Trader's Focus

Equities suffered from heavy selling pressure on Monday, but as the week progressed, the economic data improved. US consumer confidence, ISM, pending home sales, and most importantly US non-farm payrolls figures, all beat expectations and helped equities rise 5% from Tuesday’s lows.

The response to the employment number today pushed the Dow Jones up more than 100 points, to a level where it has recovered all of the losses it made through the month of August.

Gold rose 5.6% last month, as investors sought out its “safe-haven” status amidst a broad based sell-off in the equity markets. Over the past week, risk appetite has recovered somewhat, but Gold prices have still rallied. The precious metal is now trading at $1240, fractionally below all time high of $1256.8, and is up 85% in three years.

This week saw a fall in the greenback against most currencies as positive economic data from the US prompted a rise in investor’s risk appetite. This resulted in the EUR/USD reaching a 2-week high at $1.2873 and the AUD/USD reaching a 3 week high of $0.911. However, GBP/USD did not fare as well, reaching a month low of $1.5384 on Wednesday after weak UK numbers.

Chart of the Week

Last week we mentioned that if the Dow Jones failed to settle below 10,000 that the market could rally back to 10,400, which it is currently trading at now. From a technical perspective, the MACD indicator has turned bullish, but possibly the more important signal to focus on now is if the market can close above 10,400, not only today but also on Monday.