THIS WEEK MARKET REVIEW SEPT. 07, 2009

Gold soars to the 1000 mark: Precious metals were the breakout story of the week, as Gold, Silver and Platinum all presented sharp moves higher. The move came as traders jumped into commodities prior to the G20 meeting that was scheduled over the weekend. Gold moved up $34 dollars per ounce this week or 3.7%, and tested trend line resistance that was created by highs in March 2008 and February 2009.


The precious metal tested the $1,000 mark, and backed off slightly on Friday, after the employment report. In addition, silver broke out to new highs for 2009, smashing through trend line resistance to close at $16.23 for the week. Silver had an outstanding move for the week, moving up by $1.45 an ounce (9.8%), leading the precious metals. One must note that Gold is currently trading around major psychological resistance. A break of current levels will only confirm silver’s trend higher as both tend to trade in the same direction.

The equity markets took a breather last week and retraced some of the gains made during the last 5 months. For the week, the S&P 500 index lost 12.5 points or 1.22% while the Nadaq closed down by a mere 0.31%. The week started out on a negative note as Tuesday’s session presented extreme selling pressure. The market was hammered losing 22 points to start the month, something also known as the ‘September Affect’.

On Tuesday, the ISM released its monthly manufacturing index, which showed a strong figure of 52 points. Even though the economy is showing a vast improvement compared to only a couple of months ago (a numbers above 50 signifies a period of expansion), one must note that sentiment is still not at its highest and consumer spending figures are still weighing on the markets. Despite that fact, during the week there were a number of strong economic data releases that pointed to further improvement in the US economy. The ISM Index was followed by a 3.6% increase in pending home sales, and a better than expected employment number. The August employment headline number showed a loss of 216,000 jobs, a figure which was better than the consensus of 245k. Revisions for the month of July, created an additional loss of 20,000 jobs. The unemployment rate showed a worse than the expected figure of 9.7%, compared to the 9.6% consensus. This overall better than expected news lifted the S&P 500 index 13 points on Friday, to close the session at 1016. From a technical point of view the broader market is still holding onto current levels, trading in prior range.

Currency pairs continue to range, AUD/USD shows possible signs of a break out: Last week’s volatile moves had an enormous affect on the currency market sending the various pairs into a trendless pattern. The Dollar increased at the start of the week against its counter parts but quickly lost its ground following the U.S market’s turnaround. Furthermore, the move in Gold had an enormous influence on commodity currencies sending the AUD/USD and the NZD/USD higher. From a technical point of view the AUD/USD bounced off its trend line support, and presented minor signs of a break out during Friday’s session. Even though the pair didn’t present a full body above the resistance line, one should observe this week’s trading pattern as higher commodity prices could help this pair surge.

The NZD/USD also presented a phenomenal turnaround during the week and headed back up to major resistance. The NZD/USD is now trading at $0.69, whereas a break could lead this pair to higher ground.

An Interest rate decision Week: Even though the U.S market will be closed Monday due to Labor Day, economic data scheduled to be released later during the week should continue to have an impact on markets. The BOC, RBNZ and BOE are all scheduled to release their rate decisions this week, all of which are expected to hold their rates at current levels. Even though the rate decisions could cause intraday volatility, many will be observing the statements that follow in order to receive a clue about official’s opinions, regarding future economic growth. Furthermore the results of the Weekend G20 meeting will be released early during the week and could give a clue on what global leaders think of the recent recovery.