Forex Trading - Market Update

Risk appetite has weakened on the 25th year anniversary of Black Monday. The biggest downside surprise yesterday was Google's earnings. Their earnings were accidentally reported early and the stock sold off 8.0%. Google's poor earnings highlight investor's growing concerns with Q3 earnings, as other bellweather companies are missing estimates as well, such as IBM and Intel. The moves down in the currency market yesterday were mostly fueled by Google's earning miss. However, sentiment seemed a lot more negative then the actual movement in equity prices. DJIA closed -0.06%, S&P500 closed -0.24%, and NASDAQ closed at -1.01%. Equities closed negative, but clearly didn't sell off.

EUR/USD's upward momentum has at least temporarily faltered as it broke below the 1.3100 level and bounced off of a daily close at 1.3056 and consolidated around a previous swing high at 1.3073. There's market talk of a $1 billion option expiry at 1.3050, so that number should be well defended. A close below it could lead to an extended move to the downside.


The Aussie in particular seemed to remain well bid as expectations about the economic situation in China improved. Expectations are a little more negative about China this morning due to the FDI print missing the estimate (-3.8% actual, -3.4% previous.) Additionally, Google's earnings miss put pressure on Asian equity markets which in turn put more pressure on the Aussie. Equity markets in Europe are currently down slightly, but it's the U.S. markets that should really set the tone for the next move in the Aussie.