Market Report 30/08: The days after the FED.

Good Morning Traders,

Today we are excepting a positive trend in all the markets, because on Monday we started the week with very good numbers in Wall Street. But the rise from yesterday was affected by a very low volume. Yesterday was the day of the year with less volume in US, and we are expecting that the volume starts to increase in the next’s days.

U.S. economic data on Monday showed a consumer spending increased for a fourth straight month, pointing to a pickup in growth that could pave the way for the Fed to raise interest rates later this year. The Financial stocks are out-performing. Again this makes sense as higher rates would tend to favor their expectations for their earnings.

About the meeting of leading central bankers in Jackson Hole, Wyoming, Fed Chair Janet Yellen said on Friday that an improvement in the economy had boosted the case for another rate rise, while Vice Chair Stanley Fischer said the U.S. central bank was still on track to lift rates this year. Although Yellen offered little new information, the follow-up speech by Fischer raised the possibility of two additional interest rate hikes in the near future, likely referring to the incremental hike policy the Central Bank had talked about it last year.

Talks of rising interest rates pushed the dollar higher as increased borrowing costs to reduce the total amount of currency available to the market. The dollar has strengthened against all major currencies, again consistent with a higher probability of Fed policy action. This has contributed to pressures on the commodity segment overall, with oil down more than 1 percent. Also the oil is trading lower following comments over the weekend from Iraq’s oil minister that his country will continue to ramp up output. A stronger dollar won’t be helping the price either.

The dollar edged up on Tuesday, but mostly took a breather as investors waited to see if U.S. employment data later this week would reinforce U.S. Federal Reserve officials’ recent hawkish messages.

The dollar index, which tracks the greenback against a basket of six major rivals, added 0.2 percent to 95.714, though it remained shy of the previous session’s high of 95.834 which was its highest since Aug. 12.

GOLD

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Gold turns up from near five-week low as dollar eases. Spot gold touched its lowest since July 26 at $1,314.70, and was up 0.3 percent at $1,324.47, after falling for the past six sessions straight.

Graphics by: www.etoro.com

BAIDU

The Chinese web Services Company, which provides Chinese and Japanese language search platforms and engines as well as many online communities, started on Monday with low session, in a very strong point of support (171.55) this price is the SMA200 of 30 minutes, and is an important support point. After that, Baidu started to rise to finished the session in positive. Today is important to check the same level of support.