Lack of direction from US leaves markets flat

09.22 AEST, Thursday 5 July 2012

Lack of direction from US leaves markets flat

By Miguel Audencial (Sales Trader, CMC Markets)

Expect a flat and subdued session in today’s Australian equities market with a lack of direction from its US counterpart as they celebrated Independence Day. European markets were also virtually flat last night as traders played the wait and see approach pending a confirmation of an ECB rate cut and a BOE stimulus. Aside from a narrow range in today’s trading session I would also expect low volumes.

The Australian Trade Balance is due later today, however it is unlikely this figure will instigate increased volatility in today’s market unless the result is way off expectations.

Commodity instruments were generally weaker mainly due to a stronger US dollar and profit taking. With light trading volumes last night, this price movement is not a good indication of any change in the economic fundamentals of commodities.

Today’s quiet session could be the calm before the storm not only because monetary decisions from the ECB and BOE will be released tonight but also due to the fact there are a lot of important economic data due in the next two days. In Europe, the 10 year Spanish Bond auction and German Factory order figures are released tonight. In the US, ADP Non-Farm Employment, Unemployment Claims and ISM Non-Manufacturing PMI are due overnight. The all-important US Non-Farm Employment data is released the following day.
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