Markets shed early gains

15.31 AEST, Thursday 12 July 2012

Markets shed early gains
By Ben Taylor (Sales Trader, CMC Markets)

Our markets have shed early gains after a rise in Australian unemployment and traders continue to take apart last night’s FOMC minutes, which shows division regarding the introduction of new stimulus measures.

The unemployment rate ticket was up 0.1% to 5.2% today, including a loss of 27,000 jobs in the month of June. While the number was worse than expected they have somewhat offset a surprising jump in May’s employment data in what is considered a volatile survey.

The unemployment data did however have the effect of pushing our dollar back below 1.02. I believe this effect will be short lived and the Aussie dollar will continue to be the cross of choice against a deteriorating Euro.

Last night’s FOMC meeting showed that the Federal reserve continues to have scope to do more if needed. The question now is how much worse is needed before we can assume QE3 is in the bag. If downsize risks are still not evident with PMI manufacturing dropping into contraction, jobs growth remaining tepid, and unemployment remaining high we could be waiting a while.

The idea of more of the same saw the Fed’s minutes fail to inspire buyers and helped to maintain today’s equity volume below $3 billion.

Tomorrow’s Chinese GDP figure is also holding traders back from jumping in head first. Monday’s Chinese CPI read following the PBoC rate cut in June and subsequent cut last week is fuelling the idea that Beijing has acted on numbers it already knew. Some traders are now betting that China’s GDP could show a read in the low 7’s.

© Scoop Media