The UK GDP figure

The latest setbacks have now negated the prospect for a major double bottom formation, with the market dropping to fresh 2009 lows and finally taking out critical psychological barriers at parity. For now however, we still retain our constructive outlook and classify the current price action as consolidative with the market in the process of carving a major base. Look for any breaks to fresh 2009 lows to be well supported around 1.0000. Back above 1.0225 will be required to take reliev some of the downside pressure.The broad Dollar selloff which started around May this year and seemed to trim itself into range only days ago has finally broken key resistance levels and pushed the Dollar into record lows across the board. The rally was fed mainly by better than expected US economic data with Initial Jobless claims falling under the 500K mark for the first time in more than a year reading 466K which positively surprising investors which were expecting a 500K reading according to various pulls. In addition new home sales which is considered to be closely linked with economic recovery rose strongly by 6.2% MoM mainly attributed to led tax breaks for new home buyers. The combination of the better than expected economic data and the statements coming from the Fed that it is currently not worried by the Dollar “orderly” decline spurred massive outflows from the Dollar and into high yielding assets and currencies alike ,with counter Dollar carry trades continuing to mount. The Dollar fell to as low as 1.515$ per Euro, the Swiss Franc moved beyond parity trading a few points shy of 0.99 CHF to the Dollar and the Yen surprised by moving above a 14 Year high against the Dollar trading below 87 this morning. The Sterling also gained rather strongly against the Dollar trading around 1.67$ as the UK GDP figure was largely in line with expectations. However the Sterling which is highly linked to appetite for risk which was elevated during the trade failed to reach new highs against the Greenback.
Equities
The better than expected economic data fueled positive sentiment for Equities. In Europe benchmark indices advanced with the DAX gaining around 0.5% and the FTSE higher by 0.77%.In the US gains were more modest with the S&P higher by 0.45% and the DOW higher by a modest 0.29% but most importantly both indices reached a record for the year. Among the best performers were Caterpillar and Home depot mainly in reaction to the strong homes sales rise.