How To Articles

07

Jan

US stocks dropped for a fifth day. Falling oil prices continued to knock sentiment pushing investors to less risky assets.  Negative data was also released.

Asian markets climbed across the region. The Nikkei added 0.01% as the Dollar climbed against the Yen. The Hang Seng added 0.83% due to a possible technical rebound after falling a day earlier.

European markets are higher today due to hopes of increased stimulus. The yearly CPI declined by 0.2% and such a weak figure hasn’t been seen since September 2009. This places more pressure on Mario Draghi, the President of the European Central Bank, to make changes at the next meeting taking place on January 22.

Oil dropped to a fresh 6 year low of 46.8/barrel. The pressure of increasing supplies and lower demand is having a big impact on the market. A slight rebound was seen after the EIA released that inventories declined by 3million barrels over the past week but the price is still trading below $50/barrel.

Gold climbed as a safe haven asset. The stock market also declined as investors ditched riskier assets. The price declined slightly on the back of positive U.S data but it seems as though the market is awaiting the FOMC meeting minutes. Traders are looking for clues regarding an interest rate hike which seems more and more likely. If hawkish comments are made, the metal becomes more undesirable and we could see it drop back down.

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Here are 4 tips for today's trading. This will help you decide where you should invest and what to look for:

1) Oil Falls, Stocks Hold Steady

US stock futures are pushing higher and global markets are mostly moving up after a few punishing days.

But keep an eye on oil prices: Crude futures in the US keep shifting lower and are now trading near $47 per barrel. The price of crude has more than halved since June as rising supply outstripped faltering demand.

2) Deflation in Europe

Official data shows consumer prices across the eurozone fell by 0.2% in December, marking the first time prices have fallen in the region since the Great Recession in 2009.

The figure was worse than most analysts were expecting. Eurozone inflation stood at 0.3% in November.

Falling prices could herald worse times to come for Europe's stagnant economy because they can encourage people and companies to hold off making purchases in the hopes of cheaper deals in the future.

The negative inflation numbers will also increase pressure on the European Central Bank to launch quantitative easing. The euro is stuck at a nine-year low against the dollar.

3) Expecting Earnings and Economic Data

Monsanto (MON) is among the key companies reporting quarterly results before the opening bell.

On the economic front, ADP will release monthly US employment numbers at 8:15am ET.

The minutes from the Fed's December meeting will be published at 2:00pm ET.

4) Tuesday Market Recap

Over the past trading day, the Dow Jones industrial average lost 130 points, while the S&P 500 slid 0.9% and the Nasdaq fell 1.3%.

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What is it? It checks the change in the number of new building approvals issued.

It's an excellent gauge of future construction activity because obtaining government approval is among the first steps in constructing a new building. Construction is important because it produces a wide-reaching ripple effect - for example, jobs are created for the construction workers, subcontractors and inspectors are hired, and various services are purchased by the builder.

When? January 7^th at 7:30pm Eastern Time.

Trading Tip: If the number is higher than the forecast, you can expect the AUD to rise.

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What is it? It's a detailed record of the FOMC's most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

When? January 7^th at 2:00pm Eastern Time.

Trading Tip: If the announcement will hint towards higher interest rates, you can expect the USD to rise.

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What is it? It checks the level of a diffusion index based on surveyed purchasing managers.

It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy.

When? January 7^th at 10:00am Eastern Time.

Trading Tip: If the number is higher than the forecast, you can expect the CAD to rise.

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What is it? It checks the difference in value between imported and exported goods during the reported month.

Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation's exports. Export demand also impacts production and prices at domestic manufacturers.

When? January 7^th at 8:30am Eastern Time.

Trading Tip: If the number is higher than the forecast, you can expect the USD to rise.

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