Investors dismiss chances of recession

Ben Bernanke will say in his speech this week.
For a while the market has been nervous and is searching for direction from all corners.
Everyone is thinking whether the world economies are heading for another recession and what does that mean for the earnings season.

Eyes are clearly pointing to Bernanke’s speech set for Friday and how he is going to bring back confidence on the market.
Global volatility from equities to
currencies has been the order of the day
as investors look to exit money-losing trades.

The market simply believes that another quantitative easing programme is on the cards as the Fed tries to resuscitate and give support to an ailing US economy.
I feel the Europeans are doing a far much better job through austerity measures unlike the US at the moment.
Investors can’t aggressively buy the dollar or even the yen now as much as they want because some big events are ahead, such as Bernanke’s speech.

As for the euro demand is capped by concern that the region is going through tough times trying to curb their debt issues.
There’s a void of information on the market as investors discount the chances of a recession.
In Europe the euro strengthened after Chinese manufacturing gauge rose showing positive sentiments in terms of demand for other commodities.

The euro was trading at US$1,4475 against the dollar from US$1,4375.
The Australian and New Zealand dollars appreciated against most of their major peers after a private report showed China’s manufacturing shrank at a slower pace this month, easing concern that the global economy is losing momentum.

The Aussie together with the kiwi climbed the most pushing demand up for high-yielding assets.
The Aussie dollar is a strong favourite against the New Zealand dollar given that Australia is a better trading partner of China than New Zealand.
Australia’s dollar advanced to A$1,0486 in Sydney from A$1,0409 in New York yesterday, after falling as low as A$1,0387.

It bought 80,45 yen from 79,93 yen.
New Zealand’s currency traded at US83,20 cents from US82,42c and rose to 63,83 yen from 63,29 yen.
On the commodities front gold is causing the stir as the bullion reached an astonishing US$1 900 an ounce.

Currently, with the situation on the market the momentum in the gold is amazing as it hugged the Bollinger bands showing signs that investors are considering the bullion as the best hedge.
Fund managers view gold as a replacement to some of the liquid currency pairs like the euro-dollar, pound-dollar and dollar-yen.
Gold has shown its prowess as a safe haven metal and has become the markets favourite.

With gold reaching such levels it shows the market sentiments are not looking good especially in the equities market later alone the currencies market.
Markets are really struggling for directions with swings from everywhere. Central banks all over the world are hoarding the precious metal and with speculation growing that the Federal Reserve looks set to introduce another quantitative easing program that won’t deter the bullion from rallying. Fund managers could increase bets on high-yielding assets ahead of the Fed announcement.
May the markets bless you.