U.S. Markets End Skid

Markets in the U.S. closed higher in volatile trade yesterday, with the major indices avoiding a six day losing streak. Investors are digesting the latest round of economic data as well as developments in Washington over the budget battle.

Stocks moved higher after a report surfaced that Republican Jeff Sessions said there would be no government shutdown or defaults. House Speaker John Boehner said a Republican proposal is on the way that would tie up federal spending cuts to a debt limit increase.

GDP estimates for Q2 were left at 2.5 percent. Jobless claims fell 5K to 305K. The four week average of new claims fell 7K to 308K. However, home data came in soft again. Pending home sales fell 1.6 percent in August. This is the third decline in three months.

STOCKS
The S&PASX has now hit a new five year high above 5,300. These are the index’s highest level since 2008. The Shanghai Composite rose 0.3 percent. The Nikkei 225 underperformed falling a bit. The yen traded higher near $98.70 against the dollar at one point. Also core inflation for Japan came in at its highest level since 2008. This supports the sales tax increase. The Kospi lost 0.3 percent on the day as well.

The DJIA rose 55 points to close at 15,328.30. We still need to close above 15,500 to relieve downside pressures. The S&P 500 rose nearly 6 points to close at 1698.67 and the Nasdaq Composite was up 26 points to end at 3787.43.

CURRENCIES
The EUR/USD (1.3479) has seen a decent rally since hitting a low near 1.3100. A lack of development in U.S. monetary policy has helped to support the Euro as it tests 1.3500. A break above that level can target 1.3700. A move below 1.3300 can retarget 1.3100. Please see the below chart.

The GBP/USD (1.6045) is still trading sideways. We see good support at 1.5720. Above 1.6100 targets 1.6380. USD/JPY (98.718) is also range bound from 97.77 to 99.65. A break above 99.65 targets 100.00 anew.

COMMODITIES
Gold (1324.80) has fallen for the second straight day. We are on track for the precious metal’s fifth weekly drop as investors are uncertain over the Fed’s stimulus plans. The yellow metal has lost 5 percent in about five weeks. Below 1320 targets 1300.

Copper (3.3000) has moved up higher but we are still range bound from 3.2400 and 3.3200.

TODAY’S OUTLOOK
Today we get even more comments from another Fed area president. Evans is set to speak later in the day and will be interesting to see how he voted and stands on the stimulus program. Comments have been confusing to say the least from others. The U.S. will release personal income later in the day as well as well as consumer sentiment.