Yes, the Dow Jones Industrial Average is closing in on the historical 16,000 level. There is actually a strong sentiment in Wall Street that it will pierce that 16,000 level albeit momentarily, since the Federal Reserve might tweak its fiscal policy heading into yearend to prepare for another Congressional bout regarding the debt ceiling. However, since the Holidays season is fast approaching and that means gift-giving is in the air, the stocks of premier supermarkets, such as Target and Macy’s are on the green side of the charts, and seems they are building up steam. Moreover, Thanksgiving is around the corner, so the shopping spree is expected to pump the asset markets up. But there is a silver lining in all of this madness.
With all the shoppers pumping up the Dow and Wall Street to 16,000, analysts and market observers are not quite buying the trend and the market signals. There is always a reservation at the back of their minds that this might be a start of a bubble of some sort, or some seasonal spike – the prevailing atmosphere is risk avoidance for the moment, the global economy being strained so much with all the shenanigans happening across the globe. On top of this thinking, we can’t just stop remembering the deadline given by Capitol Hill regarding the debt issues. In fact, the USD in the Forex markets is fairly mixed right now, with the Cable facing a strong resistance at 1.6200, EURUSD trying to build some momentum, and the general USD Index going a roller-coaster ride, which brings us to the ECB.
The European Central Bank has cut its interest rates with hopes to invite foreign investors to fuel the recovery process. This may sound to be good but some market observers are worried that it might force the little players in the financial markets to go down the drain since they can’t keep up with the pace that the market must go to in order to match the recovery policies. The ECB has been searching for proactive ways in order to start their seemingly stagnant engine but the problem is still beneath their common fiscal agenda. This explains the relatively low volume performance of the ECB exposed assets, especially in Forex.
EURUSD, as mentioned before, is trying to build some momentum but we have to keep in mind here that the market has relatively not responded to the measures that the ECB and the Fed have placed. And this means one thing, and one thing only – that the investors and market observers demand more information because they have lost the confidence on the policy-making bodies.