Thin Trade Limits Asian Markets

Investors brushed off strong economic data released overnight and Asian markets were mixed during a thinly traded session. Hong Kong markets closed for the morning session as officials raised the typhoon category for Utor as it prepares to head inland.

Investors were hit with strong positive data releases overnight that helped stir optimism that the global economy is recovering. U.S. retail sales came in strong as they were up at their fastest pace in seven months. Retail sales not including cars, gasoline or building materials rose 0.5 percent in July. Department store sales rose 0.6 percent, but auto sale fell 1 percent on the month. Overall, retail sales were up 0.2 percent on the month as strong gas prices helped.

Out of Europe overnight, the German confidence survey, ZEW, rose more than expected last month. This was helped by signs of growth in the Euro zone. Also, Industrial output for the EU was up as June showed a 0.7 percent growth from the month before and a 0.3 percent yearly growth.

STOCKS
The Shanghai Composite has hit its highest level in two months. The Chinese benchmark was up nearly 2 points to close at 2107.69. The Kospi has hit a one week high at 1,916.52 as the index rose 3.50 points in the session. The S&P/ASX, in Australia, fell back from near its three month high to close at 5,154.90, down almost 3 points.

U.S. markets were up overnight as Atlanta Fed President Dennis Lockhart’s remarks downplayed the chances for the tapering of the bond buying program to begin in September. The Dow closed at 15,451.01, up 31 points. The S&P 500 rose 4.69 points closing at 1,694.16 and the NASDAQ closed at 3,684.44, up 14.50 points.

Apple, Inc. (NASDAQ: AAPL) jumped 4.75 percent to close at $489.57after Carl Ichan reported he hada “large” holding in the iPhone maker. Please see the below chart. Apple hit a six month high earlier and has now broken above its 20 day moving average (DMA). Ichan’s investment is reported to be worth over $1 billion.

CURRENCIES
The USD/JPY (97.93) rose yesterday. We see a key resistance level now at 98.50. Should that level break then we could test 99.00 then it could target 99.00. We are seeing the U.S.-Yen yield spread spike hire and the Nikkei 25 is bullish, this could mean the U.S. dollar will continue its bullish move against the yen.

The EUR/USD (1.3263) should have bounced higher on the economic news out of Europe, but did not. The outlook is murky and we look to be range trading from 1.3249 towards 1.3290/3250.

COMMODITIES
Brent WTI (109.25) has been rising and could now test 110.00 today. We see a very strong resistance lining up at 110.98 which should hold and cap gains. We see support at 108.00. Gold (1321.30) is a bit mixed right now. We need a break above the key 1350.00 level to continue its bullish move. A failure of this could send the precious metal lower back towards 1300.00.

Copper (3.306) has fallen a bit on profit taking. We look to be consolidating for now. We are still encouraged by Copper’s performance as of date and can test 3.349 while we stay above 3.300.

TODAY’S OUTLOOOK
Markets should be encouraged by the strong data released so far this week. So should the Forex market as a strong dollar could be in play. The U.S. will release MBA Mortgage applications later today as well as the Producer Price Index (PPI). Oil inventories will also be in focus today.