Recap: Week Ending September 6, 2013

September 8, 2013

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New Undergraduate trading courses at the GTF

Despite global equities falling throughout the month of August, the final week of summer proved to be positive for stocks. The strongest gains on the week were seen on the Nikkei where the 225 rallied over 3.146%. The rally in Japanese’s equities started off from a push lower in the Yen vs the US dollar. The Yen became weaker as the week went on as the Bank of Japan (BoJ) decided to keep interest rates low at 0.1%, attempting to continue to devalue their currency. European equities also rose on the week with both the German DAX index and London FTSE recovering from the previous week’s poor performance. Meanwhile on the TSX stocks saw their lowest volumes in over 2 months with the TSX Composite Index closing slightly positive on the week. Throughout the past week, the Canadian dollar gained strength vs the US dollar, pushing the currency pair to the ever so important 1.035 level. 1.035 proved to be an area of reversals throughout the summer, it will be critical to watch this level to see how price reacts. The 30 year US Treasury continues to sell off entering some of its lowest levels on the year. It is significant to note that the 30 year, which is considered a haven in uncertain times, continues to push lower despite developments of a possible attack on Syria. The current yield on the 30 year is 3.87. The yield on the ever so important 10 year treasury is targeting the 3% level which many economics think could be a breaking point for the security which has taken a beating.

This past week both the Canadian and US governments reported their monthly unemployment figures for the month of August. Both figures beat expectations with the US reporting a decline from 7.4% to 7.3% and Canada reporting a decrease from 7.2% to 7.1%. Even though that both figures beat it must be noted that there is more behind the initial figure. The labor force participation rate in the US hit its lowest number since 1978, dropping to 63.2% from the previous month of 63.4%. The number does not support a good economy and signals the possibility that many who are unemployed have stopped searching for work. With this theory in mind the employment rate that is released monthly, which does not factor in those who have quit looking for work, painting a much rosier picture than the actual reality. With all this being said, an improvement in the unemployment figure might signal the end of Quantitative Easing (QE), which many investors think could end the rally of 2013. On September 18th investors will hear from the Federal Reserve on the possibly of ending the bond buying program.

Currently the US is still debating the idea of entering Syria following reports of chemical weapons used by the Assad regime again the Syrian people. The US as a nation appears to be much divided over the topic with a potential decision coming down sometime this week. President Obama is expected to address the nation Tuesday night; it is unclear at this time what this message will entail. In the meantime, at risk commodities including oil spiked later in the week as news about a possible strike gained strength again. Like crude, gold sold off at the start of the week, however, Friday it caught a strong bid, pushing off the September lows. The situation in Syria is ever so changing, and it is necessary to follow news updates as anything can happen at any time.

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