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Equity markets are treading water after bouncing back yesterday, and now traders are faced with the prospect of another fall with no Greek resolution imminent. We are still in the eye of the storm and dealers are holding their breath as Athens is weeks away from going bust. Traders love jumping on the bandwagon, but on a day like today when the market isn’t moving much in either direction, that is when their nerves will truly be tested.
Sentiment remains negative because of Greece, and today’s sideways trading is just the pause before the next move lower. It is only a matter of time before investors’ fears get the better of them, sparking the next round of selling – there is no point in being long when Greece’s fate is still uncertain.
The pound surged on the back of the unemployment report, and the headline figure hasn’t caught traders’ attention. The rise in weekly earnings stole the show, putting the spring back in sterling’s step.
We are expecting the Dow Jones to open 45 points higher, at 17,950, ahead of the Federal Reserve meeting tonight. Traders expect to hear the usual rhetoric from the Fed that interest rates might be hiked at any time, but there is no fear of that happening in the near term.
Janet Yellen doesn’t want traders getting too accustomed to the record-low interest rates, but at the same time the US economy isn’t ready for a rate hike, and this will override any possible warning of rates rising sooner than anticipated.