Forex Flash: US markets less than 1% from 2007 peak – Deutsche Bank

Returning to last Friday's session, better than expected US manufacturing ISM (54.2 vs 52.5 expected) and consumer confidence (77.6 vs 76.3) data set the tone for a stronger US session, offsetting concerns over the impact of the sequestration and a mixed set of final PMIs in Europe. The S&P500 (+0.23%) closed near the day's highs rallying more than 1% from the morning lows, and taking the index to about 3% shy of its record 2007 closing high. Industry-wise, mining (-1.3%) and resources (-2.9%) were the main underperformers, weighed by weaker than expected official and HSBC manufacturing PMIs in China. The Dow Jones closed 0.25% higher and is now less than 1% from its 2007 peak.

According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “US payrolls and central banks take center-stage this week and alongside the latest developments in Italy this will probably dictate whether we continue the upward march towards the recent highs or whether we pullback to the levels seen during last month's wobble.”