Market Movers of the Day
Asia-Pacific
Japanese industrial production rose 2.1% better than expected
New Zealand Retail Sales fell -0.5% MoM
Europe
Swiss Producer and Import prices rise 0.1% slightly better than expected
EU industrial Production fell -0.3% in line with expectations
EU Employment change at -0.5% QoQ
UK RICS House Price balance substantially better than expected reading 10.7%
Americas
Canadian Capacity utilization at 67.4% for Q2
The Overall Sentiment
In Asia-pacific sentiment was strongly negative amid wows over the US-China trade dispute in which the US imposed taxes on Chinese imported tiers. Although this is has a rather marginal effect on both economies the dispute raised concerns over protectionism in the US which could snap future growth in emerging markets which are the main growth engine in Asia. Equities in the region sank lower with the Australian ASX falling -1.42% and the Nikkei falling -1.79%. In Japan sentiment was exceptionally negative as the negative sentiment was already afloat due to the stronger Yen which weighted on Japanese exporters. In Europe the EU industrial production continued to shrink but modestly and in the UK RICS Housing price balance surprised for the better pointing further improvement in UK housing market. In the FX arena the 3-months Dollar labor rates reached to a record low pushing the greenback even lower against the Euro which traded around the 1.465$ area. However against other peers the dollar showed rather resilience and even slightly rebounded trading around 91¥ .Dollar also showed a rather resilience in the Commodities arena with Gold still around the 1000$ and oil at the 68 zone. The Canadian dollar also came under bearish pressure and ended the day flat against the Dollar after rising 1% in response to subdued oil prices. In the US rumors the US government intends to sell its share in Citi Bank spurred more confidence on the financial system which is slowly becoming less dependent on the US government. Overall sentiment in the US was positive with bets on a US recovery continuing to push equities higher.
The Day Ahead
Economic data will returned to the spotlight starting with the RBA meeting Minutes which will shed more light on the probability of a rate hike in Australia. In the London session UK inflation and housing data will gather much attention as it will reflect on just how effective the quantitative easing program by the BoE is. In Germany the highly important ZEW survey will reflect on the sentiment in the German economy the largest in Europe. Moving to the US, economic data on inflation manufacturing and most importantly the consumer could swing sentiment both ways. The NY Empire state manufacturing index will reflect on the US manufacturing sector with investors expecting further imporment.PPI figures due at the same time will reflect on the status of inflation in the US and US retail sales due later in the day which will gather most of the attention with investors hoping for a recovery in consumption. As the US consumer posses 2/3 of the US economy, in markets eyes only a recovery in consumption will signal a true recovery.
Technical Analysis
EUR/CAD
Since bottoming in July around the 1.5 zone the pair has been slowly but confidently moving in an upward trend with each peak higher than the previous. The pair is currently aiming the 1.63 level and in not showing any overbought signals. However the pair is trading in a rather tight range any strong swing upwards could ignite a sell off that would still leave the pair higher but within the tight range. As the pair will approach closer to the 1.63 level the resilience of the trend will be but to the test.
Market Analysis provided by eToro
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