Market Movers of the Day
Asia-Pacific
New Zealand Retail Sales rise 1.1% MoM versus 0.6% expected.
Japanese M2 Money supply was in line with analysts’ expectations at 3%
Europe
German Wholesale price index fell -8.1% YoY
UK RICS House Price Balance Surprised for the better reading 22%
UK BRC Retail sales Monitor rise 2.8% YoY
The Overall Sentiment
Sentiment was rather positive as investors continue to expect positive results from the upcoming earning season, pushing equities higher with the FTSE gaining 0.94% and the DAX Gaining 1.25%.In the UK RICS house price balance surprised for the better pointing a recovery in UK housing market. Although the positive indication on the UK housing market has helped to push UK equities higher sentiment for the Sterling was rather bearish as worries over the looming UK debt issue .The Sterling fell bellow the 1.58 against the Dollar and the Euro traded close to 0.94 £.However the overall picture for the Dollar was bearish with the Euro consolidating at the 1.48 level, Gold rising above 1058$ an ounce and Oil above 73$ a barrel.
The Day Ahead
The published National bank of Australia Business survey which surprised for the worse could affect sentiment in Australia and New Zealand to some extent. But the effect is expected to be short lived as the survey has been conducted before the RBA rate hike which has lifted sentiment for the Aussie economy. Moving to Europe some inflation figures are due with the Swiss Producer and Import prices, and in the UK CPI figure with both due ahead of the opening of the London session. Slightly later in the Day the German ZEW survey is due and is expected to shed light on the economic sentiment in Germany the largest economy in Europe. The reading will likely affect sentiment for both European equities and the Euro. The concluding data for the day will be the US ABC/Washington Post consumer confidence which is due at 21:00 GMT with investors eager to get a more robust reading of the consumer. Overall sentiment will largely affected by the earning releases due this week with investors looking for top line growth rather than profits from cost cutting as only top line growth will indicate the economy is back on the growth track.
Technical Analysis
GBP/USD
The fast moving average crossing the slow moving average downwards at the 1.644 area is signaling the pair is slowly but confidently gaining bearish momentum. The pair has broken successfully the 1.61 support and the 1.6 support and has settled above the 1.57 support which is rather meaningful. The 1.57 area trims the upper edge of the range thus a break of this specific support could drag the pair into a long bearish trend. The 1.51 area which acted as a support area not so long ago is now acting as the upper resistance for the pair. Although the 1.57 support is significant and the stochastic indicator shows sum potential for correction, a prolonged period in which the pair fails to break the 1.61 resistance might eventually allow the pair to gain sufficient bearish momentum to break the 1.57 support and trade closer to the 1.5 mark which is the next significant support.
Market Analysis provided by eToro
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