Market Movers of the Day
Asia-Pacific
Australian Consumer Inflation Expectation at 3.5%
RBA Foreign exchange transaction at 830M
Japanese Industrial Production falling -19% YoY in line with expectations
Japanese capacity utilization at 2.3
Europe
EU CPI at 0% MoM
Swiss ZEW survey expectations at 65 versus 58 expected
Americas
US CPI rise 0.2% MoM versus 0.1% expected
Initial Jobless claims at 514K surprising for the better
NY Empire State Manufacturing Index at 34.6 surprising for the better
Philadelphia Fed Manufacturing Survey disappoints
EIA crude oil stocks change at 0.4M versus 1M expected
Canadian Manufacturing shipments in line with expectations
The Overall Sentiment
While sentiment in Europe was slightly negative in the US Bullish sentiment remained firm mainly attributed to a weak Dollar and high oil prices which moved US energy stocks to end higher and push indexes to the Green. The S&P closed at 1096.56 and the DOW still above 10K with both gaining close to 0.5% .The Dollar remained weak against it’s higher risk peers trading around 1.495 Dollar per Euro and falling sharply against the Sterling as looming expansion of quantitative easing by the Bank of England slightly faded. The Sterling traded above the 1.61$ resistance and closed the day near 1.64$ posting a strong gain of almost 4.5% in three days. CPI figures in the US and the Euro zone were in line with expectations with US CPI reading almost flat and EU inflation MoM at flat zero, suggesting rate hikes in both economies are still remote.US manufacturing surprised for the better and although Philadelphia Fed manufacturing survey disappointed the NY Empire state manufacturing index rose to a level not seen in more than 2 Years showing expansion in US manufacturing sector. In the Commodities arena Oil trade was at the centre, rising in reaction to tighter supplies than previously anticipated, trading around 78$ a barrel and just 2$ shy of the 80$ mark. Natural Gas settled at 4.5$ and in the Metal space Gold retreated lower to the 1050 zone and silver settled at the low end of the 17$.As both metals and petroleum are seen as hedge against rising prices and a falling Dollar it seems that whenever petroleum outlook improves investors tend to favor petroleum over Metals.
The Day Ahead
Earning releases will continue to be at the spotlight with earnings of Bofa(Bank Of America) and GE due during the Day.EU Trade balance is also due with investors surveys pointing investors are expecting the trade balance to rise nevertheless any downside surprise could suggest the strong Euro is weighing on the region’s exports. Later in the day US-TIC flows will reflect on capital inflows to the US and the highly watched customer confidence will reflect on consumer trends with investors expecting a flat reading MoM. All in all earnings releases will again be the driving force behind market sentiment with potential profit taking in equities in case earning fail to surprise for the upside.
Technical Analysis
EUR/GBP
After reaching the 0.94 level the pair has encountered strong resistance retreating to as low as the 0.91 level. However the main bullish trend remains firm and thus poses a good opportunity for the Euro bulls to buy into the pair on dips. The pair is currently heading towards the 0.9 support which is in line with the Fibonacci retracement although not a major one. The 0.89 on the other hand poses an excellent contender to catalyze resumption to the major trend and it is in line the strong 61.8% Fibonacci retracement. A break of that support could question the major trend but would not rule out a resumption of the bullish momentum with the 0.95 as the target.
Market Analysis provided by eToro
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