Daily Update 06.08

Market Movers of the Day

 Asia-Pacific

*Australian trade deficit shrinks to -441M on July against -737M deficit a month before.

*New Zealand Unemployment rise to a record 6%

  Europe

*German PMI slightly lower than expected

*EU PMI in line with expectations at 45.7

*EU Retail Sales fall -0.2%MoM

*UK industrial production up 0.5%MoM

*UK Halifax housing prices up 1.1%MoM

*UK NIESR GDP estimate upgraded to -0.4% from -0.8%

 Americas

*US MBA Mortgage Application up 4.4%

*US ADP Employment change at -371K

*US Factory orders fall 0.4%

* ISM non manufacturing at 46.4 lower than expected

*US EIA Crude oil stocks rise 1.7M

 

The Overall Sentiment

Sentiment was rather mixed as data from the US weighted on Equities which tend to navigate the market in recent days. The ISM non manufacturing disappointed and US privet sector employment fell 371K which was higher than expected. Although the negative US data produced some head winds for equities ,indexes relatively showed resilience with the S&P holding above 1000 and the Dow falling a mare 40 points. Commodities also held well with Gold still higher than 960$ and oil gaining slightly more than 50 cents settling just short of 72$ a barrel in spite a rise in inventories .In Asia pacific Australian trade deficit improved slightly but it was the New Zealand Unemployment figure that loomed  with a rise to a record 6%.The record rise of unemployment alongside remarks from the New Zealand central bank suggesting intervention in the FX rate spurred worries over the resilience of the Kiwi and is expected to place pressure on the currency .In the FX arena positive data from the UK has spurred strong momentum for the sterling with the currency trading above the 1.7$ resistance. The UK economic data presented improvement in the industrial sector a rise in Housing prices and the expected GDP growth was updated upwards. All which helped the UK gain consensus as one of the best performing economies in Europe.

 The Day Ahead

The Opening sentiment in Asia pacific will be affected by the Australian unemployment figure which fell slightly to 5.8% and the negative jobless data coming from Kiwi land. In Japan the leading economic index due later in the Tokyo session might also affect the sentiment with investors looking for a rise in the Index suggesting better growth prospects. However as the day will advance toward the mid of the London session market eyes will be focused on the main dish of the day, the expected rate decision from the ECB and BOE. Both banks are not expected to change rate and in both cases investors are eager to learn more about the bank’s view on the Quantitative easing policy but on difference circumstances. In the UK the latest economic data pointing improvement in economic and deflationary prospects alike could move the BOE to suggest a pause in the bank’s QE policy which possibly would push the sterling higher.In the Mean while in the EU circumstances are very different , the continuing evidence of rising deflationary pressures that could lead the ECB to announce more Quantitative easing which will potentially place pressure on the Euro making the EUR/GBP trade an important one to watch. The concluding data for the day will be initial jobless claims figure coming from the US where investors will look from improvement in the US job market. All and all markets could gain some positive momentum after a relatively flat to slightly negative trade a day before. However any negative surprise might ignite profit taking as the markets still are up strongly for the week.

Technical Analysis

 EUR/GBP

 

 

 

 

 

 

 

 

 

 

This pair which traded in a long down trend since topping around 0.95 has traded in a rather tight range recently between the 0.85 support and the 0.87 resistance. The pair which first has seemingly created a double bottom pattern around the 0.85 support with potential retracement toward the lower levels of the 0.9 has failed to break the 0.87 for several weeks now. The continuous failure to break the 0.87 resistance alongside the current trade which is consolidating with the 0.84 support is signaling more weakness is around the corner for this pair. A break of the 0.84 support will move the pair again into the territory of the bearish price channel with the 0.82 as the first target.

 

Support/Resistance

 

 

 

Daily Events

 

 

 

 

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