Markets have been stuck in ranges for the past few sessions and this trend continued in The East, with risk assets slightly lower and the US Dollar making small gains. Announcements out of Europe proved that instability in Spain (both with the private banks and in the government) continues to define the nation's financial prospects but these stories only had a little effect on price activity during the Western european session. The EUR/Greenbacks dropped back below 1.30 and while many researchers have revised their 2012 forecasts lower for the pair, the market remains heavily short, which may make it tough for short term trends to resume.
Macro information out of the US continues to be supportive, and yesterday’s Factory Orders information from spread betting companies was the most recent example of this (coming in at a rise of 1.8 p.c for Nov), which is one of the higher up to date figures out of any of the G10 economies. Comments from Federal Reserve Manager Ben Bernanke were also released and focused generally on the home market and the necessity to implement strategies to improving that section of the economy. Today, the information will be mostly work related, and this could be significant for gauging the particular print for the Non Farm Payrolls info released on Friday.
In the Eurozone, the primary release is the Store Sales number out of Germany and this will be followed by the subsequent bond auction in France (where 8 bill Euros in government debt is on sale). This bond auction will be key for understanding the market’s bias relative to the general confidence that's seen for the French economy and an unsuccessful bond auction will probably push the Euro lower. At the moment, the long run credit history in France is AAA, so be aware of speculation that weak financier hunger for French treasuries could put this in trouble.
Services PMI in Germany was revised down in the December number (to 52.4) but overall the most recent info has shown improvement so the impact was limited. The services PMI in Italy nonetheless , was much worse and came in decisively in contractionary territory at 44.5 for Nov. The primary concern here is the potential effect on 4th quarter GDP numbers, which is already expected to come in negative at 0.3 p.c.
The Footsie has taken the up escalator since the end of December and the Moving Average readings are bullish in positive territory but costs have since found resistance at 5680. We might need to see some consolidation or retracement before getting another run higher, so that the level we are having a look at is the 38.2% Fibonacci level of the rally, which comes in at 5525. Moving average levels are coinciding nicely with the Fibonacci levels so there should be some satisfactory long entries once prices retrace to these areas.
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This post was written by admin on January 23, 2012
