Aussie and Euro close to short term break downs as Stevens warns and Draghi readies to speak.

July 14, 2014

Germany won the world cup but its time for the Euro to fall if they want to get back to economic health. Even though I have a lifestyle short on the Euro it doesn’t feel like it is going to happen anytime soon.

Having said that though with Mario Draghi speaking this evening and with RBA Governor Glenn Stevens noting over the weekend that the Euro strength is part of the EU deflation threat it might be time for Draghi to extent his “anything it takes” to the Euro.

Almost breaking the short term trend.

Anyway back to Friday night and it was the normal “nothing can hurt this market” meme as the concerns over Portugal and Banco Espirito abated Friday.

This lifted a weight off the bulls and US stocks closed higher and well off the early day’s lows. This was despite the Wells Fargo earnings which on the face of it were okay but reported mortgage revenue was down. This put pressure on its shares, which closed down 0.6%. At the close of play, the Dow was up 29 points to 16,944 for a gain of 0.17%. The Nasdaq was up 0.43% to 4,415 and the S&P rose 3 points to 1,968.

In Europe, the German CPI printed in line with expectations at +3% for June to keep the yearly rate at 1%. At the close, the DAX rose 0.07% to 9,666, the CAC was 0.37% higher at 4,317 while in London, stocks rose 18 points to 6,690 for a gain of 0.26%. Stocks in Milan were 0.62% higher while in Madrid, stocks had a bad mid-part of the day, closing up just 0.05%.

Locally on the ASX, the SPI 200 September futures rose 12 points to 5465. It should be a good day today given Iron Ore has finally broken higher, taking out resistance at $97 tonne.

In Asia, the Nikkei fell 0.34% on Friday after the Portugal concerns on Thursday from the US and Europe. This took the Nikkei to 15,164 for a 1.8% loss on the week.

On Currency markets, it was a day of quiet two-way trade in the majors, with the Aussie closing at 0.9391. Euro settled at 1.3607 on Saturday morning while sterling and USDJPY finished at 1.7122 and 101.36 respectively. Tomorrow night, Janet Yellen is ultra important for any change to this near-term range trade in currencies.

Aussie also close to a break

RBA Governor Stevens warned again over the weekend that a “material” fall in the Aussie may be possible so I am staying short.

On Commodities, the huge news is that Iron Ore has broken out and is headed higher based on the technicals. It closed the week at $97.17, up 85 cents for September delivery. Newcastle Coal slipped again with September futures down another 15 cents to $69.60 a tonne.

Elsewhere Crude, happily, slipped $2.10 to $100.49 bbl for July while Gold finished at $1,339 and Silver closed at $21.44. Worth noting on Silver is that Reuters has been appointed to host the silver fix from August. Copper closed at $3.26, Corn fell 0.19% but Soybeans and Wheat were poleaxed, losing 2.56% and 4.1% (not a typo) respectively after the supply estimates from the US DoA upgraded forecasts.

On the data front today, there is nothing of note in Australia, but Singapore releases its GDP for Q2 2014. EU industrial production is out tonight but the key is ECB president Draghi’s speech tonight.

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