Last night was a great night to highlight that technicals and fundamentals need to be part of your trading toolkit.
After moving above 1.32 the previous night the Euro came under intense pressure in Asian trade yesterday hitting a low around 1.3150ish. But from almost the minute the first traders wandered into the dealing rooms of the Northern Hemisphere the tone changed and it rallied to a high of 1.3210.
Not a huge move of course and certainly not move that threatens the longer term trend toward a lower Euro but if you were watching your short term charts you could have ridden it.
On the daily charts the Euro looks like it might build a base as well and I have a stop on a long from yesterday below the low looking for a move toward the short term moving average around 1.3280ish.
If we look elsewhere without the catalysts of central bank speak or much in the way of data stocks in the US went nowhere and at the close The Dow was up 0.09% to 17,122, the Nasdaq fell 1 point to 4,570 and the S&P 500 was unchanged closing at 2000.
Europe provided the only decent piece of economic data overnight with the release of the Gfk consumer confidence data which printed 8.6 versus 9 expected. Also out was the import price index which fell a much bigger than expected 0.4% in July taking the year on year import price deflation to 1.7% for German imports.
It fuelled a rally in German bonds which has taken the 2 year rate back into negative territory and driven the 10 year German Bund to 0.909% which is a new record low according to Bloomberg. Rates in Italy fell 3 points to 2.39% while Spanish 10′s fell 4 points to 2.14%. Rates in the UK also rallied strongly falling 7 points to 2.26% while rates in the US were lower as well with 10 year Treasuries dropping 4 points to 2.36%.
– Back to stocks in Europe and at the close it was a little mixed with the DAX down 0.19% to 9,570, the FTSE was up 0.12% to 6,831 and the CAC virtually unchanged just 0.04% higher at 4,395. Stocks in Milan were 0.57% higher while those in Madrid rose just 0.09%.
– But small moves in the US hasn’t stopped the ASX futures from falling 19 points to 5,610. Today is going to be an interesting day for some of the smaller iron ore miners most likely with a big fall in ore prices overnight to $87.92 a tonne – a drop of $1.62 and a break of this year’s low. In terms of SPI levels to watch today 5580 will see traders getting nervous if it gives way.
In Asia yesterday the Nikkei was up just 0.09% to 15,535, the Shanghai composite rose the same amount to 2,209 while the Hang Seng fell 0.62% to 24,919.
On currency markets with no real catalysts and a few pairs oversold there were reversals overnight with the Euro rallying as noted above. Sterling is at 1.6568 and USDJPY fell a little with the Yen stronger to 103.86. The Aussie continued to defy gravity rallying up to 0.9351 overnight and it sits at 0.9337 this morning.
I’ve just sold a little Aussie on this little hourly break looking for a dip in the run up to Private new capital expenditure at 11.30 this morning. On the dailies its still in the box.
On commodity markets as noted iron ore crashed again with Newcastle Coal futures also lower dropping 70 cents a tonne to $69.30. Nymex crude is $93.75 a barrel, gold – yawn – is at $1,279 with silver at $19.41 while copper is still around $3.20 a pound. On the Ags though its never quiet – hardly ever anyway – corn rose 0.9%, wheat was 1.06% higher while soybeans ripped 2.62% higher.
On the data front today we get the release of the Private New Capital Expenditure data today in Australia which will be watched closely as economists, traders and investors try to take the pulse of the economy via investment intentions. HIA new home sales are also out. This evening we see Spanish GDP but German unemployment is more important. Later we get EU consumer and business confidence and then the big one German CPI.