While European markets continued to rebound from their Friday losses, they still remain some way short of undoing the damage from last week’s declines.
The wider concern remains, despite the rebound in the last two days, that the damage done by last week’s decline could well prompt some further profit taking
, particularly in light of yesterday’s surprise fall in the German ZEW investor confidence expectations survey.
It is also worth noting that even though European markets finished higher, they finished well off their intraday highs
, the shine being taken off by reports that the ECB was considering raising the haircut thresholds on Greek collateral
for the ELA, as well as running projections on Greek default scenarios. This sent Greek banking stocks plunging along with Greek bonds.
US markets, on the other hand continue to struggle to gain traction
and retest the recent highs as the momentum required to push on simply doesn’t appear to be there at the moment, despite some broadly positive earnings numbers.
The energy sector, which had helped US markets rebound in the past few days, slipped back again yesterday after oil prices slid sharply in the afternoon session, ahead of today’s latest oil inventory numbers.
Asia markets, on the other hand continue to kick on juiced by the prospect of more easing measures from the Chinese and Japanese central banks with the NIKKEI moving comfortably above 20,000 and fifteen year highs,
and the Shanghai market hitting its highest levels since 2008. These multiyear highs look like translating into a higher European open this morning.
One of the surprising aspects of the UK election campaign so far has been the relative strength of the pound despite the prospect of a world of uncertainty
, in the days after the vote, on May 7th. With the Conservatives and Labour neck and neck in the polls and both parties throwing unfunded promises around like confetti at a wedding,
the pound has remained fairly steady.
Today’s Bank of England minutes are unlikely to change that and are likely to be fairly neutral
ahead of next month’s vote. It will be interesting to see whether the committee’s views have changed on the prospects for inflation and wages in light of the more recent data, which has remained fairly positive, throughout the first quarter of this year.
After that the German Economy Ministry is expected to deliver its spring economic forecasts
for the German economy, and it will be interesting to note if they follow the IFO in raising their predictions for GDP growth in light of the recent improvement in economic data, the lower oil price and euro.
In the US
the only data of note is existing home sales for March which are expected to rise 3.1%, up from 1.2% in February.
– despite slipping below 1.0700 the risk remains for a move back towards the highs last week, and the potential for a move towards 1.1000. Only a break below trend line support at 1.0650 from last week’s low at 1 0520 suggests a move back lower.
– last week’s bullish weekly reversal candle, keeps the prospect of a rebound through 1.5000 intact. The main resistance remains at the 1.5000 level and the 50 day MA, while any pullback should find support at the lows yesterday at the 1.4850 level. A fall below 1.4850 retargets 1.4780.
– currently finding it difficult to move above the 0.7235 area, which means we remain susceptible to a pull back to the lows last week at the 0.7150 level. A break above the 0.7235 area, retargets the 0.7280 area, with 0.7385 the main resistance level.
– currently finding resistance just above the 119.80 level we need to retake the 120 level to retarget the 120.70 and the highs at 122.00. While below 120.00 the bias remains for a return towards the March lows at 118.30. A move below 118.30 retargets the 116.50 level.
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