After a run of positive finishes on US markets investors backed away from this years all time highs, after weekly jobless claims came in much better than expected at 292k. While some of this number was put down to a processing glitch on the part of two states not processing enough of their final claims, nonetheless it still looked a pretty strong number and carries on the recent run of improving data.
This weaker finish ahead of some key US retail sales data this afternoon and next week’s FOMC meeting suggests an element of caution in the absence of any new drivers to propel markets beyond their previous all-time highs.
Even European markets are running into a certain element of uncertainty after a mixed finish yesterday, and this lack of conviction looks set to translate into a flat open this morning.
Yesterday’s really poor Italian economic data has once pushed the focus back on the fractured politics of Europe’s third largest economy as parliament there continues to be dominated by internal wrangling surrounding the future of Silvio Berlusconi.
Eurozone finance ministers all meet today to discuss the faltering bailout programs of Greece and Cyprus with most market participants universally acknowledging that Greece is going to once again need more money and quite likely some further debt restructuring with Germany still implacably opposed to any form of OSI.
The recent recovery in the UK is likely to be once again under scrutiny today and the improvement in the construction sector in particular with the release of the latest construction output data for July which is expected to show a rise of 2.1%, a significant improvement on the June number.
We then move across the pond for the latest August retail sales data for the US which has in recent months been extremely lacklustre despite very robust consumer confidence numbers. While new car sales have been going great guns consumers haven’t been spending in the shops with a number of large US retailers lowering their guidance numbers for year end due to weaker spending patterns. The August numbers still look set to show a rise of 0.4%, an improvement on July, though these could well be boosted by “back to school” spending.
– the euro is currently running into some resistance at 1.3320/30 but still looks set for a retest of the recent range highs at 1.3400. We could drift back towards the 1.3180 pivot but it would need a move below that to retarget the 1.3000 level.
– having busted through the 1.5740/50 triple resistance level we now need to close the week above these levels to argue for a move towards 1.6000. We may find interim resistance at 1.5880 the February highs in the short term. The medium up trend support remains at 1.5585 from the 1.4815 lows. Only below the 1.5400 level argues for a sharper move towards 1.5340, and then 1.5260.
– the downside remains intact but we need to crack through the 0.8390 area for this to unfold. As long we stay below the 0.8480/90 area and 200 day MA the outlook remains bearish. A break below the 0.8390 area argues for a move back towards 0.8320.
– another new high at 100.60 earlier this week but the progress remains slow. The failure to take out the 100.50 level conclusively means the risk of a pullback towards 98.80 remains a possibility. The long term triangle target remains at 108.00, but we need to get back to the May highs at 103.75 first. The only concern is the stalling of momentum which could see an increasing risk for a move back below 98.80 undermining this scenario and arguing for a test back towards the 97.00
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