October 24th, 2014 15:47:01 GMT

European equity close: Modest losses to end a strong week

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Closing changes for the main European bourses:

  • UK FTSE -0.5%
  • German DAX -0.6%
  • French CAC -0.6%
  • Italy MIB +0.4%

On the week:

  • UK FTSE +1.23%
  • German DAX +1.67%
  • French CAC +2.54%
  • Italy MIB +4.35%

It’s been a wild year in the Italian stock market.  In June it was the best performing market in the world, up 13% ytd but was down by more than 10% at the lows last week.

Italy MIB daily chart

Italy MIB year-to-date

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October 24th, 2014 15:37:03 GMT

Merkel: Important ECB works independently

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She did add:

  • She values Draghi’s engagement in Euro area
  • Agrees with Draghi that closer cooperation is needed in the Eurozone
  • Growth not adequate. Jobless too high. Inflation too low

Nothing new except Merkel may be a little kinder toward Draghi/ECB

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October 24th, 2014 15:07:47 GMT

Second source says 25 European banks fail stress test as of end 2013, 10 still have capital shortfall

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Reuters now citing sources, confirming an earlier report.

25 failing is the headline but it only really means that 10 have failed and that’s good news for the euro unless you believe the tests were far too easy, which is reasonable. In that case, the whole exercise is a joke.

My feeling is that the market will decide to trust the ECB but that doesn’t mean the euro will rebound.

1 Comment

October 24th, 2014 14:54:07 GMT

EURUSD back below trend line

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The action is  slow today. We got the squeeze higher that took the price above the broken trend line. That failed. The price is back lower toward the midpoint of the day’s range at 1.2664. The close yesterday was at 1.2644.

EURUSD falls back down with some Draghi comments.

EURUSD falls back down with some Draghi comments.

I get the feeling the finish line is in site for the week .  Stocks are higher but not racing.Gold is up and down in sideways trading but at the days lows.  Oil is staying below the 100 and 200 hour MA and trading at the lows for the day.

Oil stays below the 100 and 200 hour MAs

Oil stays below the 100 and 200 hour MAs

4 Comments

October 24th, 2014 14:43:49 GMT

Draghi repeats ECB ready to use other unconventional measures if needed – spokesman

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A spokesman from the ECB who is speaking for Draghi and repeating his comments to EU leaders in Brussels:

  • Draghi did not speak of deflation
  • Draghi says EU budget rules must be credibly upheld as policy anchor
  • Countries with fiscal space should consider stimulating demand
  • Would be worried if prolonged low inflation led to second round effects in wage and price setting
  • Eurozone recovery has lost momentum
  • Inflation to remain low in the near term

There’s nothing here that we haven’t heard before.

1 Comment

October 24th, 2014 14:20:36 GMT

Forex Technical Trading: NZDUSD’s Trade Balance head fake.

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The NZDUSD marched lower yesterday and got a Trade Balance number that was much worse than expectations – or was it?

The Trade Balance came in with a deficit of -1350 for the month. This was a record deficit.  NZDUSD goes lower, right?  Not so fast.

The mix showed 3.61B of exports which was higher than the 3.5B expected and Imports rose to a record 4.96B (vs 4.20B expected). Imports and exports both rise take the sting out of the data.  Good number after all. Buy NZD.

Hold on though. The import number includes  new Boeing Dreamliner 787 which was not included in the July number.  Apparently, there was a change in heart and they decided to revise July and include the imports in September as well.

So July was imports were revised  from 4.41B to 4.63B (NZD 220 million).

The report said that 3Q aircraft totaled 863M so with 220M in July, that means 643M was in September.

If that was excluded from the September deficit of -1350m, the non-aircraft adjust  deficit would have been  -707M which is still higher than the -625M estimate but not a record.  The Imports would have been 4.96B – 0.643 or 4.317B which is higher than the 4.20B expected but not as great.

So overall, Imports rose, ex-air and with air. Exports were higher than expected.  Good news.

Then again….the Export trend is down. The 3Q fell 3% with dairy down 8.8%.

Oh the heck with it. Just listen to what the charts are saying….

——————————————

Technically, the NZDUSD rallied higher and is extending to new highs.

Looking at yesterday’s action, the price broke below some key trend lines yesterday and extended to the 2nd of 3 downside targets before starting to rally (see post Forex Technical Trading: NZDUSD tumbles on the back of lower CPI ). The move back above trend lines broken yesterday, has led to a further push higher. The down side market momentum could not be sustained and traders started to cover into the weekend.

NZDUSD approaches the 38.2% retracement.

NZDUSD approaches the 38.2% retracement.

The price is moving toward the 38.2% retracement level now at the 0.78851 level. I would expect that traders will be eyeing the action here. Does the patient sellers who missed the move lower show up here? Or is that 50% and 100 and 200 hour MA above at the 0.7913 level worth waiting for?  It is Friday, so much depends on the week ending flows.  Enter with that understanding..

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