Draghi delivered an unexpected speech a day ahead of the European Central Bank decision and used it to put the onus on governments to restore growth.
That could be a preview of what Draghi will say after the ECB meeting. Draghi has delivered repeated and risky policy measures over the past two years that push the legality of what the central bank can do.
Meanwhile, European governments have done the bear minimum to calm markets, institute reform and improve competitiveness. If he steps out tomorrow and starts to point the finger at governments rather than hinting at QE, don’t be surprised.
Swiss National Bank President Jordan spoke with FAZ:
- Minimum exchange rate is absolutely central
- Negative interest rates can still be applied
- Doubts that franc will continue to strengthen
No reaction in EUR/CHF, trading at 1.2069.
Draghi says fiscal, structural policies must also do their part, in a speech in Naples ahead of tomorrow’s ECB meeting.
- Eurozone faces cyclical and structural challenges
- Key to sustainable recovery is higher investment
I hope this is the start of Draghi throwing the ball to politicians. I just don’t see the value in QE when German 10s are at 0.90% and Spain is at 2.06%.
Governments in Europe (and elsewhere) need to start taking some responsibility for growth, rather than asking the central bank to do the heavy lifting.
Down from the blistering 17.45M pace in August but up from 15.42M in Aug 2014.
US domestic vehicle sales
There’s no clear fundamental catalyst for the weakness in the S&P 500 today but three technical levels have given way.
- The 61.8% retracement of the Aug-Sept rally
- The 100-dma
- The April-August trendline
S&P 500 technical analysis
Keep an eye on those levels on a closing basis. If they break a test of the Aug low and 200-day moving average may be in order.
Relational Investors will wind down its $6 billion fund, likely due to the ill health of co-founder Ralph Whitworth who was diagnosed with throat cancer.
The Wall Street Journal reports:
One internal memo at a public pension fund said Relational executives said they are focused on “executing an orderly liquidation and wind-down of operations” by the end of 2015.
The fund’s largest positions were in Hewlett-Packard and SPX Corp.
The USDJPY has been able to grind below the 109.50 level, the 100 hour MA and even made it to the 200 hour MA at the 109.09 area (@Pippin). That low also corresponded with the low from Sept 29th. The price has not traded below the 200 hour MA since August 18th. KEY LEVEL (see PRIOR POST)
Technical Analysis: USDJPY trades below the 100 hour MA, but above the 200 hour MA
The price now trades “between the Goal Posts” defined by the 100 and 200 hour MAs. We know that all of last week, the price reacted to the 100 hour MA. When the price moved above, it tended to continue higher. When it went below, it tended to move lower (at least for a little while – follow blue line in the chart above). The problem was the price could not keep the momentum.
The correction off the 200 hour MA today is so far holding below the 100 hour MA. HMMMM. Key level to stay below for the shorts.
Will that break below keep a lid on it today and if so, will it have enough “oomph” to push it through the 200 hour MA for the 1st time since mid August? If so 108.83 – 38.2% of the move up from the September 16th low – should not be far behind. Below that 108.44 at the 50% and low floor area (see hourly chart) is a stronger support level/target. Key battle going on between the goal posts.
Comments from the Bank of England’s Forbes:
- Pound rise impact on inflation to peak at end-2014
- Medium-term inflation expectations ‘contained’
- Pound rise is drag on UK trade, growth, jobs, CPI
The pound ticked lower on the bit of jawboning.
The S&P 500 is down 1% to the lows of the day at 1952.
I’m keeping an eye on the 61.8% retracement of the August/Sept rally at 1949.
I don’t believe in any move that happens at quarter-end/beginning until it holds for a few days.
Goldman Sachs cut its Q3 US GDP tracking estimate to 3.1% from 3.3% after today’s construction spending report.
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