European Outlook: Asian stock markets moved mostly higher overnight, as Japan’s equities continued to rally following Abe’s election win and on hopes of ongoing monetary stimulus. the CSI 300 and the ASX also shrugged off losses in the U.S. and moved higher, although the Hang Seng is marginally in the red and the ASX up a mere 0.06%. U.S. stock futures are up, FTSE 100 futures in the red and there is some caution settling in ahead of earnings reports, especially after the recent run higher in global markets. In Europe politics remain high on the agenda, as Catalonia’s government ponders the response to Madrid’s plans to take over direct control, while Brexit uncertainty lingers, although on the continent at least have long started to prepare for alternative suppliers and cut back business ties with the U.K.. Today’s calendar has French business confidence, as well as preliminary PMI readings for the Eurozone as well as the ECB’s bank lending survey.
FX Update: The dollar majors have posted relatively narrow ranges so far today. EUR-USD has settled around 1.1750 after logging a two-week low at 1.1724 late yesterday. Market participant will remain vigilant on developments in Spain, with Catalonian leaders threatening to unleash mass civil disobedience over the independence issue. A plenary meeting on Thursday’s in Catalan’s regional parliament has become a focal point, and there is some speculation that it may be used a cover for a vote on whether to unilaterally declare independence. We expect the euro to be a sell-on-rallies trade in the meantime. Elsewhere, USD-JPY recouped and settled to the mid 113s after logging a low late yesterday at 113.24. The low completed a correction from the three-month high seen yesterday at 114.10, which was seen as markets reacted to the resounding victory of Abe at weekend elections.
Main Macro Events Today
- German Services and Manufacturing PMI’s – Expectations – 55.6 and 60.2 respectively
- Euro Area Services and Manufacturing PMI’s – Expectations 55.6 and 57.8 respectively
- US Services and Manufacturing PMI’s – Expectations 55.6 and 53.5 respectively
Charts of the Day
Support and Resistance Levels
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