Paul Gallacher
City Trading & Investment
Market Commentary
Equities rallied persistently throughout yesterday’s session, discounting the slightly weaker than expected Chinese growth numbers for Q2. ECB source comments seem to have fuelled a rally that progressed despite the subsequent report from the FT that put the validity of the initial source comments in ques-tion.
The equity rally progressed into the overnight session for US equity index futures, yet upside momentum subsided going into the start of the European session and has largely been subdued since the European morning.
The main theme in the FX space so far today is USD strength which has been escalating following the release of US CPI numbers for September. The M/M print came in at 0.1% vs. prev. –0.2.
Intraday Strategy: E-mini S&P
The E-mini S&P extended circa 60 points from the lows of yester-day’s session to the overnight highs following ECB source com-ments. It seemed like upside momentum was waning ahead of the cash open, yet, despite a downtick, selling pressure did not prove to be committed.
Taking into account that current price action is provide to be a little whippy just post cash, open, we feel there is scope to be patient in these market conditions. As a result, we are going with a conserva-tive entry at the pivot.
Intraday Strategy: EUR/USD
The EUR/USD broke out of the range formed in the latter half of last week in yesterday’s session, primarily as a function of EUR weakness following ECB source comments. Mild USD strength, persisting throughout the session only exacerbated the scale of the sell-off. Downside dynamics have continued into today’s session, albeit with choppy momentum.
We are also keeping our approach to the currency pair on the con-servative side, going with a pullback entry at the lower boundary of the aforementioned range.
Technical Analysis: Nasdaq and DJIA
Nasdaq and DJIA largely flat so far today.
Technical Analysis: Bund and US 10-year T-note Futures
US 10-year futures and German bunds started ticking lower follow-ing US inflation numbers.
Technical Analysis: GBP/USD and USD/JPY
Sterling is weaker today following the maintenance of the 7-2 MPC split and a couple of dovish comments from the BoE. USD/JPY is moving largely as a function of USD strength.
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