Market Review
The EURUSD was contained in a very impressive 30 pip range on a day that was low on US data. In the morning the Bank of England was surprisingly dovish in their statement compared to what we usually expect from Mark Carney and his associates; after the minutes we saw sterling weakness, and it has temporarily changed the theme in the currency. The S&P continued its bullish move and made yet another all time high, despite initially being weighed down by relatively poor earnings from Boeing: The Dow Jones started a sell off led by its sixth largest component. The US10Y were moving up as a result of the relative risk off we were seeing, but was halted at our level for stop, and for that reason just managed to stay in the short, before getting out at a small loss at 5PM London time. Crude oil was stopped yesterday as the inventories numbers were a lot more bullish than we had anticipated on the headline, though the components were more bearish and, overall, the weekly Department of Energy numbers were neutral.Today's Fundamental View
This morning has seen mixed data coming out from EU member states, with German manufacturing beating their headline expectations, and the Europe figure beating estimates. The Italian retail sales were lower than expected, as was the French manufacturing number, though the French Services PMI numbers were higher. The data led to euro strength as reports were strong overall, and considering the QE threat floating over the continent the chances this going ahead have decreased after several strong data sets: Ultimately, this means the euro may still head higher. Equities initially sold off this morning, but following the strong European numbers the bid tone has taken over, allowing the S&P to make a new all time high during morning trade. Overnight, we saw the release of HSBC Flash Manufacturing PMI out of China overnight, beating estimates with a release at 52.0. The number is the highest since March 2011, and is an indication that the world's second largest economy is improving and there are increasing chances of China hitting its growth target for the year. This has helped sustain the move higher in the global equity market, although is worth noting that China’s Premier Li Keqiang has stated a growth slightly lower 7.5% will be acceptable. The afternoon is set to be busy with Initial Jobless Claims at 1330BST, followed by manufacturing and home sales data. Due to seasonality we remain bullish on the US market, and believe the set of data released today will beat their estimates. Looking towards next week's NFP number, the last two months it has shown a steady increase. We believe there is a very small chance of today's Initial Jobless Claims missing on the estimate; a number between 300k and 320k should not have a great effect on the market. Today’s strategy will be bullish the dollar and equities. Similarly we will be looking at a sell off in safe haven treasuries as well as a continued push to the upside in crude.Alternative View
Comments from Russian officials may halt the move up, though this should still lead to USD strength in a risk off move. Please remain aware of all developments coming out of Ukraine, Russian and the Middle East and keep a conservative outlook with regards to risk. Over exposure in markets with such uncertainty is dangerous and should be avoided.
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