EUROSTOXX 50 (Dec 12) INTRADAY
Review The Eurostoxx traded lower throughout yesterday’s session, making two-week lows to finish the day with a loss of 2.17%. Our yesterday’s strategy aimed to take advantage of a potential double top formation at Monday’s highs with an entry short at 2,551. However, the index lacked upside momentum throughout yesterday’s trade and our entry was not reached.
Strategy The economic calendar for the session ahead is relatively busy. First up, we will be looking out for EU member states’ manufacturing and services PMIs, starting with French data at 7:58AM BST. Following last week’s mixed ZEW data, we are keen to look out for the update on the Ifo front, with October’s survey data due at 9AM. The US session will entail New Home Sales for September and House Price Index data at 3PM. The session will culminate with the release of FOMC minutes at 7:15PM. We feel that the downward trend in the Eurostoxx can continue in today’s trade and therefore we prefer to position ourselves with an entry short at the pivot, targeting yesterday’s lows and 11th October low.
Alternative Scenario Positive European data might prompt the Eurostoxx to test R1.
EUR/USD Spot INTRADAY
Review The EUR/USD traded lower throughout yesterday’s session, losing 0.74% at the close. As we expected, the downside breakout of the short-term pennant early in yesterday’s trade prompted the currency pair to test the 1.30 handle, with the overextension leaving the low of the day at 1.2952. Our yesterday’s strategy entry short at 1.3056 was not reached.
Strategy The EUR/USD recovered circa 40% of yesterday’s losses in the latter part of yesterday’s trade and in the overnight session, with the sentiment in the Asian session boosted by stronger than expected HSBC Flash Manufacturing PMI data for China, with the reading coming in at 49.1 vs. prev. 47.9. Although the Chinese data bodes well for sentiment, we do not see the stronger overnight print feeding through to a sustained risk-on reaction in today’s European trade. As always, we are keen to monitor European commentary throughout today’s session in addition to looking out for data releases. For the session ahead we prefer to position ourselves with an entry short at last Friday’s lows, targeting yesterday’s low and S1.
Alternative Scenario Headline risk and macroeconomic data might prompt the EUR/USD to test R1.
BUND (Dec 12) INTRADAY
Review The Bund was slower to respond to yesterday’s risk-off tone than equities and the dollar, and ended up finishing the session near the highs of the week-long range (139.45 to 140.59). Our yesterday’s strategy entry long at 139.67 was not reached. Although the downside momentum in equities and the dollar seemed strong throughout yesterday’s trade, we feel that the majority of the move was driven, in addition to disappointing earnings from the US, by the pricing out of expectations of progress on the European polit-ical front. The markets are not in panic mode yet. However, European-driven downside always has the scope for being persistent and protracted.
Strategy For today’s session we will be looking out for Mario Draghi’s comments at the briefing with German lawmakers which is scheduled at 12:45PM BST. We will also keep an eye on the results of the EUR 4bn Bund auction which is scheduled for 10:30 this morning. For the day ahead we prefer to position ourselves with an entry long at S1, targeting yesterday’s high and the 5th October low.
Alternative Scenario A disappointing Bund auction might prompt the Bund to break below S1.