Paul Gallacher
City Trading & Investment
Market Commentary
Markets are once again in quiet mode so far today.
Spanish Manufacturing PMI for June came in at 54.6 vs. prev. 52.9 (highest reading since June 2007) while German and Ital-ian Manufacturing PMIs declined marginally, 52.0 vs. prev. 52.4 and 52.6 vs. prev. 53.2, respectively. UK Manufacturing PMI registered the 16th consecutive month of expansion, with the June print coming in at 57.5 vs. prev. 57.0.
German unemployment rate for June remained unchanged on the month at 6.7% as did the May EU unemployment rate (11.6%).
With the rest of the session devoid of notable speakers and government bond auctions, the bulk of focus will centre in on US Manufacturing PMI, ISM Manufacturing as well as Con-struction Spending.
Intraday Strategy: E-mini S&P
The E-mini S&P has been grinding progressively higher over the last three sessions within the boundaries of last week’s trading range. The slow grind continues this morning, albeit at a very slow pace.
In our view, it would require a strong fundamental catalyst to war-rant a sustainable break above the current high of the year. Hence, for today’s session we aim to sell into a ascent to 1960.00, target-ing the pivot and S1. US Manufacturing PMI and ISM Manufactur-ing later in the session cumulatively present the largest caveat to our strategy for the day.
Intraday Strategy: DAX
The DAX continues to recover moderately off last week’s lows so far this week, yet not to the same extent as the US equity indexes. German unemployment in June ticked slightly higher in June, with the number of unemployed persons rising 9,000 vs. the fall of 26,000 in May. The rise in unemployment, however, was not suffi-cient to have affected the overall unemployment rate, which re-mained steady at 6.7% in June.
For the session ahead, we plan to sell into a pullback to the 61.8% Fibonacci retracement (on last week’s range), looking for a follow-through to the pivot and S1.
Intraday Strategy: EUR/USD
The EUR/USD rallied in the latter part of yesterday’s session, pre-dominantly as a function of broad weakness in the USD. The cur-rency pair broke out of the upper boundary of its post-ECB June meeting range, with upside progression currently capped by the 1.37 handle.
With the exception of EU PMI releases earlier in the day, there is no economic data scheduled from the EU for the rest of the ses-sion. US Manufacturing data has the scope of affecting short-term dynamics in the USD later in the session - yet, that is contingent on whether the data constitutes a surprise for the markets.
For the session ahead, we prefer to buy into a pullback to 1.3663, targeting a potential extension to the high of yesterday’s session.
Technical Analysis: Nasdaq and DJIA
The Nasdaq is outperforming the S&P 500 and the DJIA, and is trading at new highs for the year this morning. The DJIA mean-while, has ascended to the mid-portion of last week’s range.
Technical Analysis: Bund and US 10-year T-note Futures
The Bund remains within a tight consolidation range just beneath the all-time high while 10-year treasury futures are retreating from the highs of the week.
Technical Analysis: GBP/USD and USD/JPY
GBP is strong across the board this morning following the release of Manufacturing PMI data while recovery in the USD/JPY contin-ues.
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