EU Bourses End Nightmare With Fireworks as PBoC Calms Nerves
Stocks in Europe finished the second session of the week with an impressive rally and posted their sharpest rebound since 2011, following Monday's steepest sell-off since 2008. The market storm lost much of its destructive power after China decided to cut its interest rates in response to the Shanghai Composite index's slump.
Germany's DAX 30 index ended Tuesday 5.32% at 10,161.27, while the UK FTSE 100 index closed 3.24% up at 6,089.76.
Among the other indices, the French CAC 40 index finished 4.41% higher at 4,576.95, while the pan-European Euro Stoxx 50 index increased 4.99% to 3,226.74.
"Markets are beginning to realize this is a Chinese problem, not a European one," Peter Dixon, a global economist at Commerzbank, commented. "These are specific issues which refer to fundamentals in other markets and do not reflect the situation in Europe."
Most of major Asian stocks recovered on Tuesday, but the Shanghai Composite index was still negative, losing almost 8% after closing Monday with an 8.5% slump.
The move came after the People's Bank of China slashed its benchmark lending and deposit rates by 0.25 percentage point, effective on Wednesday, while it also reduced its reserve requirement ratio by 0.5 percentage point, effective on September 6. This decision will allow banks to lend more, which may calm down the ultramassive storm in the nation's equities.
As a result, equities rebounded across the globe, with Wall Street recording sharp gains - although smaller than seen in Europe - as even oil prices also found firmer footing and the day brought some firm domestic macro, supporting the gains.
EUR/USD rebounded from highest price since January and now testing strong support line 1.14280. maybe I will go short under the support line.
If it breaks below that support it might keep falling until it reaches target 1.1180.
On Tuesday EUR/USD broke the four-day rally, given that the euro has depreciated by nearly 100 pips against the dollar to a closing price of 1.1515. The session was held within the extreme values at 1.1620 and 1.1397. Relative strength index retreated from extreme levels, but continues to support the bulls and graphics develops over moving averages, alluding a continuing growth.
July 2015 France total jobseekers 3551.6k vs 3552.3k exp
July 2015 France total jobseekers data report 26 August 2015
First decline in 6 months. At best job losses are stabilising in France. The chart shows the work still needed to be done. The Labour ministry had the unemployment rate at 10.2% in June, unchanged on May and April
Yesterday the EURUSD pair fell after a rally of four straight days and closed in the red near the low of the day on a narrow range, creating an inside day. The currency did not managed to stay above the daily resistance at 1.1556 suggesting that a stronger pullback may be coming in the next few days.
Downside Risks To Inflation Rise; Ready To Raise QE If Needed ECB's Praet
European Central Bank Executive Board member Peter Praet said downside risks to inflation have increased and the bank is willing to expand its bond purchase program if needed.
"Developments in the world economy and commodity markets have increased the downside risk to achieving the sustainable inflation path towards 2 percent," he told reporters on Wednesday.
"There should be no ambiguity on the willingness and ability of the governing council to act if needed," he added.
Praet said the quantitative easing program provides sufficient flexibility to do so in terms of size, composition and length.
Under the quantitative easing program, the ECB is buying EUR 60 billion bonds a month, which is set to run until September 2016.
The widening output gap in emerging markets poses challenge to the euro area, he noted.
The ECB will release its inflation and growth outlook after the Governing Council meeting on September 3. The new staff forecast will serve as the basis of discussion, Praet said.
EUR/USD continued falling and reached the support at 1.1320. I think that should it break below that support it will probably continue moving to the downside at least until it reaches the the support at 1.1170 which coincides with the (89)MA on the four hour filter chart.
German Import Price Index -0.7% vs. -0.4% forecast
Germany’s import price index fell unexpectedly in the last month, official data showed on Thursday.
In a report, Destatis said that German Import Price Index fell to a seasonally adjusted -0.7%, from -0.5% in the preceding month.
Analysts had expected German Import Price Index to rise to -0.4% in the last month.
Just my pennies worth. I try to stay away from news trading, but my experience is that it is more profitable to trade the draw back of the spike. 99% of the time more predictable and less hectic but a draw back there will be - 95% of the time.
Watch and see if you can find reason to agree with me.