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EU Market Outlook - UK Retail Sales & Spanish Progression

Last updated 7/19/2012 1:25 AM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

** I will be off on Trade Show and Master Class duties so my next report will next Tuesday**

Top Headlines

o    Beating low set Corporate Earnings expectations provide positive feel

o    Spain back in spotlight as hurdles for bailout approach

o    UK retail sales on today’s data card

o    Market Moves:

·          AUD/USD hasn’t faltered for 300pts > testing 1.04

·          Upbeat equity sentiment supports risk assets

·          Oil kicks on and still looks strong

Overnight equity markets received a prop up from better than expected earnings reports and lingering hopes that QE3 was still just around the corner.

US micro data provided mixed results with home constructions beating expectations whereas actual building permits missing. Markets were encouraged by the construction data as it provides near term economic activity vs the future dated permits action. Chairman Bernanke delivered his second testimony which provided no new evidence that steps for easing was any closer.

Australia has seen solid and steady buying in its currency as its AAA rating, high interest rate differentials and economic credentials attract genuine interest from those diversifying reserves. The moves are reminiscent of sovereign plays with no real pull back on its 300 point journey in four days.

Outlook

The upbeat mood will be put through its paces in the European session as it negotiates UK retail sales data as well as the resurfacing of Spain’s bailout challenges. Traders are eyeing the Bundestag vote to approve the 100 Billion Euro package for Spain. Although it is expected to go through, one can never be certain until it happens. Keep an eye on the 10 year yields for guidance.

Economic Events to watch:

0800 EU           May Euro area balance of payments

0830 UK           Jun UK monthly retail sales figures

0830 UK           Jun UK monthly automotive production figures

0900 EU           1Q Balance of payments - 2nd release

For more intraday analysis and trade ideas, follow me on twitter @ATaylor_GFT

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About The Author

Andrew Taylor's financial markets career started in 1991 in the interbank FX market,where he worked for one of the largest banks in Australia. Andrew then went on to trade on behalf of some of the biggest global banks, working across five of the world's major financial hubs: Sydney, New York, Singapore, Auckland, and Tokyo.

His more than 20 years of experience spans market borders and asset classes, covering global equities, commodities, options and futures. Andrew's wealth of trading experience and ability to communicate with traders of all levels has put him in demand as a first point of contact for clients and the media alike when seeking information and guidance.