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EU Market Outlook - Will the Fed Join The ECB, BoJ?

Last updated 7/27/2012 1:17 AM EST (GMT -5) 0 Comments - Add your comment

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Top Headlines

o    Japanese CPI & Retail Sales miss > BoJ Erasing chatter

o    US GDP the one to watch > markets bearish

o    Draghi’s bold statement reverberates in traders ears all day

o    Market Moves:

·          EUR & AUD maintain high points

·          Gold remains above $1610

·          Oil trades finds a good base at $89

·          Copper joins the bandwagon up around $340.50 

Overnight markets have continued buying into equity and commodity markets based on speculation that European, US and Japanese Central Banks will intervene and inject some life into their ailing markets.

ECB President Draghi set the tone overnight with clear and precise comments that they are ready to step up and deliver the goods. The BoJ has been added to the list after unimpressive CPI and Retail Sales data missed its mark today. Japan, like China, is concentrating on domestic demand to counter the global slowing but today’s figures show they have a long way to go.

Tonight will see the US release its GDP figures which will show its growth crawling back into its shell. The main question being asked is ‘what figures need to print for QE3 to occur?’ Recent labor market data have left analysts in limbo and today’s growth figure could be the one that gives the QE3 clique good reason to shout. Mediocre GDP leads have opened the door to a number that is likely to be lower than the forecasted number (of 1.4%). This sentiment has added to the buying on dips during the Asian session where markets are content to keep testing for higher levels.

Outlook

European markets are expected to open up slightly today with moves being based on Central Bank probabilities than natural forces. This will see cautious trading with pressure to the upside prior to the US GDP release with some squaring up before the weekend will end the session.

Economic Events to watch:

0645 FR            Jul Consumer confidence survey

1200 GE            Jul Provisional CPI

1230 US           2Q Advance estimate GDP

1400 US           2Q U.S. Housing Vacancies

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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.