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EU Market Outlook - No Sugar Fix Makes For An Angry Market

Last updated 8/3/2012 1:02 AM EST (GMT -5) 1 Comments

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Andrew Taylor

Market Strategist, GFT

Follow @ATaylor_GFT

Top Headlines

o    ECB joins The Fed in to hold on actions > Pressure on leaders

o    China HSBC Services PMI improves (53.1) whilst its National Non-Man PMI reduces slightly (55.6)

o    AU Performance of Services Index contracts further  to 46.5 from 48.8

o    Market Moves:

•    EUR and AUD trade in tight ranges

•    Asian Equities remain pressured post ECB meeting

•    Precious Metals, Oil and Copper also look set to test lower

The Asian session seemed happy to take a break from second guessing itself as all markets continued in tight ranges post ECB President Mario Draghi’s below expectation delivery.

Today has seen many traders reflecting on how the market convinced itself (again) that talk from officials would translate into action. The score card that shows chatter equating to anything of value is very low but in a market that is starved of real solutions, these Central Bank verbal interventions prove that they still have some sway.

The fact that two of the largest Central Banks have refrained from applying stimulatory measures may be a sign that they have done all they can and it is now the leaders turn to carry the weight and commit to making some tough decisions.

NFP

Today will throw the Federal Reserve back into the spotlight with the release of the Non Farm Payrolls for July. Their implication is once again based on policy easing measures (QE3). If the number prints above 70k then the markets perception will be that the Fed will be NO closer to easing which will be USD positive. If the number is below the 70k mark then the QE3 bandwagon will fire up and push their case, although they may have lost quite a few supporters over the last few days. The later will see equities, commodities and AUD benefit most.

Outlook

The market seems as though there is still some unwinding to be done post ECB meeting (the minimal bounce of lows is an indicator of this), the preference will be to again sell rallies in equity, commodity and risk currency markets with a view that the NFP number just won’t be disastrous enough to bring forward QE3.

Economic Events to watch:

Note: Times are in GMT

0750 FR     Jul France Services PMI

0755 GE     Jul Germany Services PMI

0800 EU     Jul Eurozone Services PMI

0830 UK     Jul CIPS Services PMI

0830 UK     2Q Insolvency statistics for the second quarter of 2012

0900 EU     Jun Retail Sales

1230 US     Jul U.S. Employment Report

1400 US     Jul ISM Non-Manufacturing PMI

1500 US     Jul Global Services PMI

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

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Comments (1)

Darkdoji

August 03, 2012 at 04:17 AM ET

Brilliant

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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.