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Better than expected inflation data from Germany send the Euro higher, will today’s news lift the currency even more?
MORNING BRIEF
We had an overall quiet trading day yesterday with even more gains for the Euro and the Pound. The European currency crawled above the 1.3600 mark to reach 1.315 lifted by the better than expected inflation data from the German economy. The Consumer Price Index rose to 1.3% compared to the 1.2% increase eyed previously and this led to more gains for the Euro as the German economy acts as an indicator for the whole European region. The Pound also had a good day as it climbed higher above 1.3650. BoE’s Governor Carney delivered the Financial Stability Report yesterday and even though the report notes stability risks from the sovereign and household debt levels the UK currency shrug that news off and continued its uptrend. The US session had very low volatility as the US markets were closed for Thanksgiving and Americans are mostly gone for the weekend, taking advantage of the holiday. On our radar this morning we have important figures coming in from the European area as the German Retail Sales and the Euro-zone CPI are scheduled for release early this morning. An uptick here could be just what the Euro needs in order to clear above 1.3600 and reach higher. The US session holds no significant events in a day that is also expected to be rather quiet.
German Retail Sales and EZ Consumer Price Index could boost the Euro
Today the day only holds a couple of important economic reports coming from the European region. The German Retail Sales are expected early in the morning and an increase in sales is eyed here as analysts expect a 0.5% rise month-on-month for October. A few hours later the EZ’s Consumer Price Index is also scheduled for release and an uptick is expected here as well. Should these figures come out strong as expected then it will be a significant boost for the Euro that could send it higher towards the 1.3700 mark. The day holds no other events and with American traders mostly gone for the week the lack of liquidity might accelerate this rise in the Euro, should it be triggered.
Economic Calendar
|
Time |
Currency |
Event |
Importance |
Forecast |
Previous |
|
7.00 |
EUR |
German Retail Sales (YoY) |
Medium |
1.4% |
0.2% |
|
10.00 |
EUR |
Euro-zone Consumer Price Index (YoY) |
High |
0.8% |
0.7% |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
Little has changed for the Euro since yesterday since the currency pair is trading near the 1.3600 level we mentioned yesterday. Our long entry just above the 1.3615 level is also ready to be triggered as the pair is hovering around this area. The German Retail Sales coming in early today could be that spark to send the Euro higher and we repeat that our long entry above 1.3615 has the 1.3645 and 1.3700 marks as targets and a stop placed just below the 1.3555 support. However, we need to be prepared for the event that figures print lower than expected and Euro falls below 1.3550. Should this happen we will enter short just below the 1.3550 area, target the 1.3525 and 1.3470 price tags and place our stops just above the recent high of 1.3615.
GBP/USD
The Pound continued to move higher for yet another day and the pair triggered our long entry above the 1.6230 area and already reached our first target at the 1.6370 area where we have liquidated half of our trade. Now, we need to move our stops to the breakeven price if you haven’t done it already -we should always do that as soon as the first target is reached- and let the trade run. We have no significant news for the Pound today so the UK currency could go either way, so to sum up our stops are placed at the 1.6330 mark and our second target for the other half of our long trade stands at the 1.6440 price tag.
FTSE 100
The FTSE 100 pulled back a bit higher yesterday but the retracement was capped by the 200-period EMA which is good for us. We’re still in this short trade, we’re targeting lower towards the 6,600 and 6,530 points areas with a stop placed above the 6,710 mark and we need to remain patient as the week comes to an end.
Gold
Gold spent its entire day hovering around the $1,240 area without any movement higher or lower. Our scenarios in this case remain the same as we’re waiting for the yellow metal to pick up some volatility once again: we like a long entry just above the $1,258 mark with targets at the $1,272 and $1,296 areas and a stop placed below the $1,234 low. Alternatively, we will enter short below the $1,223 mark, target the $1,203 and $1,169 areas and place a stop above the $1,258 peak. Being Friday and with little to expect from the Dollar today we believe that these trades have a small chance of triggering today and Gold will pick up steam next week.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Value/Growth filter has indicated [Restricted Content] Plc as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc has been rated a 8 out 10 in our Value/Growth rating and gets an B Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be undervalued. Turnover is up year on year suggesting good growth and Earnings are also up supporting the growth potential. Finally, from a technical standpoint, the MACD indicator has been slowing down on the weekly chart above (hence the B grade in the Momentum meter) but we believe that the longer term trend is still upwards and a break of recent highs should send the stock higher. The recommended holding period for a stock of this type is 6-12 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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