Macro Morning: Spanish rally fades

For the first time in ages we had a quiet end to the week without the usual data, corporate announcements or other fractious goings on. Wall Street had been going well after an FT article about Spain but a late day sell off suggested it was just a little bit of day traders having some fun.

When you think about the overall price action last week – or the lack of it – the contention could remain that this was a buy the rumour sell the fact QE3 announcement. Certainly the markets haven’t fallen away but neither have they pushed significantly higher. The bellwether of QE for mine, the US dollar actually did pretty well last week. Was it just consolidative before the next leg down or is it a genuine bottom before the USD starts rallying again? It is really difficult to tell but as we enter the new week it is fair to say that the signs are there that the Fed’s attempt to goose the markets higher might not be as successful as some thought.

At the end of the day it is going to be the data that is the key for the US and the rest of the world. Indeed that was the thorn in the side of the markets last week as the data once again printed weak around the globe – with the exception of course of the US housing data which is dragging itself out of the mire.

It’s a long game so we will see.

At the close of play Friday the Dow Jones was down 17.46 points, or 0.13 percent, at 13,579.47. The S & P 500 fell 0.11 points, or 0.01 percent, at 1,460.15 while the NASDAQ was up 4.00 points, or 0.13 percent, at 3,179.96. Yawn!

In Europe it was better day as they didn’t see the late sell off on Wall Street. The FTSE did its own thing and closed more in line with the US markets down 0.03%, the DAX however was up 0.84%, the CAC up 0.5% and Madrid roared higher by 2.54%. The key was that the FT reported that a new rescue package was in the offing for Spain along with the ECB’s bond buying. But German Finance Minister Schaeble said Spain is on the right path and doesn’t need a bailout and this morning Bloomberg has an article saying Europe’s usual discord continues in this article.

Some things never change.

On FX markets the euro didn’t do much Friday but it’s off about 1.5% from the recent high as weak European data weighed and the US dollars recovery continued over the week. Euro is 1.2974 this morning. As you’ll see in the chart below the Euro was under selling pressure all week and remains thus. The Australian dollar lost its mojo after making a run higher on Thursday and is back in the mid to low 1.04 region this morning at 1.0441.

On commodity markets the CRB was up 2.05 points to 308.98 with the energy complex up strongly lead by gas which rose 3.22% while Nymex crude was up 0.51% to $92. 89 Bbl. Wheat rose 1.98% with Corn up 0.3% and Soybean up 0.18%. Breakfast was mixed with coffee up 2.71% but orange juice fell 0.96%.

Lets have a look at some of the markets we follow using our AVATrade trading platform charts.

EUR/USD: Messy price action the last couple of days and although the positive trend is continuing according to JimmyR the MACD suggests that EUR is going to test lower once again.  Support 1.2900/13, 1.2833. Resistance 1.3080/85 and then 1.3167.

AUD/USD: What a messy couple of days. AUD feels like it is going lower. Overhead resistance levels on the 4 hour charts of 1.0462, 1.0490/95 (big) then 1.0513/23 and 1.0540. Support is 1.0425, 1.0414, 1.0359/64. If this lower level gives way its 1.0320. This would be a target for me to test support.

DATA: Fairly quite in terms of primary data for Australia this week so we’ll be watching the US housing sector and the data to be released again this week.

Couple of issues with the Calender this morning it will be back tomorrow.

And here is how the markets closed Saturday morning courtesy of AVATrade

Twitter: Greg McKenna . He is the Chief Investment Officer of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

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