With US markets closed for the Thanksgiving holiday Europe had a great night after the positive improvement in the Chinese HSBC PMI was built upon with reasonable PMI outcomes from Europe’s big economies. The Yen also weakened substantially as well but its rally back is suggestive of an interim bottom for the moment.
Looking at the PMI results and starting in China the HSBC Flash PMI showed that manufacturing output was in expansionary territory for the first time in 13 months printing at 50.4 from 49.5 previously. Clearly this is not roaring higher but at a 13 month high it is another indicator that the Chinese authorities have indeed fashioned a soft landing.
In Europe the PMI’s were mixed. The French PMI increased from 43.7 to 44.7, Germany from 46.0 to 46.8 and the overall Eurozone from 45.4 to 46.2. So its still recession and contraction for Europe at the moment but at least there was some improvement. But the serives PMIs deteriorated and employment sub indexes were weak still so there is certainly more hard going on the jobs front for the many millions of Europeans who are out of work. Europe is clearly still struggling under austerity.
Elsewhere in Europe Spain kicked off its borrowing program for 2013 with a bond auction raising €3.9 billion from 2012 to 2021. Spain needs to raise something in the order of €207 billion next year possibly more if the budget deficit overshoots current expectations.
On balance, at the close the European bourses were sharply higher. The FTSE was up 0.68%, the DAX rose 0.84% and the CAC was 0.60% higher – indeed all of the European markets I watch were higher overnight. Also worth noting is that hopes continue to grow that a Greek solution is possible at next Monday’s meeting although news is out that Cyprus has its hand out for a bailout.
For me the big news on commodities overnight was that Barclays are leaving the floor of the LME which has to have an impact on liquidity longer term otherwise not a lot of action except for copper which was pushed higher by the Chinese PMI data up 0.6%.
On global FX markets the big thing that caught my eye was the price action in the USDJPY overnight. What struck me this morning was the candlesticks on the USDJPY and many of the Yen crosses which, when combined with my other indicators suggest that even within the overall uptrend an interim top might, I stress might, be in for the moment.
Of interest is the very last candle stick which shows the yen made a new low (USDJPY high) in the last 24 hours but has or is closing below the close of yesterday. At the same time my MACD indicator is at a very high level and the ATR has risen materially over the past month or so. What this says to me is that longs need to be brought closer to market or if super aggressive a short could be instituted with a stop above last nights high – But remember I am very bullish longer term this cross so it is a counter trend trade.
Lets have a look at some Meta 4 charts from my AVATrade platform.
EUR/USD: EURUSD pushed a little higher but could not hold onto gains. Euro is currently at 1.2876 up 0.38% but off the days high of 1.29oo. Technically it looks like it can run toward resistance at 1.2985ish and we’ll see how it looks there.:
AUD/USD: For the AUD 1.04 was the high again and the AUD sits at 1.0385 presently – It remains becalmed and it’s probably a 1.0280-1.0420 range. Prefer the crosses at present:
Data: German GDP tonight will be important and interesting as will the IFO report and Italian retail sales. Otherwise quiet with no data in Australia and the US having a half day’s trade.
Here is how the markets looked at 7.45 this morning.
Twitter: Greg McKenna.
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