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Markets follow through on ECB inspired rally
Morning Report: 08.15 London
• We’re seeing some follow through buying today following ECB president Draghi’s speech yesterday. Although not specifically stated, Draghi dropped enough coded hints about direction interventions, to give markets a boost. Sceptics abound though, with many pointing out that this euro crisis has seen a familiar pattern of sell offs, bold words, lack of action then more selling.
• The complex nature of European politics is one of the major stumbling blocks, with German law lords still yet to rule on the legality of certain market interventions. Michael Cartine of Thomson Reuters IFR makes the point that if a big player such as the ECB drops heavy hints about stepping in to lift troubled marke ts, the natural reaction of markets is to buy in early anticipation. This in itself does not cover over the yawning structural gaps within the Eurozone such as Greece’s economic death spiral. We can only hope that Draghi has done more than buy time.
• Markets have continued to buy the enthusiasm though with the main risk on/ risk off pair, the AUD/JPY leading the charge, up 0.48%. The euro is also rallying, with the EUR/JPY up 0.25%, some way behind the Aussie.
• Coming up today, we have US advance GDP at 13.30 with a drop to 1.5% expected.
• Revised UoM Consumer Sentiment is released at 14.55.
Bet Idea:
• Markets rallied sharply last night, with pairs such as the GBP/JPY having their best day of the month. The dollar index has been flashing over bought for some time, so the rally could be seen to represent pent up buying demand over the last few weeks or so, how ever, despite Draghi’s comments yesterday, the fundamental structural problems of the Eurozone still remain. The Greek economy is still in a death spiral and the country will quite likely need a fresh round of funds in August.
• So while there may be some more upside in the short term, in the longer term, the big questions remain unanswered. As there is still potential for short term upside, this bet idea might be best played in two parts; the first today and the other half in two weeks if we are higher than current levels.
Markets follow through on ECB inspired rally
Morning Report: 08.15 London
• We’re seeing some follow through buying today following ECB president Draghi’s speech yesterday. Although not specifically stated, Draghi dropped enough coded hints about direction interventions, to give markets a boost. Sceptics abound though, with many pointing out that this euro crisis has seen a familiar pattern of sell offs, bold words, lack of action then more selling.
• The complex nature of European politics is one of the major stumbling blocks, with German law lords still yet to rule on the legality of certain market interventions. Michael Cartine of Thomson Reuters IFR makes the point that if a big player such as the ECB drops heavy hints about stepping in to lift troubled marke
ts, the natural reaction of markets is to buy in early anticipation. This in itself does not cover over the yawning structural gaps within the Eurozone such as Greece’s economic death spiral. We can only hope that Draghi has done more than buy time.
• Markets have continued to buy the enthusiasm though with the main risk on/ risk off pair, the AUD/JPY leading the charge, up 0.48%. The euro is also rallying, with the EUR/JPY up 0.25%, some way behind the Aussie.
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• The dollar pairs are enjoying the dollar’s rapid slump, with the AUD/USD and NZD/USD the biggest movers.
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• Gold is also enjoying the recent dollar weakness, rising another 0.19% this morning.
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Coming up today:
• Coming up today, we have US advance GDP at 13.30 with a drop to 1.5% expected.
• Revised UoM Consumer Sentiment is released at 14.55.
Bet Idea:
• Markets rallied sharply last night, with pairs such as the GBP/JPY having their best day of the month. The dollar index has been flashing over bought for some time, so the rally could be seen to represent pent up buying demand over the last few weeks or so, how
ever, despite Draghi’s comments yesterday, the fundamental structural problems of the Eurozone still remain. The Greek economy is still in a death spiral and the country will quite likely need a fresh round of funds in August.
Click here to view full-sized image
•
So while there may be some more upside in the short term, in the longer term, the big questions remain unanswered. As there is still potential for short term upside, this bet idea might be best played in two parts; the first today and the other half in two weeks if we are higher than current levels.
Today’s bet idea is a LOWER trade on the GBP/JPY to be
below 122.00 in 34 days for a potential return of 141%.
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This is presented as an idea to stimulate fixed odds financial betting ideas and is not financial advice.
Summary:
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