Amplify Trading Market Brief.
Asia: Asia stocks slip, Yen gains as expected. Yen posting gains not only on weak stocks but the old Euro Greek fiscal dramas returning to the digital front pages. Increasing ICBM tests out of North Korea is another theme that hasn’t dissipated however markets seem not to respond as aggressively as before.
Euro: Bank holiday Monday is over and we have a few developments that should bring some volatility back into the markets on the Euro front. I mentioned last week that the Greek default theme could be back in focus and its its hitting top spots on major news websites. To add additional contention news, Italy’s election could come sooner than previously expected due to legislation changes (definitely worth keeping check on Italy developments). Draghi’s speech also pressured the euro as he believes that “an extraordinary amount of monetary support” is still needed, meaning that the current level of QE will probably remain for the foreseeable future. Which is great for Euro Equities Indices and inflationary over the short term leading Euro currency weakness.
UK: On the UK front, polls tightening and the conservative gap narrowing putting pressure on Sterling with Gross shorts outweighing longs on current commitment of trade data. Another instruments showing movement ahead of the election is UK Gilts showing a 1% drop in Yields as people start to hedge the election risk increasing portfolio weightings into bonds.
North America: Dollar index gapped higher on Negative Euro political risks and stimulus QE keeping a cap on euro gains. Mixed view on US equities as we are pressing all time highs and definitely over valuation in stocks. Rate hikes and recent dollar and gold strength makes me nervous for a long bias on stock indices at current levels and more a neutral range bound market with hope for negative shock to the market to press the S&P500 for a correction which we could see extended moves to the downside as we saw last week on Trump Impeachment chatter.
Data of interest:
- EU business data
- Ger inflation rate
- US Core PCE, Shiller home Prices, Personnel Spending and Consumer confidence
- US Fed Brainard Speech (voter dove)
Intra-day positioning and Bias
- Short: Euro – QE and monitory stimulus still supported by Draghi, Greek debt default back in the headlines, Italian election risk.
- Short: Sterling: Election risk and narrowing of polls between conservative and Corbin.
- Long: Yen – Euro risks propping Yen, inflation data inline last week, weak stock indecis performance, ICBM tests still being launched in South Korea.
- Long: Euro stocks indices – Good Euro data additional support for QE and fiscal stimulas chatter from ECBs draghi.
- Neutral: US Indices – rising T-notes and Gold stronger dollar on euro weakness and mixed us data as of late.
- Nuetral: Gold – range bound on mixed stock view and dollar view and recent strength in the metals.
Preferred trades today – EUR, GBP, YEN, DAX/EURSTOXX