Merkel victory adds to risk positive tone
City Index September 23, 2013 1:35 PM
<p>The FX markets have continued to trade with a slight bias to the risk on trade helped by stronger Chinese data and a resounding victory […]</p>
The FX markets have continued to trade with a slight bias to the risk on trade helped by stronger Chinese data and a resounding victory for Angela Merkel in Germany’s election on Sunday. The Chinese HSBC flash manufacturing data for September rose to a 6-month high of 51.2 versus the August reading of 50.1.
There were no shocks from the German election results as Angela Merkel’s Christian Democrat secured 42% of the votes which is the highest majority since Helmut Kohl reunification era of the 1990’s although as common in the European politics a coalition with the SPD looks likely as this outcome strengthens the German opposition to a common euro bond.
I expect the FOMC tapering theme to continue this week as the market focuses on speeches from various Fed members following Bullard’s comment on Friday that tapering could begin in October but for me this would need an extremely robust US jobs report on the 4th of October especially with the market being cautious as the US budget and debt ceiling showdown draws closer.
Today’s data highlights are PMI readings from the EU and US as the CFTC position data showed that USD longs were reduced by 50% last week pre the FOMC no tapering outcome.
Supports 1.3500-1.3450-1.3380 | Resistance 1.3580-1.3630-1.3715
Supports 98.85-98.45-97.80 | Resistance 99.45-99.80-100.00
Supports 1.5950-1.5925-1.5885 | Resistance 1.6080-1.6125-1.6165
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.