EURGBP European Open Remains Range Ahead of UK Data Dump

Asian indices:

  • The Australian ASX 200 index fell -53.5 points (-0.76%) and is currently trading at 7,017.50
  • The Japanese Nikkei 225 index rose 685.11 points (2.46%) and is currently trading at 28,504.44
  • Hong Kong’s Hang Seng Index rose 64.5 points (0.32%) and is currently trading at 20,146.93
  • China’s A50 index fell -24.93 points (-0.18%) and is currently trading at 13,637.90

UK and Europe:

  • UK FTSE 100 futures are currently down -1.5 points (-0.02%), the spot market is currently estimated at 7,464.41
  • Euro STOXX 50 futures are currently down -4 points (-0.11%), the spot market is currently estimated to open at 3,753.05
  • German DAX futures are currently down -16 points (-0.12%), the spot market is currently estimated at 13,678.51

US Futures Contracts:

  • DJI futures are currently up 44 points (0.13%)
  • S&P 500 futures are currently up 34.25 points (0.26%)
  • Nasdaq 100 futures are currently up 7.25 points (0.17%)

Despite lower inflation in the US, Fed members continue to speak of a hawkish game and that has weighed on sentiment among equity traders. Wall Street stumbled overnight and the ASX 200 followed its lead today, finding resistance at its 200-day exponential moving average. But we have also reached that point in the year where the price action is choppy and its direction can be fickle. Conversely, traders in Japan wasted no time in celebrating weak US inflation by sending the Nikkei to its highest levels since January. The exchange was closed yesterday due to a public holiday.

Now that the US inflation data is behind us, it’s almost like the calm after the storm. And that has led to tight ranges for currencies and commodities after a period of volatility a few days ago. With $1800 being such a nice round number, it’s tempting for traders to book a profit after its rally from the July low. Gold is on course for its fourth consecutive bullish week, which has warned us of an average return below $1800.

EUR/GBP daily chart:

20220812eurgbpFX

EUR/GBP is trading in a range of around 50 pips and its next directional move could be marked by the side of the range it breaks. A series of lower lows and higher highs have formed on the daily chart, although its recent countertrend move has encountered resistance at the 200-day eMA and monthly pivot point. A bearish engulfing candle also formed below resistance on Wednesday, so a break below 0.8418 would suggest a swing top has formed. However, if we see a break above the 200-day eMA, we will move into a bullish bias.

FTSE 350 – Market Internals:

20220812moversFTSEfx

FTSE 350: 4164.99 (-0.55%) August 11, 2022

  • 140 (40.00%) shares rose and 201 (57.43%) fell
  • 8 stocks hit new 52-week highs, 3 hit new lows
  • 35.71% of stocks closed above their 200-day average
  • 89.43% of stocks closed above their 50-day average
  • 16.86% of stocks closed above their 20-day average

Outperformers:

  • +16.18% – Network International Holdings PLC (NETW.L)
  • +8.12% – Aston Martin Lagonda Global Holdings PLC (AML.L)
  • +5.78% – Harbor Energy PLC (HBR.L)

Underperformers:

  • -10.06% – GSK plc (GSK.L)
  • -8.63% – Savills PLC (SVS.L)
  • -6.35% – Jupiter Fund Management PLC (JUP.L)

Upcoming economic events (Times in BST)

A data dump for the UK comes in at 07:00 – where any signs of weakness on the data only confirms the BOE’s warnings of a 5-quarter recession. GDP, industrial, manufacturing and construction production and business investment will all be in focus. But with gloomy expectations, it also allows for a positive surprise, if the data isn’t as dire as expected.

US import prices are also worth looking at, as this is one of the (many) key drivers of consumer inflation. After hitting an 11-year high of 13.01% in March, import prices have fallen over the past three months and are now at 10.6%.

The University of Michigan also released its preliminary consumer survey at 1:30 p.m. BST. It saw a slight increase last month, but from a record high.

20220812calendarBST

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