This weekend is chock-full of news stories, but I am going to throw a few of them at you that caught my attention. Also, down below I am going to do a little “EUR” strategizing…so read on:
As far as the Euro goes, there are a ton of news stories. First one is from Der Spiegel online, which talks about German people’s opposition to the ESM.
This article is also from the FT, and it talks about Germany’s backlash from the ECB. Although most analysts believe that the ESM will be passed in constitutional court this week, you can see the possible political backlash.
George Soros had a lot to say about Europe over the weekend, and the FT has a great recap. He has been notoriously critical of the mismanagement of the EUR crisis, so it makes sense his comments would come following some positive developments from the ECB in the last few weeks.
China had a data dump over the weekend, and this article from Bloomberg sums it up. Also note Hu Jintao’s comments over the weekend saying China’s economic expansion faces “notable downward pressure.”
A site that always has a good read on China’s economy is “Also Sprach Analyst” and here is an opinion piece on China’s recent stimulus from last week.
Lastly, as you know the FOMC rate decision is on Thursday. This is going to be a key event, and frankly one that will have to be watched very closely. I know I am in the minority thinking that QE is not going to be announced this week, but I do believe the actions of the ECB has taken the immediate pressure off the FOMC. But as Reuter’s points out, the jobs data this week was a big disappointment and may have opened the door for more QE. The risk for the USD bears is that either 1) there is no QE announced or 2) like QE2 and when other central banks in recent times have announced additional stimulative measures their respective currencies have aggressively bounced.
This leads me to this week’s Euro analysis. As I told the Wizetrade traders on Friday, the “obvious” trade may not be the one you want to make this week. To me, the obvious trade to make would be the EUR/USD long with the year long trend line taken out and the 200 day SMA in the USD index being broken. However with the 200 day SMA in the EUR/USD just overhead, and the event risk with the FOMC this week, this may not be the best trade.
Here are a few ideas (charts below) for some other EUR currencies. They could be good for a couple reasons. 1) with a “EUR” squeeze across the markets, these pairs could obviously be beneficiaries of this type of event. 2) If the market sees some risk aversion, the EUR/AUD, EUR/CAD and EUR/NZD could act particularly well.
On the calendar this week we have Trade Balance tomorrow night out of China, then Tuesday morning in CAD and US. Wednesday is the German Constitutional Court Ruling (sometime in European trade) then later that evening is the NZD Rate Decision. Thursday CHF will have their Libor Rate Decision, US will have PPI and then the highly anticipated FOMC Decision, Economic Projections and Press Conference. Friday in the US will be CPI and Retail Sales.
Lastly, most of you know that my team and I broadcast daily from 7AM ET through the NY stock market close. To access our live webinars daily (which are free, and our live in the market analysis has been for nearly 10 years now) just click on this link.
Although I spent a lot of time on the EUR charts, I did want to make sure you saw this “confluence” of Fibonacci levels on the E-Mini Futures and Copper breaking higher (with other PM’s) but approaching some key resistance as well.
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