Category: UK & Europe

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Sterling breaks support

The pound broke support at €1.15 against the euro, signaling a test of the 2011 low at €1.10.
Pound Sterling/USD

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Europe: FTSE advances while DAX retreats

The FTSE 100 is advancing toward long-term resistance at 6750 on the monthly chart. Rising troughs on 13-week  Twiggs Money Flow indicate long-term buying pressure.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

Germany’s DAX is testing support at 7500. Bearish divergence on 13-week Twiggs Money Flow warns of selling pressure. Failure of 7500 would indicate a correction to test the rising trendline — and support at 7000.

DAX Index

* Target calculation: 7500 + ( 7500 – 7000 ) = 8000

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Sweden has reformed its welfare state to deliver both efficiency and equity | EUROPP

Will Tanner writes:

At face value, the Swedish welfare state is an unlikely poster child for sustainable government. In 2011-12, government spending was 53.1 per cent of GDP, paid for by taxes on the average worker of 42.7 per cent. The country’s “cradle to grave” social security system has long been used as evidence that government can and should be bigger, not smaller. Despite this, the Swedish state is showing policymakers the world over how to deliver high quality services at low cost.

Read more at Sweden has reformed its welfare state to deliver both efficiency and equity – the UK should learn from its example. | EUROPP.

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U.S.-EU Trade Deal: Obama Makes Risky Bet on Europe’s Future | Fiscal Times

David Francis writes:

The U.S. and European Union together already account for nearly half of global GDP and a third of global trade flows, with some $2.7 billion worth of goods and services exchanged daily. [A trade agreement] …..would increase trade between the partners by $120 billion within five years, according to a study by the U.S. Chamber of Commerce. At the same time, it would add some $180 billion to U.S.-EU gross domestic product. Estimates put forth by the European Commission suggest a new trade pact could increase annual GDP by 0.5 percent in the EU and 0.4 percent in the U.S. by 2027.

Read more at U.S.-EU Trade Deal: Obama Makes Risky Bet on Europe’s Future | Fiscal Times.

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Sterling falls

Sterling retracement respected resistance at $1.58  and the pound is now headed for a test of primary support at $1.53*. Reversal of 63-day Twiggs Momentum below -5% would warn of a downward breakout, offering a target of $1.43.
Pound Sterling/USD

* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53

The fall against the euro is even more dramatic. The brief rally to $1.18 was snuffed out and short-term support at €1.15 is not secure. Expect a test of the 2011 low at €1.10.
Pound Sterling/USD

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Euro tests support

The Euro retreated below its new support level at $1.35 on the weekly chart. Expect a test of $1.32 and the rising trendline. Respect would indicate a primary advance with a target of $1.42*. Rising 63-day Twiggs Momentum (above zero) suggests continuation of the primary up-trend. Failure of support at $1.32, however, would indicate a bull trap — with a target of $1.27.

Euro/USD

* Target calculation: 1.37 + ( 1.37 – 1.32 ) = 1.42

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OECD Leading Indicators Point to Divergence | WSJ.com

PAUL HANNON at WSJ writes:

The world’s largest economies are set to diverge in coming months with few signs that a broad-based recovery in growth is imminent, according to the Organization for Economic Cooperation and Development’s composite leading indicators.

The leading indicators for December, released Monday, point to a pickup in growth in the U.S., Japan, the U.K. and Brazil, but suggest growth will remain weak by historic standards in many other big nations [including China and India]……

Read more at OECD Leading Indicators Point to Divergence – WSJ.com.

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Europe: DAX selling pressure

The FTSE 100 is retracing to test its (secondary) rising trendline on the daily chart. Respect would signal another advance — as would a 21-day Twiggs Money Flow trough above zero.

FTSE 100 Index

* Target calculation: 6000 + ( 6000 – 5250 ) = 6750

Germany’s DAX is retracing to test support at 7500 on the monthly chart. Bullish divergence on 13-week Twiggs Money Flow warns of selling pressure. Breach of support would indicate a correction to test the rising trendline — around 7000.

DAX Index

* Target calculation: 7500 + ( 7500 – 7000 ) = 8000

Italy’s MIB index retreated below the new support level of 17000. Breach of the rising trendline — and support at 16000 — would warn of a bull trap. But a 63-day Momentum trough above zero would signal a primary advance to 19000*.

DAX Index

* Target calculation: 17000 + ( 17000 – 15000 ) = 19000

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Sterling double top

Sterling is headed for a test of primary support at $1.53* after completing a double top. Oscillation of 63-day Twiggs Momentum in a similar range to the last year would indicate a ranging market in the longer term — between $1.53 and $1.63.
Pound Sterling/USD

* Target calculation: 1.58 – ( 1.63 – 1.58 ) = 1.53

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Euro finds new support

The Euro is testing its new support level at $1.35 on the weekly chart. Respect would confirm the primary up-trend. Rising 63-day Twiggs Momentum (above zero) strengthens the signal. Reversal below $1.32 and the rising trendline is unlikely but would indicate a bull trap — and test of primary support at $1.20.

Euro/USD

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