UK & Europe Archives - Page 56 of 88

July 6, 2012

Economists React: How Likely Is QE3 Following Jobs Data? – WSJ

CAPITAL ECONOMICS: QE3 will depend on second-quarter GDP and July’s ISM data because the jobs report was not bad enough to make QE3 “a done deal.” Both GDP and ISM numbers will be released just ahead of the Fed’s next policy meeting.

via Economists React: How Likely Is QE3 Following Jobs Data? – Real Time Economics – WSJ.

Comment:~ The range of opinion canvassed by WSJ leans toward the Fed holding off QE3 for the present because jobs numbers aren’t bad enough to warrant drastic intervention. In the long run QE appears inevitable — and not only in the US. There are three options: (1) stagnation with low growth and high unemployment; (2) debt-deflation as in 2009; and (3) inflation. Option (3) would reduce the public debt load by raising nominal GDP and rescue underwater homeowners and banks by lifting real estate values. Those on fixed incomes would suffer but they do not appear a powerful enough lobby to deter politicians from this course.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

July 5, 2012

Forex: Euro, Pound Sterling, Canadian Loonie, Australian Dollar, Japanese Yen and South African Rand

The Euro broke support at $1.25 before falling sharply through $1.24, warning of another decline. Narrow consolidation below the new resistance level is a bearish sign. Follow-through below $1.23 would offer a target of $1.20.

Euro/USD

Pound Sterling broke resistance at €1.25 against the Euro, offering a target of €1.28.

Pound Sterling/Euro

* Target calculation: 1.250 + ( 1.250 – 1.215 ) = 1.285

Canada’s Loonie is strengthening against the US Dollar on the back of rising oil prices. Expect another test of $1.02.

Canadian Loonie/US Dollar

The Aussie Dollar threatens to break down from its recent flag formation. Failure of support at $1.025 would suggest a test of $1.01.

Aussie Dollar/USD

The Aussie Dollar continues to range between ¥72 and ¥90 Japanese Yen. Dips are getting shorter and range traders may need to move their base to ¥75.

Aussie Dollar/Japanese Yen

Against the South African Rand, the Aussie Dollar is testing resistance at R8.50. Breakout would offer a target of R9.00. Narrow consolidation above R8.30 would be a bullish sign.

Aussie Dollar/South African Rand

* Target calculation: 8.50 + ( 8.50 – 8.00 ) = 9.00

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

July 5, 2012

Europe Central Banks Fight Slowdown – WSJ.com

The ECB lowered its main lending rate by 0.25 percentage point to 0.75%, the lowest level in the central bank’s 13-year history. It reduced the rate it pays banks that deposit funds overnight with the central bank by the same amount, to zero. Both decisions were unanimous.

via Europe Central Banks Fight Slowdown – WSJ.com.

Comment:~ Lowering interest rates will help restore liquidity, but will not fix the current solvency crisis.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

July 4, 2012

Euro/USD

The Euro retreated from resistance at $1.27 on the 2-Hour chart and, after breaking support at $1.255, is headed for a test of $1.24. Follow-through below $1.25 would strengthen the signal, while reversal above $1.255 would negate. Penetration of the descending trendline would suggest that a bottom is forming, with another test of $1.27 to follow.

Euro/USD

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

July 3, 2012

UK and Europe: Tentative recovery

The FTSE 100 index broke resistance (and the descending trendline) at 5600/5620, suggesting the correction has ended. Oscillation of 63-day Twiggs Momentum around zero is narrowing, indicating hesitancy. Follow-through above 5650 would strengthen the breakout signal — as would recovery of 63-day Twiggs Momentum above zero — targeting 6000*. Reversal below 5600, however, would warn of a false signal.

FTSE 100 Index

* Target calculation: 5600 + ( 5600 – 5200 ) = 6000

Germany’s DAX is testing resistance at 6500; breakout would test the 2012 high of 7200. Rising 13-week Twiggs Money Flow (not shown) indicates buying pressure. Recovery of 63-day Twiggs Momentum above zero would strengthen the signal.

DAX Index

* Target calculation: 6500 + ( 6500 – 6000 ) = 7000

The Madrid General Index is headed for a test of medium-term resistance at 750/760. Bullish divergence on 13-week Twiggs Money Flow indicates buying pressure. Penetration of resistance — and the long-term descending trendline — would indicate a bottom is forming.

Madrid General Index

Italy’s MIB Index shows a similar bullish divergence on 13-week Twiggs Money Flow (not shown) — and on 63-day Twiggs Momentum. Recovery above 15000 would signal another test of long-term resistance at 17000.

MIB Index

* Target calculation: 15000 + ( 15000 – 13000 ) = 17000

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 30, 2012

Merkel Concessions at Euro Crisis Summit Smarter than they Seem – SPIEGEL ONLINE

Christian Rickens: Merkel’s concession is more than compensated for by a diplomatic victory she scored in the run-up to the summit: Late last week, she managed to get new French President François Hollande to sign off on her fiscal pact, which is deeply unpopular in Paris, in return for her support on the €130 billion ($165 billion) European Union “growth pact.”

The inequality of the deal is difficult to overstate. The growth pact is made up of little more than empty promises and dreams that can never come true. Though it won’t spur any growth in Europe, at least it won’t cost Germans any more money either.

Should one be looking for a summit loser, in fact, it necessary to look no further than Hollande. Not Angela Merkel. She merely did what she always does on the EU stage. She made compromises. And pretty clever ones at that.

via Merkel Concessions at Euro Crisis Summit Smarter than they Seem – SPIEGEL ONLINE.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 29, 2012

Debt crisis: Germany caves in over bond buying, bank aid after Italy and Spain threaten to block 'everything' – Telegraph

Bruno Waterfield: On Thursday night, Italy and Spain plunged an EU summit into disarray by threatening to block “everything” unless Germany and other eurozone countries backed their demands for help.
…..Under the deal, Spanish banks will be recapitalised directly by allowing a €100 billion EU bailout to [be] transferred off Spain’s balance sheet after the European Central Bank takes over as the single currency’s banking supervisor at the end of the year.
……[and] a pledge to begin purchases of Italian bonds using EU bailout funds to reduce Italy’s borrowing costs with a lighter set of conditions…..

via Debt crisis: Germany caves in over bond buying, bank aid after Italy and Spain threaten to block ‘everything’ – Telegraph.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 28, 2012

Forex: Euro, Pound Sterling, Australian Dollar and Canadian Loonie

The Euro retreated below support at $1.26, indicating a test of the 2010 low at $1.19/1.20. Breach of the rising trendline on 63-day Twiggs Momentum would strengthen the bear signal.

Euro/USD

Pound Sterling is testing resistance at $1.58 against the greenback. Respect would indicate another test of primary support at $1.52. A 63-day Twiggs Momentum peak below zero would warn of a primary down-trend.

Pound Sterling/USD

* Target calculation: 1.53 – ( 1.63 – 1.53 ) = 1.43

Against the Euro, Pound Sterling is in an accelerating up-trend. The gap between the recent low at €1.225 and the previous peak at €1.215 suggests strong buying pressure — as does 63-day Twiggs Momentum oscillating high above zero.

Pound Sterling/Euro

* Target calculation: 1.250 + ( 1.250 – 1.215 ) = 1.285

Canada’s Loonie is strengthening against the Aussie Dollar. Long-term bullish divergence on 63-day Twiggs Momentum warns of reversal to a primary up-trend. Breakout above parity would confirm.

Canadian Loonie/Aussie Dollar

* Target calculation: 1.00 + ( 1.00 – 0.96 ) = 1.04

Short retracement suggests that the Aussie Dollar is, in turn, strengthening against the greenback on the Daily chart. Breakout above $1.02 (and the descending trendline) would indicate that a bottom is forming. Recovery of 63-day Twiggs Momentum above zero would suggest a primary up-trend.

Aussie Dollar/USD

* Target calculation: 1.02 + ( 1.02 – 1.00 ) = 1.04

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 26, 2012

What Will Germany Do?

Anatole Kaletsky: With every day that passes, and especially since the French election, it is becoming clearer that the problem country for the euro—the odd man out in terms of economic structure and the chief obstacle to any political resolution of the euro crisis—is not Greece, Spain or Italy. It is Germany. It is Germany that refuses even to talk about mutual debt and banking guarantees. It is Germany that insists on self-defeating fiscal austerity and intolerable political conditions for the debtor countries. It is Germany that vetoes quantitative easing by the ECB, which could cap bond yields and relieve deflationary debt traps. And it is Germany that makes the other euro countries uncompetitive, discourages devaluation of the euro against the dollar and refuses even to relax its own domestic fiscal policies to reduce its trade surplus and support growth….

via John Mauldin’s Outside The Box

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

June 26, 2012

UK and Europe

The FTSE 100 monthly chart shows how the up-trend since 2009 has lost momentum, forming a large top. Reversal below 4800 would complete the reversal, offering a target of 3500*. Recovery above 6000 is unlikely but would indicate resumption of the up-trend.

FTSE 100 Index

* Target calculation: 4800 – ( 6000 – 4800 ) = 3600

Germany’s DAX shows a similar loss of momentum on the monthly chart. Breach of medium-term resistance at 6000 would indicate another test of 5000. Recovery above 7200 is unlikely.

DAX Index

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.