The EURUSD was a ballistic missile today in trading as it rocketed up the charts on the back of news that the ECB is not looking to further stimulate the market in the face of improving data coming out of the Euro-zone. This has come as a bit of a shock to the market as a whole as Draghi has been talking up the prospect of stimulus for some time, while at the same time the ECB has taken a whole different tone after Nowotny said that Inflation is not a problem for the ECB. This is quite a strange remark to here coming from a central bank and it will be interesting to see where this sudden change has come from, as it looks like the ECB may be a little out of touch to think otherwise, or in fact be slightly splintered over the current direction of monetary policy.
For the DAX as a whole it was a case of plummeting as the market looking to signs of stimulus to help boost equity markets got a sharp shock, which in turn sent the bears into a frenzy. Trend lines which have held up for months have all but disappeared as people are now looking to position themselves in a bearish manner. Traders will be focusing now on the 50 day moving average as a likely prospect for dynamic support, and a further support level at 10322, which is looking a likely prospect for a brief bit of volatility and liquidity.
Despite the tune being played from the ECB today the American markets were somewhat positive as core durable goods m/m lifted to 0.5% (0.3% exp), but unemployment claims missed the mark at 269K. Despite all of this tension is building over the coming non-farms payroll as people are looking for a sign of here labour strength in the build up to Christmas, and the hope that Yellen comes to the party and offers something a little early.
Looking across the other side of the globe and the Australian trade balance due out today showed the state of economy was not in its best shape as it came in at -3.31B (-2.63B exp). This is of little surprise given the volatile nature of the Australian economy as of late and its weakness - despite the minor boost in labour markets. It's likely that there will be a future rate cut, but we may need some further data to convince the Reserve Bank of Australia that such a idea is plausible.
Either way the AUDUSD on the chart has been looking very active and the strong touch at resistance at 0.7361 was no surprise. Despite the push back of this level, I would be careful to start thinking this is a bearish signal. At present the market is still looking quite bullish and a double touch may be required to see any strong reversal for the AUDUSD, despite the bearish nature of some of the economic data recently out.
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