Last week the European Central Bank set out new, stricter rules for how to and how much money needs to be set aside for non-performing bank loans. Yesterday the Italian head of the European Parliament, Antonio Tajani, wrote to Mario Draghi saying Parliament must be involved in this decision. (Italy holds about 30 per cent of the bloc’s €915 billion bad debts). Meanwhile of the 111 Euro area banks which underwent stress tests the ECB claims risk is ‘well managed in most European banks’. But a rise in interest rates would seriously affect the viability of 51 banks who must raise yet more capital. So almost half will be told how much new money they need to raise.
Fourteen massive wildfires in Northern California have destroyed at least 1500 homes so far and 10 people have died. Some 20,000 residents of Mendocino, Napa and Sonoma counties have been urged to leave the area as firefighters prioritise keep people safe rather than putting out the blazes.
DAX 30
Price action yesterday was similar to Friday’s, closing fractionally down on the day with a tiny shooting star type candle. Still ridiculously overbought.
SHORT TERM TRADER: Considering going short if more bearish candles form.
POSITION TAKER: Square.
FTSE 100
A bearish engulfing candle yesterday has dragged the index off overbought territory. Yesterday the ONS admitted it had miscalculated unit labour costs and rather than increasing at an annualised rate of 1.6 per cent they are running at 2.4 per cent. Today the OBR will also admit its assumptions on UK productivity have been wrong for about 7 years.
SHORT TERM TRADER: Short at 7507; stop above 7600. Target 7320.
POSITION TAKER: Square.
S&P 500
Let’s see how North Americans react to markets as they return from yesterday’s holiday.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
As we had thought yesterday, US dollar strength over the last fortnight was likely to be a temporary thing. Cable’s trying to base against the 1.3100 area. Despite no longer being legal tender after the 15th of this month, Poundland will continue to accept the ‘much loved’ old round pound coin until the end of the month because ‘we are the official home of the pound, so it’s a no brainer’ said CEO Barry Williams.
SHORT TERM TRADER: Small long at 1.3115; stop below 1.3000. Target 1.3400.
POSITION TAKER: Square.
EURO/US DOLLAR
Mixed messages here as we try to base against 1.1700 while the MACD remains bearish.
SHORT TERM TRADER: New small long at 1.1770; stop below 1.1650. Target 1.2000.
POSITION TAKER: Square.
GOLD
Bearish momentum has eased considerably with this morning’s break above immediate trend line resistance. Slightly worried about the next phase in the value of the US dollar.
SHORT TERM TRADER: Short at 1291; stop above 1295; target 1245.
POSITION TAKER: Square.
