European Open: EUR/GBP stays within range ahead of UK data dump

Asian Indices:

• Australia's ASX 200 index fell by -53.5 points (-0.76%) and currently trades at 7,017.50
• Japan's Nikkei 225 index has risen by 685.11 points (2.46%) and currently trades at 28,504.44
• Hong Kong's Hang Seng index has risen by 64.5 points (0.32%) and currently trades at 20,146.93
• China's A50 Index has fallen by -24.93 points (-0.18%) and currently trades at 13,637.90

UK and Europe:

• UK's FTSE 100 futures are currently down -1.5 points (-0.02%), the cash market is currently estimated to open at 7,464.41
• Euro STOXX 50 futures are currently down -4 points (-0.11%), the cash market is currently estimated to open at 3,753.05
• Germany's DAX futures are currently down -16 points (-0.12%), the cash market is currently estimated to open at 13,678.51

US Futures:

• DJI futures are currently up 44 points (0.13%)
• S&P 500 futures are currently up 34.25 points (0.26%)
• Nasdaq 100 futures are currently up 7.25 points (0.17%)

Despite softer inflation in the US, Fed members are continuing to talk a hawkish game and that has weighed on sentiment for equity traders. Wall Street stumbled overnight and the ASX 200 followed its lead today, finding resistance at its 200-day exponential moving average. But we’ve also reached that that stage of the year where price action is choppy and its direction can be fickle. Conversely, traders in Japan wasted no time in celebrating soft US inflation as they sent the Nikkei to its highest levels since January. The exchange was closed yesterday due to a public holiday.

With US inflation data now behind us, it is almost like the calm after the storm. And that has led to tight ranges for currencies and commodities after a spell of volatility a couple of days ago. With $1800 being such a nice round number it is a tempting level for traders to book a profit after its rally from the July low. Gold is on track for its fourth consecutive bullish week, and that has placed us on guard for some mean reversion below $1800.

EUR/GBP daily chart:

EUR/GBP is trading an approximate 50-pip range and its next directional move could be marked by which side of the range it breaks. A series of lower lows and highs has formed on the daily chart, although its recent countertrend move has met resistance at the 200-day eMA and monthly pivot point. A bearish engulfing candle also formed on Wednesday below resistance, so a break beneath 0.8418 assumes a swing high has formed. However, should we see a break above the 200-day eMA, we will switch to a bullish bias.

FTSE 350 – Market Internals:

FTSE 350: 4164.99 (-0.55%) 11 August 2022

• 140 (40.00%) stocks advanced and 201 (57.43%) declined
• 8 stocks rose to a new 52-week high, 3 fell to new lows
• 35.71% of stocks closed above their 200-day average
• 89.43% of stocks closed above their 50-day average
• 16.86% of stocks closed above their 20-day average

Outperformers:

• + 16.18% - Network International Holdings PLC (NETW.L)
• + 8.12% - Aston Martin Lagonda Global Holdings PLC (AML.L)
• + 5.78% - Harbour Energy PLC (HBR.L)

Underperformers:

• -10.06% - GSK plc (GSK.L)
• -8.63% - Savills PLC (SVS.L)
• -6.35% - Jupiter Fund Management PLC (JUP.L)

Economic events up next (Times in BST)

A data dump for the UK arrives at 07:00 – where any signs of weakness on the data simply backs up the BOE’s warnings of a 5-quarter recession. GDP, output for industrial, manufacturing and construction and business investment will all be in focus. But with expectations on the grim side it also allows for a positive surprise, should data not be as catastrophic as feared.

US import prices also warrants a look, as it is one of the (many) key inputs to consumer inflation. After hitting an 11-year high of 13.01% in March, import prices have declined for the past three months and now sit at 10.6%.

The University of Michigan also release their preliminary consumer survey at 13:30 BST. It saw a minor increase last month, but from a record low.

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