European Open: EUR/GBP in focus ahead of ZEW and UK wage data

Asian Indices:

• Australia's ASX 200 index fell by -48.1 points (-0.67%) and currently trades at 7,101.30
• Japan's Nikkei 225 index has risen by 98.02 points (0.38%) and currently trades at 25,405.04
• Hong Kong's Hang Seng index has fallen by -584.41 points (-2.99%) and currently trades at 18,947.25
• China's A50 Index has fallen by -297.76 points (-2.23%) and currently trades at 13,065.86

UK and Europe:

• UK's FTSE 100 futures are currently down -30.5 points (-0.42%), the cash market is currently estimated to open at 7,162.97
• Euro STOXX 50 futures are currently down -20 points (-0.53%), the cash market is currently estimated to open at 3,721.10
• Germany's DAX futures are currently down -59 points (-0.42%), the cash market is currently estimated to open at 13,870.11

US Futures:

• DJI futures are currently up 36 points (0.11%)
• S&P 500 futures are currently up 81.5 points (0.62%)
• Nasdaq 100 futures are currently up 11.75 points (0.28%)

China’s equity markets continued to tumble on the dual combination of fresh lockdowns in certain regions and the surprise move of PBOC not easing further. Data for China was mixed, which saw unemployment rise to 5.5%, industrial output increase by 7.5% (4.3% prior) yet industrial output fall to 7.5% (9.6% prior).

US futures are higher, European futures are lower. The S&P 500 futures trade below 4200 and forming a potential bear flag on the hourly chart. Nasdaq futures looks set to probe the February low and break beneath 13l for the first time since May 2021.

7200 remains key for the FTSE 100:

Prices rallied to test the 200-day eMA yesterday yet failed to close above it once again, leaving a bullish inside day by the close. Volume was its lowest in nearly 3-weeks which basically means a lack of conviction in either direction, yet as daily trading volumes have been trending lower whilst prices rose over the past week, we continue to favour the scenario that a swing high is pending. And a break below 7100 would be a good start, whilst a daily close above 7200 on above-average volume would see us reconsider the bearish bias.

FTSE 350: 4043.45 (0.53%) 14 March 2022

• 263 (75.14%) stocks advanced and 82 (23.43%) declined
• 4 stocks rose to a new 52-week high, 1 fell to new lows
• 25.71% of stocks closed above their 200-day average
• 94.29% of stocks closed above their 50-day average
• 10.57% of stocks closed above their 20-day average

Outperformers:

• + 9.09% - Petropavlovsk PLC (POG.L)
• + 7.86% - Mitie Group PLC (MTO.L)
• + 7.62% - Network International Holdings PLC (NETW.L)

Underperformers:

• -7.13% - Fidelity China Special Situations PLC (FCSS.L)
• -6.22% - National Express Group PLC (NEX.L)
• -5.82% - Glencore PLC (GLEN.L)

EUR/GBP coils at its highs ahead of UK and euro data

The euro was the strongest major and rose across the board yesterday, as a fourth round of peace talks between Russia and Ukraine took place. Several pairs had formed bullish outside days by the close and EUR/GBP was no exception.

We had previously looked for the cross to break higher but its original breakout failed to hold above trend resistance. Yet now prices have pulled back and since closed back above the trendline, we’re on the lookout for longs again.

We can see on the four-hour chart that support was found around the 200-bar eMA after a slight retracement. Prices are now meandering around the December trendline yet hovering near recent highs to show demand. Should prices break above yesterday’s high then our bullish target is around (or just below) the 0.8460 – 0.8478 resistance zone, which comprises of the monthly /weekly R1 pivot and February high.

Up Next (Times in GMT)

Employment and wage data for the UK will be in focus at 07:00 GMT to see if the wage-spiral fears can keep the pressure on the BOE to hike several times this year. It is all but a given that they will hike by 25 bps this week anyway but, like the Fed, it is the trajectory of their hikes which now counts.

At 10:00 we have the ZEW economic sentiment reports for Germany and the eurozone. In last moths report it stated that over 50% of respondents now think the ECB will hike rates over the next six months, so any change in that metric is of interest.

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