Trading with point and figure

eurusd..not too much reaction after Yellen

2ic5g7s.gif
 
dax
supp held last Friday/Yellen...aqua horizontal
now got a bullish breakout
price is at trend rez/red
 
** EVENTS PREVIEW **
********************

As the UK rejoins the financial market fray, the statistical schedule is relatively busy, while the policy side finds its focus on a newly scheduled interview with Fed vice chair Fischer at 11:30, which now becomes THE focal point for the day, with Italian BTP auctions, the rollover in US and UK bond futures and month end portfolio considerations the other items on the agenda. Statistically German and Spanish CPI follow the overnight Japan labour and monthly personal spending data (the latter being weak, but better than forecast), with UK monetary and lending aggregates, EC Confidence surveys rounding off the European schedule ahead of US Case Shiller House Prices and the probable highlight of the day, the Conference Board's Consumer Confidence measure. Oil markets will naturally continue to be a further point of focus, with the combined speculative net long in NYMEX WTI, ICE WTI and ICE Brent soaring a further 120 Mln bbls to 628 Mln bbls in the week to August 23, which compares with a record high of 663 Mln bbls on April 23. In passing, one should also keep on Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman visit to Asia this week, as he moves from China yesterday today, with the focus on increasing bilateral trade, and in the hope of drumming up inward investment from Asia. Fed rate expectations continue to
shift, albeit grudgingly, with September now at 36.0% vs. a low of 23.0% on Friday, and December at 61.4% vs. a low of 53.0% on Friday (see chart).

** Germany/Spain - August CPI **
- As is becoming ever clearer, the ECB is not really minded to enact more easing measures at the current juncture, though if governments continue to renege on taking action in terms of redirecting fiscal spending and pursuing structural reforms, their hand may well be forced. As the ever thoughtful Mr Coeure summed up in his Jackson Hole speech: "Today, we face an exceptional situation where the real equilibrium rate is very low. All the monetary policy measures we have taken were a necessary response to this. They stabilised the euro area economy and anchored medium-term price stability. But they were done on the assumption that low real rates would be temporary, because other policies would act in their fields of responsibility. The ECB’s operational framework and its monetary policy strategy are robust and sufficiently flexible to deal with the current challenges. We will fulfil the price stability mandate given to us by the Treaty. But if other actors do not take the necessary measures in their policy domains, we may need to dive deeper into our operational framework and strategy to do so." (See: https://www.ecb.europa.eu/press/key/date/2016/html/sp160827.en.html). One reason for their increasing resistance is that the drag on CPI from energy prices is gradually starting to unwind, and while still CPI is very low, it will tick up up over coming months, as today's German and Spanish CPI will likely underline. Germany's CPI and HICP are both expected to rise 0.1% m/m, which would edge both y/y rates up to 0.5% from 0.4%, despite petrol prices acting as a drag given a late August average of €1.29 per litre vs. late July's 1.32, but critically it will be less of a drag than in August 2015.

** U.K. - July Monetary & Credit Aggregates **
- As the Bank of England continues to stumble from one barrage of criticism to the next (we note the hefty criticism of Haldane's comments about his in certain respects understandable preference for property investing over pensions savings, attention turns to the latest lending data. As far as corporate lending trends go, it will take many months to evaluate the impact of the Brexit referendum result's impact on credit demand and supply, and to what extend the BoE's measures are heling to offset them. However the consumer side of the equation already has a worrying trend very clearly in evidence, with credit growth running at 9.9% y/y, which hardly appears sustainable when compared with Average Earnings growth of 2.3% y/y. Today's Consumer Credit and Secured Lending are forecast to show a marginal slowdown to £1.7 Bln from £1.84 Bln, and £3.2 Bln from £3.35 Bln respectively, which implies that credit growth will not slow, notwithstanding an expected further drop in Mortgage Approvals to 61.9K from 64.8K.

** U.S.A. - August Consumer Confidence **
- Consumer Confidence is seen little changed at 97.0 vs. July's 97.2, which would be a solid, relatively elevated reading by recent standards, though somewhat disappointing when one considers mortgage rates are close to their lows, gasoline prices are low by recent historical standards, labour demand solid and, equity indices are close to their highs. Per se, one might surmise that it may reflect uncertainty related to the presidential elections, above all the all too obvious lack of enthusiasm for either of the major party candidates. Given that Fed vice chair Fischer has set up Friday's labour report as a potential deal maker/breaker for a September rate hike, the labour differential will be very closely watched. The latter has been close to its cyclical highs for much of this year, but shows a distinct lack of upward momentum when considered from the vantage point of a very low unemployment rate, and ostensible strength of labour demand.

Recap - Week Ahead focal points:

- US August labour report tops data agenda, Manufacturing PMIs/ISM, Eurozone (national and Eurozone) CPI, UK Monetary & Lending Aggregates, Japan and Australia Q2 CapEx; US PCE, Personal Income, Auto Sales, Pending Home Sales

- Plenty of ECB and Fed speakers, kicking off with Fed's Fischer today

- G-20 Meeting in China (Sat/Sun) and German state election in Mecklenuerg-Vorpommern (Sun), India-U.S. Strategic and Commercial Dialogue (today)

- US closed for Labour day on September 5, early close for Bonds on Frida


from Marc Ostwald
 
poss breakouts
cable break 1.3050 or above 1.3100
dax break 10620 or down 10580
dow break 18525 or 18485
gbpjpy pump 134.00 area
eurusd dump 1.1160 or pump 1.1200
 
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