France

Perspective on Greece

France

European Stocks Validate Bearish Bias, Break Past Key Support

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 4751, has been reached and is where the rally from 4096 is equal to 61.8% of the 3461-4521 rally.  The next level is 5156, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE has broken out of the Rising Wedge that we identified earlier this week, with prices now positioned to test the 38.2% Fibonacci retracement level at 4816.64. A break beyond that will target the 50% Fib at 4777.25.

DAX

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 5506, has nearly been reached and is where the rally from 4524 is equal to 61.8% of the 3589-5176 rally.  The next level is 6113, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The German benchmark index has sold off as expected and is now positioned above the 61.8% Fibonacci retracement level at 53198. A break lower targets the 76.4% level at 52587.

CAC 40

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 3535, has been reached and is where the rally from 2958 is equal to 61.8% of the 2466-3400 rally.  The next level is 3892, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

Our bearish forecast for the French equities has been validated: prices fell through the bottom of a rising wedge formation and taken out the 38.2% Fibonacci retracement level at 3599.14. From here, the bears will look to take the index to the 50% Fib at 3560.47.

IBEX 35

Long-Term Technical Outlook

There are 2 levels that most likely produce a top.  The first level, 1124, has nearly been reached and is where the rally from 925 is equal to 61.8% of the 670-993 rally.  The next level is 1247, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

As with most other European exchanges, Spanish shares sold off to break beyond the Rising Wedge we identified at the beginning of the week. Prices now target the 38.2% Fibonacci retracement level at 1113.66.

FTSE MIB

Long-Term Technical Outlook

There are 2 levels that most likely produce a top and neither has been reached.  The first level, 22798, is where the rally from 17626 is equal to 61.8% of the 12332-20702 rally.  The next level is 25996, which is where the 2 bull legs would be equal.

Short-Term Technical Outlook

The FTSE/MIB looks essentially the same as other European benchmark indexes: prices validated our bearish scenario, breaking below Rising Wedge support to challenge resistance-turned-support at 21981.13. A move lower from here would target the 21947.83 – 21762.62 congestion region.

France

Daily Commodities Fundamentals: The Week Opened Quietly, But Don’t Expect It to Last

North American Commodity Update, Last Updated 8/10/2009 4:06 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Pares Losses to Close Near Even

Crude Oil (WTI)   $70.960                         +$0.030                             +0.04%
Crude Oil future prices traded sideways today during a quiet US trading session. A lack of market-moving fundamental data release forced Crude to track equity markets and retreat amid US dollar strength for the majority of the day. All three major US equity indices closed lower today as investors engaged in some profit-taking following last week’s impressive performance. Crude tends to follow equity markets because of its function as an input price; global economic expansion would likely increase demand for Crude, which has been extremely weak this summer. Week after week, the US Department of Energy’s inventory figures have showed an oversaturated market with not enough demand for the commodity. This week, Crude stockpiles are expected to increase by another one million barrels. Crude prices have also reflected a stronger US dollar, which continued its gains from Friday following a better-than-expected NFP report. Tomorrow, the FOMC will begin its two day Monetary Policy Meeting; speculators believe that the key lending rate will remain at 0.25%, but the committee may hint towards a hike in rates as early as next year. Such a decision would lead to growing confidence in the global economy, potentially contributing to future Crude price increases.

Department of Energy Inventories

Commodities – Metals

Gold Trades Sideways, Silver Loses

Gold                   $948.100                           -$11.400                           -1.19%
Gold future prices fell the most in two weeks during intraday trading as prices tested and broke through the psychological $950-per-ounce level to close down 1.3% at $946. The move was a significant setback to any hopes of a near-term test of $1000, as the break below $950 could spark technical selling until $920-per-ounce. Gold’s decline was largely due to the stronger US dollar as it continues to gain against its major competitors following Friday’s NFP report. Job losses for July were approximately 80K less than expected and the unemployment rate dropped by 0.1% for the first time since April 2008. The U.S. dollar index was up 0.3% as of 3:00 PM EST but investors traded cautiously preceding tomorrow’s FOMC Monetary Policy meeting. The commentary surrounding tomorrow’s meeting will likely be the main market mover, as no tangible changes are expected just yet. Gold could see significant upside if the committee is concerned about future inflation as a result of the economic stimulus plan; Gold is often used as a hedge against dollar weakness and/or inflation.

Silver                 $14.365                           -$0.303                          -2.07%
Silver future prices lost nearly 2% as the US dollar continued to strengthen and investors pull back from their bullish sentiment that closed last week’s trading. Due to a shortage of market-moving fundamental data, mere speculation may be responsible for Silver’s noteworthy decline. An extension from Friday’s dollar strength contributed to the metal’s decline today, especially in anticipation of this week’s upcoming reports. In addition to the FOMC meeting, an array of potentially impactful releases is expected, including Euro-Zone CPI, the UK Unemployment Rate, and the UK’s Quarterly Inflation Report. After this week, we should have a clearer idea of the future direction of commodity prices and the global economy as a whole.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

France

Daily Commodities Fundamentals: Commodities Close Lower to End Week

North American Commodity Update, Last Updated 8/7/2009 5:19 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Fall on U.S. Dollar Strength

Crude Oil (WTI)   $70.420                         -$1.500                             -2.09%
Crude traded lower after a choppy day of trading, losing roughly 2% by the session’s close. Today’s main market mover was the US Non-Farm Payrolls report, which led to a swing towards risk appetite but also a strengthening of the US dollar. The NFP revealed a loss of 247K jobs last month, a dramatic improvement when compared to the 328K analysts expected. The US unemployment rate actually fell from 9.5% to 9.4%; it was the first decline since April of 2008. The positive release out of the United States led to an impressive dollar rally. When the dollar gets stronger, dollar-denominated commodities like Crude lose. However, the better-than-expected NFP report heightened investor confidence, leading many to believe that the recession is over. If this is truly the case, demand for Crude would likely increase as the global economy begins to expand. Note that just Wednesday, the Department of Energy inventory figures showed a significant year-over-year decline in Crude demand, a threat to any sustainable economic recovery. It will be interesting to see what direction, if any, Crude prices take next week.

Department of Energy Inventories

Commodities – Metals

Precious Metals Retrace Slightly to End Week

Gold                   $956.900                           -$6.000                           -0.62%
Gold finished slightly lower today, leaving it nearly even over the past week at approximately $957-per-ounce. The reason for Gold’s decline today was certainly US dollar strength; the greenback closed higher against all of its major competitors (excluding the New Zealand dollar), specifically gaining over 2% on the Japanese Yen. As was the case with Crude, the US NFP report was the fundamental driving factor. Investors continue to regain confidence in the global economy, many of whom believing that the US will lead the world out of the recession. Gold losses were subdued today despite the dollar’s impressive performance because when speculators prepare for an economic recovery, inflationary fear sets in, helping to support Gold future prices. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. Expect Gold prices to increase next week due to heightened risk appetite and inflationary concern.

Silver                 $14.600                          -$0.045                          -0.31%
For the first time all week, Silver’s price move was less extreme than Gold’s. Silver future prices lost only 0.3% due to conflicting fundamental data that applied pressure on opposite sides of the metal. Usually, dollar weakness and risk appetite go hand-in-hand, leading to volatile swings in prices. In addition to serving as a precious metal, Silver also has an industrial application, which makes it particularly sensitive to a changing global economic outlook. Today’s better-than-expected US NFP report bid up the US dollar while still encouraging investors to re-enter higher yielding assets. Next week, the Bank of Japan and the FOMC are due for their interest rate decisions. Though they are both expected to maintain their respective key lending rates, the commentary that follows may provide some direction in the global marketplace, leading to changes in commodities.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

France

Daily Commodities Fundamentals: Commodities End the Week on a Bullish Note

North American Commodity Update, Last Updated 7/31/2009 4:30 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Finish Week Off Strong

Crude Oil (WTI)   $69.220                         +$2.280                             +3.41%
Crude Oil future prices advanced further today, marking a complete retracement of Wednesday’s near 6.5% decline. Mixed fundamental data, including the US 2Q GDP report, led to Crude’s near 3% increase up towards $69-per-barrel. At 8:30 AM EST, the Department of Commerce reported a 1.0% contraction in GDP, less than the 1.5% expectation. However, further analysis is required to fully understand the report. In the report, 1Q GDP was revised down to -6.4% from -5.5%, meaning that the recession had been even more extreme than we thought. Also, despite the bullish total GDP figure, US Personal Consumption (a component of GDP) fell by 1.2%, a steeper decline than the projected 0.5% fall. Personal consumption is a leading indicator for future economic growth, as it can indicate both consumer confidence and spending. Many believe that the 2Q GDP was inflated by another one of its components, Government Expenditures.  Regardless, commodity traders were bullish following the news, leading to Crude’s increase. It will be interesting to see if Crude can finally hold onto these gains even though demand remains extremely weak. Next week could prove to be volatile, as three major national banks (BoE, ECB, RBA) are all due for their respective key lending rate decisions.

Department of Energy Inventories

Commodities – Metals

Precious Metals End Higher After Volatile Week of Trading

Gold                   $954.100                           +$16.800                           +1.79%
As expected, Gold continued to gain during intraday trading, again breaking through the psychological $950-per-ounce level before closing around $956. Today’s 2% price increase was largely due to extreme US dollar weakness, as investors again sold the safe dollar in favor of higher yielding currencies. The Dollar Index actually broke through key support level today around 78.3 before re-establishing itself, preventing breakout losses for the greenback. All the major currencies had gained over 1% on the dollar (excluding the Canadian dollar) as of 4:00 PM EST. Recall that Gold and the greenback tend to trade inversely as speculators use the metal to hedge against dollar weakness and/or inflation.

Silver                 $13.905                             +$0.420                              +3.11%
Silver closed the week on a positive note, adding another 3% to what has become a volatile three days. Like Gold, Silver benefitted from today’s extreme dollar weakness against its major competitors. Foreign currencies rallied against the greenback as risk appetite drove dollar to the absolute edge of a breakout. The US 2Q GDP report, though not immediately influential, ended up being a significant market mover today. On Monday, the US ISM Manufacturing figure is due at 10:00 AM EST. The survey questions US industry executives about future production, inventories, employment, etc. It has potential to drive Silver prices upon its release.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

France

Daily Commodities Fundamentals: Crude Loses 6.5%, Leads Other Commodities Downward

North American Commodity Update, Last Updated 7/29/2009 4:20 PM EST (GMT = EDT +5:00)

Commodities – Energy

Crude Prices Tank Amid Continued Demand Concern

Crude Oil (WTI)   $62.890                         -$4.340                             -6.46%
After adding nearly $10-per-barrel over the past two weeks, Crude Oil future prices plummeted straight through the psychological $65 level to close below $63. The 6.5% decline marks the biggest intraday loss for the commodity since mid-April. Crude’s descent continued from yesterday, picking up steam early in the US session following the release of a disappointing US Durable Goods Orders report, which showed a 2.5% pullback as opposed to the expected -0.6% change . Durable Goods, by definition, last over three years, so many investors use their growth rate as an indication of future growth. At 10:30 AM EST, the Department of Energy published its Crude Oil Inventory figure, which was the catalyst for today’s extreme price movement. Stockpiles increased by nearly 5.5 million barrels last week despite analyst expectations of a 1.5 million barrel reduction. Demand for Crude had already been week this summer, but investors had ignored this fact when bidding up future prices; the alarming figure from the DOE forced the market to succumb to the basic economic principle of supply and demand. Though slight retracements have been well-documented after such significant price declines the fundamental concerns remain; Crude could begin to fall back to mid-July lows and re-test $60 later this week.

Department of Energy Inventories

Commodities – Metals

Gold Slips, Silver Falls on Weak Day for Precious Metals

Gold                   $929.400                           -$9.700                           -1.03%
Relatively speaking, Gold prices held steady during today’s trading, losing only 1% intraday. After a new batch of disappointing fundamental data reports, the dollar began to climb against its major competitors as investors favored risk aversion. The prospect of a prolonged economic recession scared investors out of higher yielding currencies and muted any existing inflationary fears after last week’s encouraging global news. Recall that Gold and the greenback tend to trade inversely as investors use the metal to hedge against dollar weakness/inflation. As the CFTC hearings rage on, the broader commodity market may continue to suffer. Just as Gold did not see as substantial gains as Silver last week, it will likely withstand substantial losses as well.

Silver                 $13.295                          -$0.445                          -3.24%
Monday’s $14-per-ounce level for Silver future prices is certainly a thing of the past; continuing from yesterday’s decline, Silver slumped an additional 3.5% today. The US Durable Goods Orders report weighed on Silver future prices, as the prospect of a prolonged economic recession is becoming increasingly probably and may be confirmed by Friday’s US GDP report. Depressing fundamental data is taking control over future price speculation, especially amid the CFTC hearings as traders maintain a “wait and see” approach. Tomorrow’s German unemployment rate and Japan’s CPI report should be the main market movers for Silver, as investors will have new insight into the health of the global economy.

-Written by Jay Steinberg, CFDTrading Research
Questions/Comments about this article? Send them to JSteinberg@fxcm.com

France

European Stock Markets Eager On Transparency Of US Fed

Europe: What to Watch For

• Wall Street Rises on Bernanke Testimony, Asia Follows
• Euro-Zone Industrial New Orders Still Falling
• German IFO Hints Improvement, Long Way To Go

European Stock Markets Eager On Transparency of US Fed

European stock exchanges look to parallel similar trends seen in US and Asian markets.  US benchmark indexes rose on Federal Reserve Chairman Ben Bernanke’s testimony to Congress regarding the bank’s exit strategy out of loose monetary policy.  Bernanke noted that recent economic indicators showed some signs of improvement and that he would leave interest rates at current levels for some time.  Euro-Zone Industrial New Orders is expected to fall -27.9% in the year through May indicating that weak global demand continues to weigh on European industries.

DAX 30   5093.97

The German IFO – Expectations Survey is set to measure at 90.1 in June, up from May’s 89.5, marking the seventh consecutive month increase.  Though the metric indicates improving sentiment among German firms, the surveyed figure still falls well short of the 100 centerline between positive and negative outlooks.

FTSE 100   4481.17

Bank of England’s Monetary Policy Committee Minutes are set to be released and may help markets gain more perspective on the BOE’s economic outlook and future policy agenda.

GlaxoSmithKline Plc, the UK’s largest drug maker is scheduled to release second quarter earnings.

CAC 40   3302.89

French Consumer Spending is expected to fall -0.3% in the year end June, bettering its previous reading of  -1.6%.  The report shows that French consumption is declining, albeit at a slower rate, while helping markets evaluate future sentiment of the retail industry and the economy as a whole.  Indication of increased spending may help uplift economic expectations as household expenditures make up 58% of total GDP.

Unibail-Rodamco SA, Europe’s biggest real estate company reports second quarter earnings after the market close.  After the financial crisis impelled the real estate industry to all time lows, improving earnings of the company my help renew confidence in the housing market.

IBEX 35   10122.20

Iberdrola Renovables SA, the world’s largest operator of wind energy farms said that first half earnings dropped -24% as larger expenses cut into gross margins.

FTSE / MIB   19830.29

Fiat SpA, Italy’s largest auto maker is scheduled to release second quarter earnings.  With no events on the economic calendar, the Italian index is likely to parallel trends seen in comparable European markets.

Upcoming European Session Event Risk / Economic Releases

Written by Kevin Yip, CFDTrading Analyst

For questions and comments email kyip@fxcm.com

France

European Stocks Rebound Tentatively Higher – Where to From Here?

Weekly Strategy

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has rebounded from significant support at the intersection of the 100-day moving average and the 38.2% Fibonacci retracement level. Near-term resistance is seen at 4279.63, a falling channel top.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves).

Short-Term Technical Outlook

German shares have rebounded from near-term support at the intersection of the 38.2% Fibonacci retracement level and the lower boundary of a falling channel. Initial resistance is seen at 48497, the channel top.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has rebounded from the lower boundary of a falling channel to meet support-turned-resistance at the 38.2% Fibonacci retracement level. A break higher will aim to challenge the channel top, now at 3134.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.

Short-Term Technical Outlook

Spanish shares are positioned above support at the 23.6% Fibonacci retracement level (91848), with negative divergence on the RSI oscillator hinting at a bearish bias. Near-term resistance is seen at 99294, the 07/01 high.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have found support at the 100-daysimple moving average. Initial resistance is seen in the 18459.31 – 18752.00 congestion region, an area that previously served as support.

France

European Stocks to Accelerate Lower as Prices Breach Key Support Levels

FTSE 100

Long-Term Technical Outlook

The FTSE rally from 3461 most likely completed wave 4 within a 5 wave decline from the 2007 high.  Expectations are for wave 5 to drawn the index to a new low (below 3461).

Short-Term Technical Outlook

The FTSE has broken below support at 4225.52, the 61.8% Fibonacci retracement level. From here, prices aim to challenge 100-day moving average, now at 4117.47.

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally from the March low counts well as wave 4 within the 5 wave decline from the 2007 high.  Moreover, the decline from 5178 (on short term charts) unfolded as an impulse (5 waves). 

Short-Term Technical Outlook

German shares have extended lower after breaking support at a rising trend line, meeting near-term support at the 38.2% Fibonacci retracement level (45803). A break lower will target 43957, the 50% Fib.

CAC 40

Long-Term Technical Outlook

I’ve made a change to the labeling for the CAC 40. The change brings the count in line with that of the DAX and FTSE counts.  The rally from 2465 was wave 4 of (3).  Wave 5 of (3) is considered underway towards a new low as long as 3400 remains intact.

Short-Term Technical Outlook

The French benchmark index has been confined to a narrow falling channel after breaking below support at a rising trend line that had guided the CAC since early March. The next leg of the down move sees initial support at the 100-day moving average.

IBEX 35

Long-Term Technical Outlook

The IBEX 35 appears to have already completed 5 waves down from its 2007 high.  However, the decline could extend (like the CAC 40 appears to be doing).  The continued divergence with RSI at the recent high also favors weakness going forward.    

Short-Term Technical Outlook

The breakout above double top resistance at 97447 looks to have been a head-fake, with prices reversing sharply lower to close below this juncture. From here, price aim to challenge support at 91678, the 23.6% Fibonacci retracement level.

FTSE MIB

Long-Term Technical Outlook

The rally from the March low in the FTSE / MIB index was a 4th wave.  In line with other European indexes, the Milan index is expected to drop to a new low (below 12343).

Short-Term Technical Outlook

Italian shares have overcome support in the 18442.00-18752.00 congestion region, the next level support at the 100-day simple moving average (now at 17792.95). This juncture is reinforced by the 38.2% Fibonacci retracement level at 17504.66.

France

European Stocks Cling to Familiar Levels, Bearish Bias Favored

FTSE 100

Long-Term Technical Outlook

The FTSE is at risk of at least a pullback if not an outright reversal as daily RSI has rolled over from overbought territory.  At best for bulls, the FTSE decline will be a B wave.  At worst, the drop will be the next leg of the longer term bear.  The rally from the low is not clearly impulsive, so the latter certainly is possible.

Short-Term Technical Outlook

The FTSE has broken below support at 4270.63, the 23.6% Fibonacci retracement level. The UK benchmark index now targets the intersection of the 38.2% Fib and the 100-day moving average (4115.00).

DAX

Long-Term Technical Outlook

The DAX pattern is the same as that of the FTSE 100.  The rally does look more like an impulse (5 waves) though, so the decline underway may be a B wave.

Short-Term Technical Outlook

German shares found near-term support at 46885, a familiar pivot level, and rebounded above the 23.6% Fibonacci retracement level. The door is now open for a return to the 14.6% Fib at 49495.

CAC 40

Long-Term Technical Outlook

The decline from the 2007 high in the CAC 40 is in 5 waves and either wave 1 or 5 is extended.  It seems more probably that wave 5 is the extended wave because if wave 1 were extended then wave 2 would be uncommonly small.  Either way, the index is most likely headed higher over the next several months but not before a sizeable correction of the gains from March.

Short-Term Technical Outlook

The French benchmark index has been trending lower in a narrow falling channel since breaking below support at a rising trend line that had guided the CAC since early March. A Hanging Man candlestick at the upper boundary of the channel suggests the next leg of the down move may be near, with initial support at the 100-day moving average.

IBEX 35

Long-Term Technical Outlook

Same story with the IBEX 35.  The rally from the low (6703) is corrective but is probably just the first leg of a larger correction.  The next several months should lead to a choppy B wave decline.

Short-Term Technical Outlook

The IBEX found near-term support at the 14.6% Fibonacci retracement level and has rebounded to re-test triple top resistance at 97240, a level now also bolstered the lower boundary of a previously broken rising channel. A Hammer candlestick at this juncture hunts at a move lower from here.

FTSE MIB

Long-Term Technical Outlook

The FTSE MIB (Milan) index took the same structure as the CAC 40 on the way down from its 2007 high.  The 200 day SMA has held as resistance and the index is headed lower in what is probable a B wave.

Short-Term Technical Outlook

Italian shares continue to try to resolve a favored directional bias around 18726.68, the 23.6% Fibonacci retracement level. A break lower would see near-term support at the 100-day simple moving average while a move higher will meet resistance at the psychologically significant 20000 level.

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