As we head into the final portion of the summer trading months, it is time for traders to start making assessments of where markets are likely to trend when liquidity levels return to normal. “Broad stock measures like the SPDR S&P 500 Trust ETF (NYSE: SPY), iShares S&P Europe 350 Index (NYSE: IEV) and the iShares MSCI Emerging Markets Asia ETF (NYSE: EEM) continue to trade at long term highs,” said Vlad Karpel, options strategist at TradeSpoon. “But when we look at the comparative economy data, it is looking less likely that assets tied to the Eurozone will be able to outperform its developed market counterparts next year.”
Shorter term, direction could be seen once the Eurozone GDP data hits the wires. These numbers will allow analysts to assess the policy statements issued by the European Central Bank (ECB) against the reality as it unfolds. For the Euro itself, we will need to see evidence that the regional economy is showing signs of stabilizing and that consumer price pressures are likely to build over time. Without this, the Euro is likely to see continued, long-term selling pressure against its major counterparts (particularly in the U.S. dollar). This would mean a more bearish outlook for the Guggenheim CurrencyShares Euro Trust (FXE) while things look slightly more positive for the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP).
Thursday- August 14, 2014
EUR German gross domestic product n.s.a.- market estimate: 1.3% Previous Number: 2.5%
Thursday, August 14 will start with the German Gross Domestic Product (GDP) nonseasonally adjusted (n.s.a.) data which will be released by the Destatis at 6:00 GMT. This data evaluates the change in the inflation adjusted cost of all goods and services generated by the economy. This is also the major gauge of the economy's health and the largest measure of economic activity. If the data emerge above 1.3%, it will be good news for the Euro.
EUR German gross domestic product w.d.a. - market estimate: 1.4% previous number: 2.3%
Later this day at the same time, 6:00 GMT the Destatis will also release the German Gross Domestic Product (GDP) workday adjusted figure. This data evaluates the change in the inflation-adjusted cost of all goods and services generated by the economy. This is also the major gauge of the economy's health and the largest measure of economic activity. If the GDP data appears above 1.4%, it will certainly be helpful for the Euro.
Friday- August 15, 2014
GBP gross domestic product- market estimate: 3.1% previous number: 3.1%
Friday will start with the news of Gross Domestic Product (GDP) released by UK's Office for National Statistics at 8:30 GMT. This data evaluates the change in the inflation-adjusted cost of all goods and services generated by the economy. This is also the major gauge of the economy's health and the largest measure of economic activity. If the GDP data appears above 3.1%, it will certainly be good news for the Pound.
EUR/USD 8-Hour Chart:
(Chart Source: CornerTrader)
Having broken key support of 1.3500 a few weeks ago, EUR/USD managed to stay below it this week, too. The pair started this week by making new lows when it collapsed on Tuesday and Wednesday and reached the low of 1.3332. This is short-term support for the time being. Last Friday (August 1) high of 1.3444 should act as short-term resistance. Price is near it right now and Euro bulls will probably try to break the level. However, the trend remains down as lower lows and lower highs are made every week in the pair. The pair remains below 200 SMA on all hourly time frames and a daily chart.