European Open: Flash PMI’s in Focus, Potential Bear Flag on EUR/GBP

A host of flash PMI’s are released for UK, Europe and US which will hopefully provide some pockets of volatility ahead of the weekend.

Charts (5)

Asian Indices:

  • Australia's ASX 200 index fell by -7.7 points (-0.1%) and currently trades at 7,378.70
  • Japan's Nikkei 225 index has risen by 159.8 points (0.58%) and currently trades at 27,548.00
  • Hong Kong's Hang Seng index has fallen by -275.61 points (-0.99%) and currently trades at 27,448.23

UK and Europe:

  • UK's FTSE 100 futures are currently up 18 points (0.26%), the cash market is currently estimated to open at 6,986.30
  • Euro STOXX 50 futures are currently up 10 points (0.25%), the cash market is currently estimated to open at 4,069.05
  • Germany's DAX futures are currently up 38 points (0.25%), the cash market is currently estimated to open at 15,552.54

US Futures:

  • DJI futures are currently up 286.01 points (0.83%)
  • S&P 500 futures are currently up 39.25 points (0.26%)
  • Nasdaq 100 futures are currently up 9.75 points (0.22%)


Learn how to trade indices


Asian indices mixed overnight

It was a mixed session overnight with Korea and Japan’s share markets rising on earning optimism, yet China’s markets were in the red and Australia’s ASX was effectively flat.

The ASX 200 resisted its urge to break to new highs as New South Wales increased its lockdown restrictions after recording its highest rate of new cases to date. Its effectively flat for the session and on track for a Rikshaw Man Doji, which underscores its hesitancy to break out this week.

The Nikkei 225 is up around 0.6% and holding above its 200-day eMA and lows from May and June.  The Hang Seng was the weakest performer after falling -1% and has remained beneath its 200-day eMA every day this week.


FTSE 350: Market Internals


FTSE 350: 4006.99 (-0.43%) 22 July 2021

  • 213 (60.68%) stocks advanced and 123 (35.04%) declined
  • 22 stocks rose to a new 52-week high, 0 fell to new lows
  • 77.49% of stocks closed above their 200-day average
  • 47.01% of stocks closed above their 50-day average
  • 20.23% of stocks closed above their 20-day average

Outperformers:

  • + 12.5%   -  Morgan Sindall Group PLC  (MGNS.L) 
  • + 5.96%   -  Volution Group PLC  (FAN.L) 
  • + 5.08%   -  NCC Group PLC  (NCCG.L) 

Underperformers:

  • -5.87%   -  Unilever PLC  (ULVR.L) 
  • -4.82%   -  Hammerson PLC  (HMSO.L) 
  • -4.32%   -  Persimmon PLC  (PSN.L) 


Forex: Composite PMI’s forecast to expand slightly faster

Flash PMI’s (Purchasing Managers Index) are the highlight of today’s calendar with data released from the UK, Europe and US. Clearly this places EUR, GBP and USD pairs into focus for news traders. As it is the first report and provides a forward look at growth expectations, it tends to be the more volatile than ‘final’ reports, especially if they deviate too far from expectations.

The overall expectation for these regions are for the composite PMI’s (the combination of manufacturing and services sectors) to expand slightly faster. And it is the services component which is expected to do the heavy lifting as manufacturing PMI’s are forecast to expand at a slightly slower rate. However, where the data points become interesting for currency traders is if we see a clear divergence between regions. For example, if UK data outperforms yet European data undershoots expectations, a logical expectation would be for EUR/GBP to rise.


EUR/GBP has been consolidating overnight and forming a potential bear-flag formation after two heavy days of selling. This has provided a strong downtrend on the hourly chart which remains technically bearish beneath the 0.8588 high. It therefore remains a pair which could favour fading into minor rallies or bears entering with a break to new lows.

However, also note it is consolidating around the weekly pivot ahead of the PMI reports. So, if prices are to spike higher we’d still consider bearish setups beneath the 0.8580 resistance zone, or a break beneath the flag brings the support zone around 0.8522 into focus.


Learn how to trade forex


Commodities:

Copper futures broke above trend resistance and rose to a two-week high overnight, finding resistance at the monthly pivot point. A weaker dollar could help it move towards 4.435 resistance but, given the US dollar index is holding above trend support, it may find itself stuck below the daily pivot as we head towards the weekend.

Gold is on track for a bearish engulfing week and break a four-week winning streak. Yet a bullish hammer formed yesterday to provide the third lower wick this week and suggest there is some demand above 1790 support. In short, it remains a market for rage trading strategies.

Silver was -0.25% lower overnight having found resistance at the 200-day eMA. Price action continues to suggest the two-day bounce is a countertrend move, so remain a case of trying to identify a swing high beneath the 25.78 high.


Up Next (Times in BST)


You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.


How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels.
  4. Place the trade.

10.1.1

More from Commodities

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.