Article / 15 September 2016 at 11:46 GMT

Mid-session Europe: Club Med equities rebound

Saxo Markets


Foreign exchange
European equities markets have rebound after three days of losses with Italian, Spanish and Portuguese shares leading the way.  

In the UK, the Bank of England held interest rates steady at 0.25% (as expected) and maintained its asset purchase programme at £435 billion. Similarly, the Swiss National Bank kept its deposit rate unchanged at -0.75% .

In data releases, UK August Retail Sales -0.3% vs. -0.7% m/m; 5.9% vs. 4.8% y/y.
Eurozone August CPI was in line with expectations at 0.1% m/m; 0.2% y/y.


  • US Initial Jobless Claims (1230)
  • US September Empire Manufacturing (-1.00 exp.) (1230)
  • US August Adv.Retail Sales (-0.1% exp.); Retail Sales ex. Auto (1230)
  • US August PPI Final; PPI ex. Food/Energy (1230)
  • US August Industrial Production (-0.2%) (1315)

Forex developments

It's a quiet market with little news from Europe as we await US retail sales and jobless claims data.

GBP is the main focus on the release of retail sales in UK, which dipped less than forecast on a monthly basis. The Bank of England kept rates steady and a majority of members of the monetary policy committee expect a rate cut if the August outlook is confirmed. The level of 1.3155 (55-day moving average) has been a decent support since September 1, and we watch any close below for opening up to the 1.30 area. Since September 7 GBPUSD has been in a very notable downtrend channel, with the highs of today (1.3278 area) being the current top of this daily downwards channel.

USDJPY sees 102.60 as the main technical resistance which is the 55-day moving average. This level has seen USDJPY capped since September 7, where USDJPY has failed to close above this average on several days. Downside the tech support is seen at the 21-day moving average at 101.91, which also has been the floor since same date, where USDJPY has failed to close below on several occasions. We watch especially a close below the 21-day moving average as the market seems to be concluding that the Bank of Japan is reaching a strong consensus on their policy as fading.

FX Options volatilities
USDJPY curve started in Asia very bid with 1m opening at 13.75 and in the European hours we have basically only seen sellers, so now we are trading 1m at 12.95 so down 0.8 %. Other major currencies also going lower but not as fast. Market overall has seen buyers of o/n volatility in most USD crosses while seller of 1w-1m.
Market still waiting for the BoE so we expect GBP vol to go lower afterwards.

Fixed income





European equities markets rebounded after 3 days of losses with Italian, Spanish and Portuguese shares leading the way.
Some of the larger retailers held back advances in the indices as Hennes and Mauritz missed its August sales targets and Next Plc fell 5.3% the current quarter will be tough and sales will be affected by Brexit.
Energy producers also weighed on markets with Royal Dutch Shell and BP both lower as oil traded down below USD 44. In France, Electricite de France rallied 1% following an approval from the French government to build two nuclear reactors.
US index futures point to a higher open later with the S&P 500 up 0.2% since yesterday's close.

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Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

Asia:      Morning Report APAC:  Asian markets weaker on oil slide


Sunny times today for Southern European shares. Pic: iStock

— Edited by Clare MacCarthy

The Global sales Trading desk is a multi-asset team providing customised trading solutions


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