24 May 2016 at 11:35 GMT
European bourses shrugged off the indifferent equities performance in Asia to rebound with a Brexit poll coming out in favour of the 'remain' campaign helping propel the FTSE to a 0.6% spike. An inline German GDP figure for Q1 will also have helped sentiment.
The dollar is weakening against sterling and yen, but is muscling the euro lower although it is as yet, unable to break through resistance at 1.1160.
- US May Richmond Fed Manufacturing Index (8 exp.) (1400 GMT)
- US April New Home Sales (523K exp.) (1400 GMT)
EURUSD is still moving in the range we mentioned yesterday but mostly pressuring the downside. The 100-day moving average we mentioned yesterday still holds today at 1.1160. For EURUSD bears, the more we fail to break 1.1160 soon the more frustrated shorts could become. 1.1250 would be key tech resistance that would need to hold in this case.
GBP: A strong comeback for GBP today in the early European session. As discussed yesterday, 1.45 looks like the magnate so far ahead of Brexit unless polls start showing a strong bias to one side. The next important technical resistance is at the 1.4660 area from here. Tech supports are now 1.4500 (psychological as well as around 21-day moving average). USDCAD has gone eight consecutive days closing higher than the open, but the range is dropping. Currently, it is back above the main tech resistance we have been watching at 1.3150/60 and it would be good if we close above this level. If we close the day above, it would give another boost for USDCAD and open the way for 1.3215/20 area (around highs of April 5 and March 23). Tech support remains around 1.3015 and then the 55-day moving average at the 1.2956 area. What could really move USDCAD higher is a sharp drop in crude (the long holdings in Brent are at record highs).
FX Options volatilities
At-the-money vols in GBP continue to get sold in spite of USD bid, but we think the focus is more on EURGBP, and the market is seeing GBP relatively strong. 1-year is given at 10.75% and offered on. Vega trades sideways with USD being relatively bid.
European stocks headed higher Tuesday, staging a turnaround as financial shares advanced.
Germany’s DAX 30 rose 0.6% and France’s CAC 40 moved up 1.2% to 4,370.11. The UK’s FTSE 100 picked up 0.6% at 6,174.34.
A new exclusive poll for the Telegraph finds that amongst all voters, the Remain campaign now has a 20-point lead, with 58% of voters saying they back the pro-EU campaign. It helped to restore confidence amongst investors this morning, especially in the banking industry.
Eurozone finance ministers are meeting in Brussels today to try to hammer out an agreement on whether Greece should pass its first review of the third bailout program agreed last year. The Eurogroup discussion will likely focus first on whether the austerity reforms passed by Greek lawmakers at the weekend are enough to unlock EUR11 billion of bailout loans, and then on the potential for debt relief.
UBS AG rose 0.7%, Commerzbank AG climbed 1.2%, and Spain’s Banco Santander SA pushed up 1.1%. Italy’s Banca Monte de Paschi di Siena SpA tacked on 4.6%. Deutsche Bank AG gained 0.9%, brushing past a ratings downgrade by Moody’s late Monday.
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.
London's FTSE climbed 0.6% on the back of a poll
in favour of the 'remain' campaign. photo: iStock
— Edited by Martin O'Rourke