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12/09/2014: Can US consumer data save us from a directionless session?


Let’s just hope that the US can save us from this boredom! Financial markets have done precious little this morning amid a dearth of economic announcements and a sense that traders are waiting for the next catalyst. A paltry 20 pips on the daily range on EUR/USD sums up a fairly tepid morning. Forex trading and equity indices alike are all taking a pause for breath today after a volatile period of trading.

The big question is over where this catalyst will come from. There can only be hope that the US will provide a directionless European session with the guidance this afternoon. US Retail Sales are announced at 13:30BST and are expected to show an improvement of 0.6% on the month. This is then followed by the University of Michigan consumer sentiment at 14:55BST which is again set for an improvement to 83.3.

The chart below chows the 1 week (in blue) and 1 month (in orange) volatility for Cable. Following the sharp spikes higher, the volatility is just beginning to drop away again.

Cable vol   12092014

There needs to be some action otherwise today’s session will be consigned to the scrapheap of dull trading sessions. EUR/USD has basically been flat all day, whilst Cable has fluctuated a touch more, it is still stuck in a range $1.6213/$1.6277. Even the strong gains of Dollar/Yen over the past few days have begun to settle down between 107.00/107.40. So we are looking for a dollar move on these forex majors, which could be driven this afternoon by the consumer data.

Indices are a touch moe interesting, mostly due to the FTSE 100 remaining in this top building process. Now, although it completed the top on an intraday basis yesterday on the move below 6773, there is still closing support at 6800 which remains intact. The price action today suggests that unless there is some weak US data this afternoon (or any further suggestions of a successful Scottish independence) the range today is unlikely to breach 6800 support. The DAX is testing the supprot of the uptrend channel that has formed over the past month. The rising 89 hour moving average (at 9642) is supporting for now, but the bulls will need to resume control soon. The recent hourly momentum indicators suggest a loss of impetus in the recovery. The support at 9600 is now key.

DAX   12092014

Gold and silver are both still coming up against bearish pressure today. A close below $1240 would confirm the breakdown on gold, whilst silver needs to prevent a close below $18.60. Both metals are on the brink of confirming a crucial breakdown.


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