Daily Market Review 11/13/2014
In the absence of any major economic events, things have
been fairly calm for currencies during the European session on Thursday. The
main gainers against the dollar were NZD and AUD.
Germany’s CPI rose 0.7% yoy in October, unchanged from the
preliminary estimates released earlier this month. This confirms that the
German economy is facing weak demand. On the other hand, the French inflation
report was slightly more encouraging than expected: its CPI rose 0.5% yoy in
October, up from 0.4% yoy previously and above expectations of an unchanged
pace. Nevertheless, the Eurozone’s largest economies remain worryingly just
above deflation. The recent disappointing industrial production figures point
to weak growth in Q3 and increase the possibility for below-expectations growth
when Q3 GDP is released tomorrow. I expect German GDP to fall on a qoq basis,
dragging the bloc’s currency lower with it.
DAX futures advanced on Thursday after finding support
marginally above the 9160 (S1) support line and the 50- and 200-period moving
averages. The short-term bias is to the upside as the index is trading within
the blue uptrend channel. A break above the black downtrend line is necessary
for the index to head towards the 9500 (R1) resistance zone. A breach above
that hurdle could trigger further extensions towards the next resistance of
9700 (R2). Our short-term momentum indicators do not give any clear indication
of direction: the RSI is just below the 50 line and pointing up, while the MACD
is already below its trigger line and seems willing to enter its negative
territory. A break above the downslope black line is needed for further upward
movements. On the daily chart, DAX is trading below the long-term uptrend line
(the light blue line taken from June 2012), thus keeping the overall outlook
cautiously to the downside. A move below 8350 would be needed to confirm a
forthcoming lower low on the daily chart
• Support:
9160 (S1), 8900 (S2), 8730 (S3)
• Resistance:
9500 (R1), 9700 (R2), 9880 (R3)
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