ecb

Wednesday 16th March 

5am – BMW FY 2015 Earnings Call (Index Weighting 3.46%)

9.30am – UK unemployment data: claimant count expected to drop by 12,700 for February, while the unemployment falls to 5% from 5.1% for January, and average hourly earnings rise 1.8% for the same month.

12.30pm – UK budget: chancellor George Osborne will unveil fresh budget measures for the UK economy.

12.30pm – US CPI (February): US price growth expected to be 1.3%, down from 1.4%, while core prices rise 2.1%, down from 2.2%.

3.30pm – EIA crude inventories: forecast to rise by 1.5 million barrels, lower than previous week’s 3.8 million increase. Gasoline stockpiles forecast to fall by 1.9 million barrels, from the notable from of over 4 million a week earlier.

6pm – Fed meeting: no change to policy expected, with rates likely to remain at current levels. However, commentary may well indicate whether the FOMC is still looking to carry on with gradual tightening. 

11.50pm – Japan trade balance (February): expected to narrow to Y245 billion from Y645 billion.

Thursday 17th March

12.30am – Australian employment data (February): unemployment rate forecast to fall to 5.9%, while the number of jobs rises by 33,000.

2:30am – Deutsche Lufthansa AG FY 2015 Earnings Release (0.68% Index Weighting)

10am – eurozone trade balance (January), CPI (February): trade surplus to drop to €22.5 billion, while the inflation rate drops to -0.2% YoY from 0.3%. Core inflation is expected to be 0.7%, also down from January, when it was 1%. 

12pm – Bank of England monetary policy decision: as with the Fed, no policy changes are likely, but with the BoE looking increasingly dovish there is the possibility we may get more talk of interest rate cuts rather than increases. 

11.50pm – BoJ meeting minutes: these will be interesting to see if there was fresh discussion of more easing measures.

Friday 18th March

12.30pm – Canada CPI (February): price growth is expected to be 1.9%, down from 2% a month earlier.

2pm – US Michigan consumer confidence (March, preliminary): confidence forecast to be 91 for the month, down from February’s final 91.7.

Mario Draghi and the European Central Bank were somewhat sanguine about the future of the Eurozone economy after it fired its monetary bazooka last Thursday.

Capital markets initially rallied in response to the ECB’s larger-than-expected stimulus measure including a cut in Interest Rates. However, this bullish optimism was short lived and indices, namely the DAX gave back all of its gains, sinking 2.3% on the day after ECB President Mario Draghi signaled that interest rates probably wouldn’t fall any lower amid concerns about the impact on Europe’s fragile banks.

On Friday the DAX started a big rally back towards the highs seen on Thursday after investors digested the overall ECB announcement.  It included a cut to its benchmark lending rate to zero from 0.05%, its deposit rate to -0.4% from -0.3% and a lowering of the marginal lending rate to 0.25%. They also announced an expansion of its QE program, extending the monthly bond-buying program from €60 Billion to €80 Billion – an additional €240 Billion over the duration of the program ending in March 2017.

The new week isn’t quite as volatile, but it does have some dates of note. Central bank meetings feature, with the Federal Reserve’s meeting taking  place on Wednesday, Bank of England on Thursday 12pm GMT and the Bank of Japan will also be interesting, given the ongoing loose policy stance.

Looking at a Weekly chart of the DAX below, one can see we are approaching into some key resistance levels for Bulls. First of all we have the 61.8% Fib level from the Oct 14 low to Apr 15 high coming in at 9899. Next area of note is the upwards sloping diagonal trendline which has been in place since September 2011.  This line was broken in the second week of January this year. The market retraced only to fall back below it once more a few weeks later. Beyond that we have the Weekly 100 Moving Average (blue line in the chart below) which is closely hugging the 50% Fib level 10378.

The bias for this market for the days and weeks ahead is currently in somewhat of a grey area, with Bullish bias residing above the 100 MA and Bearish bias below the 200 MA (green line in the chart below).  The DAX is currently gyrating between these two levels.

(click on image to enlarge)

Bull targets :-

• 9899 – 61.8% Fib Level (Oct14/Apr15)
• 9926/9942 zone
• 9950 – Diagonal trendline
• 9997 – Last week’s high
• 10016 – Weekly S1
• 10064 – 50% Fib Level (Dec15/Feb16)
• Daily 100 MA (currently 10203)
• 10242 – Weekly S2
• 100 Weekly MA (currently 10309)
• 10378 – 50% Fib Level (Oct14/Apr15)
• 10387 – 61.8% Fib Level (Dec15/Feb16)

Bear targets :-

• Hourly 100 & 200 MAs
• 9741 – 38.2% Fib Level (Dec 15/Feb16)
• 9693
• 9674 – Weekly Pivot
• 9630/9612 zone
• 9593 (Gap fill 11/3/16)
• 9448 – Weekly S1
• 9396 – Last week’s low
• 9378

The Fundamental view should lean a slight bias towards the Bullish side in light of recent events, namely the ECB’s announcement on Thursday.  However, the RSI is overextended on some timeframes, which should lead to a slight pullback in price before resuming its trend higher.

And remember…

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