Outlook for Europe: US job figures keep markets cheery

16.11 AEDT, Friday 12 October 2012

Outlook for Europe: US job figures keep markets cheery

By David Land (Head of Analysis, CMC Markets)

The US jobs data overnight certainly seems to be something of an anomaly but it seems to have continued the relatively cheery mood of the markets in the last 24 hours. It's very much worth keeping in mind though that there is a lot of market choppiness at the moment with a number of the major currencies and commodities trading in a wide oscillation. Recent trading conditions have frustrated many in the market. Particularly after a time when there have been a lot of trend following opportunities these instruments are in something of a state of flux.

I have been impressed with the strength of the Chinese and Hong Kong markets over the course of the week. This has been a critical support for a number of the Asian equity and currency markets. Over the weekend we will see the trade balance figures released and this will be significant for the immediate outlook for the Chinese economy. At this stage there is fairly minimal expectation of further major stimulus programs being offered by Chinese authorities.

The USD has been moderately weakening in the last 24 hours but now seems stuck in the short term. Technically speaking the EUR is now oscillating around the 200 hour moving average. I think that the market is waiting for the next significant news to start things driving along again. Whilst there has been plenty of talk about the outlook for the US and Europe in recent days the overall moves of the market have been insignificant. Until price can break out of these recent trading ranges I wouldn't be expecting significant momentum to develop.
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