Friday, June 9, 2017

SuperThursday: like any other session...

Yesterday was the dreaded SuperThursday (elections in the UK, meeting of the ECB and the Comey case in the US, all the same day), and the markets did not suffer any visible excess, I would say that it moved like any normal day.

- In the United Kingdom, May did not have the expected success with his election advance. While he won the elections, he lost his conservative majority in parliament, and this new scenario can complicate his path to Brexit, and even his tenure in office. To continue these days the FXB, etf that follows the sterling, today reacting in fall -1.6%, tendency can continue until May defines its negotiations in favor of the parliamentary majority, because it is understood that the pound does not suit the Brexit.


The etf of British stocks EWU accompanies this fall (-1.3% today): these tend usually to diverge, which reveals even more the weakness of the currency today. On the other side of the ocean, we will see how much these events influence the FOMC, which will meet next week.


- The Comey case, former director of the FBI that appeared before the courts today, was just one more blow from the Democratic press that wants to lie down Trump. It did not bring anything new and it did not interest the markets. It does not give for more the analysis here: Trump continues and reinforced even more, the same as the dollar and the banking sector.

- The decision of the ECB was to maintain interest rates and the QE, before the loose progress of inflation and low wages, noting that the European economy is doing well. There are even rumors that Draghi intends to take the rates to negative territory, to boost the economy ... I would expect the quick and sure recovery of the price of crude oil before proceeding to drastic measures like that.


Already on Wednesday Bloomberg announced that the ECB planned to cut inflation prospects, a fact that weakened the euro, and strengthened the dollar and the Finance XLF sector (+ 1.55% at the moment). As I do not trade with futures, I prefer to follow the FXE etf that follows the euro, and which has been bouncing from its resistance at $109.

The euro can stop its 2-month rise, because in addition to the news, it is bouncing from 
its significant resistance at $109, is oversold and with its MACD crossing to the downside.


The Recommended Reading


For any trader that, as in my case, follows the world economy before deciding my purchases, I believe that the Brexit, and its outcome, will be the event that will mark the markets in the coming days or weeks, I have no doubt. To understand well how this will affect the English and European economy and trades (its relevance, the right of passport, its legislation, its consequences, etc.) I recommend this didactic article by Toby Clarence-Smith, written for Toptal, which will clarify the many doubts that exist with this topic.

The link is: https://www.toptal.com/finance/market-research-analysts/el-impacto-de-brexit-en-el-sector-de-servicios-financieros/es


The transfer of offices and brain drain can be one of the consequences. 
Immediate negatives of the Brexit. The banks have already started with it.
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