A look around markets after the Belgium news and data
Apols for being scarce in the comments, obviously quite a bit going on. Here's a quick run down on how things stand and a review of all the data. I'll try to make some sense and stick to context.
European manufacturing and services told two different stories. Overall manufacturing has halted the drop since late last year but is far from out of the woods. Services picked up pretty well. New orders looked mostly solid, except in France.
The German sentiment numbers were better but the same old excuses and warnings are being trotted out. These types of indicators are likely to be effected by today's terror attacks but hopefully there will be nothing more and they will be a passing thought
UK prices are showing some signs of life but we need more than one report showing better monthly numbers to shift BOE thoughts that inflation is going to run higher. The core CPI holding at 1.2% keeps inflation on the tightrope. A drop below 1.0% would tip BOE expectations heavily to the dovish side. Above 1.5% won't bring the opposite effect but will lessen the dovish feeling.
The data isn't life changing for either the UK or Europe so it's pretty much as we were. I certainly don't see anything that would cause a snap back against these risk off moves is markets settle.
Right now markets are still glued to the wires and the sad and terrible news from Belgium. We've stopped falling in pairs that have seen a run to safety but the nerves will remain for a while yet. Before you think about fading these moves it might be wise to wait and see what happens at the US open as that will have a big say in how we fare through the rest of the day. There's not going to be a huge appetite in the market to take up risk trades right now.
If you're trading, stick to your defined levels but be prepared that they might not stand up to much if we get any further bad headlines.
