All eyes on Europe – Huge volatility expected in EU equities
The platform is set to start the new week on a positive footing after the solid retail sales last Friday.
The index of US500 closed retail at absolute highs after the Friday gain of 1.9% which brought the loss on the week to 1%- the bulls need the index to break 3950, which could set off the trend and look at the short position in CFTC report, if the rally of Friday continues. If it happens, we can see some systematic players cover short and propelling the market higher. The impact that may have an options market makers too and the need to buy back delta hedges is also there.
The earnings of US in this week with 14% of the US500 market cap reporting could get Netflix and Tesla workout from clients.
EU equity markets held on, but this week there is political issue of Italy and the decision regarding NS1 from Russia has the potential to inject some huge volatility in EU equities. The Nord Stream 1 decision the market almost sees this as binary and could see relief, clear worry depending on what the Russians do after the maintenance has finished this Thursday-it could navigate the head line fest.
The USD rallied against almost all G10 FX last week with USDX stopping shy of 109- the USD is clearly at the epicenter of markets and economics at present and a falling USD could be good for equity and commodity bulls. Europe is especially sensitive now as the ECB’s balance sheet is increasing at a clip and this is feeding into further EUR weakness.