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Market Wrap
An Englishman’s home is his castle, that is until someone offers him more money than what the house was paid for initially. Then it is purely an asset for financial gain and a lot of the perceived wealth a person in the UK has is based around how well the homes they own are appreciating in value. The government know this and the banks play on this greed too. Getting a business loan is nigh-on impossible for someone with little credit or savings, but you can get an 95% mortgage if you are trying to get on the property ladder. As the pandemic is coming under control with vaccines, the focus is now on the well-being of our nation. Today the Halifax house price index in the United Kingdom rose 8.2% year on year in May 2021. Which is the fastest rate of change in nearly seven years. The monthly change was up 1.4% compared to market expectations of 1.2%. The government’s stamp duty holiday is helping to drive prices up with prospective buyers racing to complete purchases ahead of June’s deadline.
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On the good news the FTSE 100 traded higher and remained at the elevated levels until the US open. The US dollar index has been dropping through the entire London session, which has given the GBPUSD some help in moving to the upside.
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The EURUSD is also benefitting from the dropping greenback and the data out of Europe.
The ActivTrader sentiment indicator is still showing that 59% of traders are bearish the pair even as the momentum on the daily chart is showing support and rising prices are more likely. Today’s price action for the single currency has almost unwound last Thursday’s price drop which created the first weekly low in six weeks. If we can get above Thursdays high this will be a good bullish signal for the coming days.
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The German DAX is back to all-time highs even as German factory orders unexpectedly declined. The strength in the market could have been tapered by the worse than expected figure if had not of been for the upwardly revised March number. The better revision is made even better considering the amount of disruption felt when the Suez Canal was blocked by the “Ever Given” container ship back in April.
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Today is the WWDC keynote event from Apple Inc. and the Nasdaq is currently trading within Friday’s value area as traders wait for any new surprises from the tech giant. At the London close shares in the United States are mixed after trading mostly lower in the premarket. The nonfarm payrolls report on Friday offered some optimism, showing the unemployment rate was down to 5.8%. This week’s CPI will be on traders’ minds more than anything else so during the quiet run up in the economic calendar I do not expect much movement unless we have some new headlines that the algos jump on.
