UK Business Optimism at 2013’s low

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The latest UK survey measuring sentiment levels in the market has been released on Monday. According to it, the business optimism characterizing British companies dropped to a three-year low given the recent global economic turmoil regarding the oil market with its supply glut and China with a major slowdown in its economy. Also, the rumors surrounding a possible Brexit had a meaningful impact on the direction of business prospects.

BDO’s Index (BDO meaning the society which launched the survey) regarding Business Optimism was the indicator that hit 2013’s low this month. The statement following the report explained that the results are an indication of the fact that companies are expecting their output growth rate to go down, under the long-term trend. The BDO spokesman, Peter Hemington, stressed the importance of the repercussions coming not only from the global concerns perspective but also from the approaching EU referendum.

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Yesterday, the EUR/USD major went under the 1.12 handle for a short period of time but managed to move back to 1.1205 after weak data release from the European side, which increased fears about a “brand new” Greek crisis. As Monday’s reports showed a stall in the bailout talks, Greece’s yields spiked. Analysts are implying that the rise in the Greek yields may be a testimony of a new debt crisis threatening to explode again. This kind of information makes the Euro unable to profit from the risk-off sentiment in the market.  At the same time, fresh German data release puts their industrial production in December lower than expected, corroborated with a diminished trade surplus.

The GBP/USD, on the other hand, attempted to go higher, but instead remained under the 1.4443 threshold, at 38.2% in the range between the 1.4079 support line and the 1.4668 resistance line, in spite of the considerable reduction in the UK’s trade deficit: the goods trade deficit fell to 9.917 billion pounds as per latest data, compared to the expected 10.35 billion pounds The good news is being counteracted by the slight drop in the major European equity markets. Despite this, the major is still trading above the 10-DMA (Daily Moving Average) at 1.4442.

Crude prices bounced up and down yesterday, alternating between gain and loss and by this managing to hit the session low at $29.40 per barrel early in the day. For most of the session, the price lingered just above the $30.00 threshold, although there were recent peaks recorded in the $34.5 per barrel area. The setback is mainly due to the risk aversion set up by global turmoil. Lacking any relevant US data release, the WTI (West Texas intermediate) price trend is expecting the API (American Petroleum Institute) inventory release later this week.

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Technical Strategist, CMT level 2 (MTA). Looking for good opportunities in the market, wherever they are, since 2009.