European markets are set to open higher after a stellar GDP print which we have seen for the U.S. economy yesterday. Investors are still stunned when they see that the final number was well above the expectations and the U.S economy is showing no signs of slack. However, as we said yesterday that the GDP number is not entirely a true reflection of the current optimism amid investors, as this is more clearly seen in the consumer confidence which clearly dipped below the expectations. Moreover, there is a question over the personal consumption part which did show improvement, but there was no evidence of that when we look at the core durable numbers or the retail data.
Regardless of that investors have cheered the headline number and the European indices have started flirting with highs once again and given that the Santa rally is not far, this momentum and a slow grinding move towards the upside could well continue, as we march towards the end of the year. There is no doubt that many traders actually have taken a full advantage of the recent sell off, which we experienced in the markets. The debate for further measures announced by the ECB during their next meeting can be stretched on several pages among market pandits, but the fact can never be neglected that only the ECB bullets are not enough to put the region on the recovery track. This is one of the reason that the OECD confirmed once again that Europe could be a trouble zone for the global economy. They also suggested that the central bank should take the initiative of buying the sovereign bonds but how likely is that going to happen, some investors are not buying that for now.
Back in the UK, the three amigos McCafferty, Governor Mark Carney and Kristin Forbes did what they do best which is mixing the cocktails of contrary messages, and confirmed that the next important move by the BOE will be increasing the interest rate, because through their telescope they do see less slack in the economy. The economic docket will deliver the GDP reading today and if we do get a positive number we could see a rally in the equity market for the UK stocks and a further upward momentum building for the GBP currency.
Due to a short trading week in the US because of the thanks giving holidays, we will get a number of economic reports for the U.S. economy. The expectations for the durable goods orders are for 0.6% which is a lower reading as compared to the previous reading of 1.1%. U.S. Weekly jobless claims data will also be released today with the forecast of 287K.
Finally, it is the personal income and personal spending data which could make the headlines for the U.S. however, we do expect the trading volume to stay lower and taking less risk could be a preference for many traders ahead of holiday season.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.