European Markets Higher Ahead Of German IFO

European markets are trading higher after a mix session yesterday. It was the economic data which dragged the markets lower, especially the dissatisfaction about the German data spooked investors. Traders are going to watch the German IFO number, due this morning and will draw their conclusion about the economy. As Germany is considered as the economic engine of the euro zone, any faults in the economic engine will become a serious problem for the European Central Bank. Although, on the other hand, softer economic data does remind the importance of the QE and Germans perhaps may not vigorously crticise the ECB as they have been in the past.

Back in Riga, once again hopes are very slim for any fruitful results but given the history of negotiation patterns, there is always one party who decides to given in. So far, the officials from creditors have played one beat which is there no deal in sight. If in reality there is no deal, another deadline passes away with no solution, we could see the pressure building up on the euro against the basket of major currencies. The EUR/USD pair could revisit the level of 1.05 or perhaps the support of 1.480. But, the other alternative scenario could be that there is very little frame work agreed and another data is drawn up to resolve the issue then we could see the EUR/USD consolidation at current levels. However, by any miracle, if Greece does unlock another payment to keep them afloat, the impact on the euro could be immensely meaningful. The EUR/USD pair could take the resistance of 1.10.

As for the U.S., the economic data released yesterday was brutal no matter what angle you look at it, but traders have ignored those numbers as the NASDAQ index once again recorded another record high. Going into next week, all eyes will be towards the Fed and what they have to say about the rate hike. June rate is pretty much out of question, so more grilling will be focused towards the September deadline.

Disclosure & 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.

by Naeem Aslam