European stocks traded along the flat line before tomorrow's European Central Bank meeting, while data from China and Australia indicate global growth is slowing.
From the Macro stand point, European retail sales dropped in July as the region's deepening economic slump eroded consumer demand from Germany to Spain. Sales slipped 0.2 percent from June, when they rose 0.1 percent, the European Union's statistics office in Luxembourg said today. Economists had forecast a decline of 0.2 percent, according to the median of 21 estimates in a Bloomberg News survey. From a year earlier, sales dropped 1.7 percent.
The Markit composite Purchasing Manager's Index (PMI) for August posted a seventh month of contraction, leaving the Eurozone economy on course to fall back in technical recession in the third quarter. The index fell to 46.3, down from an initial estimate of 46.6 and below July's 46.5.
The common currency dipped against the dollar, the euro traded at 1.2545$ or 0.22% lower versus the greenback off its high of $1.2629 seen on Tuesday and over a cent below Friday's two-month high of $1.26378.
Germany sold 3.61 billion euros of new 10-year government bonds on Tuesday, drawing bids worth less than the amount on offer, signalling that investor appetite for safe-heaven assets is drying up.
The German auction sparked a rally in Germany's Dax index up 0.60% to 6,974.46 at midday. The broader Stoxx50 traded 0.30% higher to 2,443.88. While Southern European benchmarks are fighting to keep the flat line with the Spanish Ibex up 0.07% to 7,493.50 and the Italian Ftsemib 0.58% lower to 15,134.37.
Crude Oil futures retreated 0.26% to 95.025$ a barrel, while Gold futures fell 0.15% to 1685$ an ounce near a six month high at $1,691.64 an ounce.
Investors are nervous ahead of the ECB's policy decision on Thursday. Analysts are widely expecting a rate cut to 0.5% from 0.75%, but the main question is whether ECB President Mario Draghi outlines the details of a proposed bond-buying program.
Yields on benchmark 10-year Spanish government bonds were 0.33% lower to 6.53, while Italian ones were 0.78% lower to 5.624 percent.
Without remarkable US macro data, Europe will be on the driver sit, stay calm and follow your plan: YOU got two “hot” day ahead.
Originally posted at www.77sigmatrading.com
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