European Closing Thoughts 16/08/12

• Jobless claims climbed by 2,000 to 366,000 in the week ended Aug. 11, Labor Department figures showed. The median forecast of 45 economists surveyed by Bloomberg News called for an increase to 365,000. The four-week moving average, a less volatile measure, dropped to 363,750, the fewest since the week ended March 31.Bloomberg reports.
• The Fed Bank of Philadelphia's general economic index increased to minus 7.1 in August from minus 12.9 the previous month. Economists forecast the gauge would improve to minus 5, according to the median estimate in a Bloomberg survey.
• New-home construction in the U.S. fell 1.1 percent to a 746,000 annual rate from June's 754,000 pace, Commerce Department figures showed today. The median estimate of 79 economists surveyed by Bloomberg News called for 756,000. Building permits, a proxy for future construction, rose to an 812,000 pace, the most since August 2008.

As a result of these macro data US stocks advanced, sending the S&P500 Index toward the highest level since April to 1,409.12 or 0.26% higher, the DJIA gained 0.31% to 13,205.30.

Oil prices held near 3-month high on worries about possible supply disruption amid Middle East tensions and a sharp drop in US inventories. Brent futures for October delivery were unchanged at $114.31 a barrel

Gold prices hovered above $1600 an ounce on hopes of Central Bank stimulus, but encouraging US data pared expectations that any such move might happen soon. The precious metal traded 0.57% higher at $1,611.86 an ounce.

In the currency market, US macros pressured the dollar against most major currencies. The dollar index was 0.18% lower to 82.50. The  euro rose in the afternoon versus the greenback 0.35% to $1.2331.

In Europe, stocks reinforced early gains sending the Stoxx50 to 2,456.53 or 1.08% higher, the German Dax 0.71% higher to 6,996.29. Italian Ftsemib and Spanish Ibex were the main gainers in the regional benchmarks space respectively up 1.87% to 14,930.30 and 4.05% at 7,417.30.

Spanish 10 year government bond yield fell 1.79% to 6.523 while the Italian comparable was 0.38% higher to 5.79 percent.

With the holiday season at its peak, Jackson Hole just few weeks away and German decision on the ESM pending, liquidity was an issue today too. To us it looks like: a low volume rise on a lot of hope without a lot of substance. This is the reason why we are pushing the idea to wait on the side if your plan tells you to fade the rally, and to protect yourself in the case you are trading this bull run.

The market is always right don't forget.

Have a pleasant evening.

Originally posted at www.77sigmatrading.com