Italian Elections And The Impact On Euro

After the stalemate of the G20 in Moscow, the attention of the markets refocuses on the American political issues and the outcome of the elections in Italy. The minutes of the Fed have caused a real shock in the currency markets. The will of the FOMC to evaluate in the next meeting of March 19th – 20th the removal of some currencies stimolus has strengthened the Dollar and weakened the gold.

In the United States the week will be full of macroeconomic data that will culminate on Friday, March 1st with the ISM manufacturing. Prior to this, on February 26th , attention to houses prices, consumer confidence and homes sales; on February 27th , durable goods orders; on February 28th the second revision of GDP for the fourth quarter and the Chicago PMI index of confidence; finally, on March 1st ,apart from the Ism, we will also be able to know the data on income and personal spending of U.S. citizens.

EYES ON ITALY

While Europe is divided between those who would like to see a competitive devaluation of the Euro (Mediterranean countries) and those who are afraid of the inflation (Germany), Italy is going to resolve the uncertainty about its political leadership this week.. The Italian elections result could create volatility on all crosses against Euro. Anyway, there will be many macroeconomic data starting from February 27th with the M3 money supply followed the same day by the confidence of consumers and businesses. On February 28th , we will have the German unemployment, but especially the Euro zone inflation, which is expected by the ECB that absolutely wants to avoid the deflation. The week will close on March 1st with the PMI manufacturing.

JAPAN, THE LEADING ACTOR AS USUAL

Since the Japanese politic has directly entered the conduct of monetary policy, Japan is one of the major market movers in the market. This week, on February 28th , the industrial production will be disclosed; on March 1st the unemployment and the dreaded index of consumer prices.

Emergine countries

China: PMI manufacturing (March 1st)
South Africa: GDP (February 26th ), Kagiso index (March 1st )
India: GDP (February 28th )
Brazil: GDP and trade balance (March 1st )

Trade of the week

We can confirm our willingness to take advantage of the decline of the Pound to take advantage of some quite interesting trading opportunities. After GBP/AUD presented last week, this time we will enter long on GBP/CAD which seems to have once again confirmed the importance of the support area of 1.5450. As we can see from the graph, since 2011 the market has tried on several occasions to break through, but without success. So we can start the following operation:
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The technical condition of EURN/ZD seems to be ideal to open a long trade. The market correction was 4.5% from the peak in January, exactly the same percentage of December and October in the corrections. The New Zealand central bank governor has expressed its willingness to act on the oceanic currency to curb the excessive appreciation. Considering the presence of the up trend line in place by August 2012, the 200-days moving average and the engulfing bar of Thursday, we can open the following trade: