Price action over the past 24 hours has been a bit unusual in our opinion, with risk sentiment dramatically improving, currencies rallying sharply, and global equities racing higher on the back of a decent round of global data on Wednesday.

Indeed, Chinese PMIs were impressive, Australian GDP was very solid, and US ISM manufacturing was a pleasant upside surprise, but for the markets to react in such a strong and aggressive manner is suspicious, and we still remain quite cautious with any of these upside moves in risk.

A closer look at some of the major equity markets shows a strong bullish day on Wednesday, with the markets however still well confined to a more important bear channel and even possibly looking to carve out a fresh lower top ahead of the next downside extension.

Technically, the push higher in equities on Wednesday should not deter bears, and if anything, only give them an attractive level to sell back into. Instead, we attribute this latest surge in risk buying to early September flows, and some optimism that is more than likely to fade at any sign of softness within the economic data on Thursday.

In fact, we have already seen the first major bout of data on the day, with the Australian trade balance coming in significantly weaker than expected. Source: Bloomberg

Looking ahead, Swiss GDP (0.8% expected) is due at 5:45GMT, followed by UK Nationwide house prices (-0.3% expected) at 6:00GMT. Back to Switzerland at 7:15GMT for the release of retail sales, with UK construction PMI (53.2 expected) then out at 8:30GMT. Eurozone GDP (1.0% expected) is out at 9:00GMT, along with Eurozone PPI (0.3% expected), and then European event risk trickles over into the North American open with the European Central Bank rate decision (expected to remain on hold at 1.00%) at 11:45GMT.

US equity futures and oil prices have given back some of their gains, while gold trades mildly higher.

For the full story please visit www.dailyfx.com

 

Bye for Now

 

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