Morning Call. Market Overview for 06.10.2016

The Big Picture

Germans have up until now invested their money in the money market, savings accounts, short and long dated Government bonds and in insurance. These were particularly safe and well yielding investments. As a consequence of the ECB´s extremely expansive monetary policy under the reigns of president Draghi, we find ourselves in an era of negative interest rates. The yield on German 10 year government bonds has dropped from 10% to 0% in the last 25 years. Reaching a stage where one momentarily has to pay to invest in German Government bonds. At the launch of the Euro, 16 years ago, private households were able to yield 6% p.a on their liquid assets. In the past 4 years this has shrunk to 3.4%, this figure being supported by accounts holding old higher coupon bonds. As these older bonds are reaching maturity, this yield is now melting down further. A rise in energy prices and inflation will lead to further wealth debasement. A reassessment in investing capital is of vital importance.

DAX

The DAX is in a sideways trend.  Resistance is at 10820, support at 10250

Euro / USD

The Euro is in a large sideways trend against the Dollar. Support is at 1.0822, resistance at 1.1429.

USD / JPY

The USD is in an upward trend

Gold

Gold is in a downward trend

WTI Oil

WTI Oil is trending sideways . Resistance is at 50.66USD and support at 42.72 USD

Overnight:

The Dax saw profit taking on Wednesday, losing 0.32%. Negative influence was given by a weaker Wall Street and the rumor of the ECB reducing their bond buying program. Largest loser in the DAX was RWE at -3.67%. Deutsche Bank stocks rise 2.77%  on speculations over reaching a deal over the height of its fine with the Department of Justice. Tomorrow´s employment figures now remain the focus. Developments on the US job market will be a decisive factor as to wether the Fed will lift interest rates. US markets closed higher and Asian markets also traded firmer. The USD is unchanged whilst Gold and WTI Oil soften.

Economic Data:

• 08:00 Germany: Factory Orders
• 14:30 USA: Initial Jobless Claims

Quarterly Results:

• No relevant data

RoboForex Analytical Department