Indeed E$ continues to consolidate during the period I was away and it does look like its not about to break-out anytime soon. Despite the negative fundamentals last week, E$ still managed to hold the 1.2800/20 support line and we are probably going to stay within the wedge (see graph) until nearer the trend line (darker line).
I spent last week in Italy visiting Florence, Bologna, Venice, Padua, Brescia, Varese and Milan. And here are my observations:
1. The group of Chinese who used to spend (like there is no tomorrow) in high end boutiques has vanished almost totally.
2. Though the main bulk of tourists are still the Chinese, the number has definitely dropped drastically. This group's agenda seems to be more on sightseeing than to swarm boutiques.
3. Notably an increase in American tourists. Age group mainly from 40s to retirees. Not interested in branded goods but will indulge in fine Italian food.
4. Another group that caught my attention is the Japanese. Mainly in tour groups - young couples to the older folks. Not into big time shopping.
5. High end brand boutiques are generally less busy as compared to 1 year ago. Even factory outlets are not as packed. This observation is further confirmed at the custom department in the airport where the line used to be so long and each individual with a thick stack of tax rebate forms. Though the Italian authority has improved the process but the spending power of the tourists has dropped significantly and one can get the custom stamp and your cash tax rebate in a much shorter time now. You can hardly see people carrying those big orange or dark brown carriers at the airport.
6. Restaurants were no longer as packed in the piazzas. In Milan, I was able to walk into a famous restaurant around 7.30pm without a reservation and was shown to a pretty good table though I was asked at the entrance... "With or without reservation?", for one moment I thought I was about to be turned away.
7. There seemed to be discrimination against Asians in some boutiques. One even refused to give me tax rebate to discourage me from buying. The lady offered a lame excuse that it was instruction from their HQ in Paris, though clearly I was in Italy and tax rebate is obviously under the jurisdiction of the Italian government.
8. Whether the Chinese has stopped buying luxury goods as a result of this discrimination or they simply just evaporated because of the weak economic conditions back home, one thing is for sure, the retail business in Italy is falling off the cliff. This is a very stark contrast to about a year back and to imagine that Europe is going through a down cycle, the last thing they wish for is a drop in tourist spendings especially in a country like Italy where it contributes to more than half of their GDP.
On the CFTC speculative account, E$ net short increase to -72,570 vs -50,265 in the week before.
On the orders, stop loss orders can be found at 1.2780/90, 1.2890, 1.2990/00, 1.3010/20 and 1.3070/85. Noteworthy limit orders can be found at 1.2800/20, 1.2845/55, 1.2990/00 and 1.3070/85.
I shall not present any technical views today as I will need sometime to get my market rhythm back.
But at a glance, it should still be 1.2850 to 1.3000 range for now.
All the best and tomorrow's update will be in the afternoon.
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| E$ Daily - Still trapped within the wedge |
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