So yesterday was indeed another directionless day for the Euro. Most of the day we were hovering around the previous Friday close like the proverbial bees around the honeypot. But in the closing hours of this week we did finally see a break through that level and a sudden blip to the upside which in thin, TA-based trading, managed to reach the 200 SMA on the 1H chart - well, except for the EURJPY which appeared to spend the day trying really hard in both directions and getting nowhere.
Euro charts - 1H:
So why the spike up towards the close?
I would suggest it was due to speculative traders with near-term shorts with little profit, if any, closing out for the weekend ahead of some potentially market-moving events over the weekend. In particular we have current, extremely important and high-profile, negotiations between the EU and the UK, which could produce comments and events at any time. Then we have President Putin’s weekend meeting with Germany’s Chancellor Merkel. Whilst there is nothing specific on their agenda that is particularly and specifically sensitive from the Euro perspective, issues such as the NordStream 2 gas line and various sanctions and trade war issues, as well as Iran, where Europe is in disagreement with the US, could have some impact on where we open on Monday and what the sentiment is likely to be.
Another issue starting to fester is rising out of the ruins of the Morandi bridge in Genoa in Italy. I am sure all our condolences go out to all the families, friends and relatives of the victims of this tragedy as well as to the entire Italian population. But even as the dust is still settling on the rubble and Italy holds its day of mourning, so the fallout is gathering pace and spreading fast. Everyone wants to know why this happened and who is accountable for such a tragedy.There is a saying that the best form of defence is attack, and we are seeing some rapid political finger-pointing going on. But beyond the political self-defence there are huge issues here which are spreading throughout the European countries like the summer forest fires around the globe. Issues which will inevitably impact on national budgets in a significant way. Issues such as:
How many other bridges are suffering from such structural weaknesses?
How do these bridges cope with today’s traffic volumes and commercial vehicles which they were not built to withstand?
Were the bridges built according to specifications or was there corner-cutting (such as weak concrete) to save costs and increase profits?
Are the safety checks carried out properly and are they sufficient in both scope and frequency?
And then that leads to the inevitable wider concern: what other areas of infrastructure from that same era are also now at risk of collapse?
There is already talk in my country of residence concerning bridge safety, structural checks, and how much money needs to be spent, and hasn’t been spent, on infrastructure. It is so easy for authorities with cost-saving needs to postpone renovations and renewals year after year, until finally something breaks, bursts or collapses. How much money has not been spent on these projects in the past, and how much will now have to be found in the aftermath of the Morandi bridge to catch up?
But bridges can often be beautiful things, architecturally challenging, economically essential and aesthetically pleasing:
The Vasco da Gama Bridge spans the Tagus River in Lisbon, Portugal. It is the longest bridge in Europe with a total length of 17.2 km: