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01/07/2014: Weekly Trading Notes


KEY DRIVERS

  • Dollar remains under increased selling pressure. Key levels being tested or broken on all major pairs.
  • Equity markets rebounding after PMIs although the near to medium term outlook remains corrective for FTSE and DAX
  • Gold is still struggling to make the upside break despite a weak dollar
  • Heavy week of data, especially on Wednesday and Thursday
  • Focus on Janet Yellen tomorrow (who is sure to toe the dovish line and not make the same mistakes that Mark Carney has been making recently)
  • Also Non-farm Payrolls a day early due to Independence Day. Focus on payrolls staying above 200,000 and also the number of people entering the labor force (which was 192k last month) along with the participation rate.

 

EUR/USD – look to buy if support now holds

  • Key upside breakout above resistance at $1.3670 as risk sentiment turns more positive
  • This is a key level now if the bulls can hold above the support band $1.3640/70 then the outlook will turn far more euro positive

GBP/USD – look to buy into weakness

  • Incredible upside break above $1.7000 and now new highs dating back to October 2008.
  • No real resistance until 50% Fibonacci retracement of the huge credit crunch sell off at $1.7330.
  • RSI over 70  could limit upside, with a good band of support now $1.7000/$1.7060

USD/JPY – wait and see

  • The bulls have once again supported around 101.30.
  • This means a rally is now on with resistance at 101.60/101.80
  • Lacking overall trend and remains difficult to trade.

Indices

Equity markets giving a variety of outlooks, with S&P 500 remaining strong, while DAX and FTSE lag

  • S&P 500 bearish key one day reversal is being threatened as the bulls appear to be resilient
  • DAX hints of a corrective top pattern but support around 9810 broadly held and this is the key near term floor – struggling to gain momentum in the past few weeks.
  • FTSE sharp rally with China related plays driving after the PMIs – however lower lows in place and needs above 6840 to defer the corrective outlook.

Gold – wait and see

  • The outlook is now improving having struggled in the past 2 weeks, due to a lack of physical demand.
  • Just in the past 24 hours it is trying to break higher – seems to be driven by the end of the ceasefire in Ukraine.
  • The primary downtrend dating back to October 2012 is under serious pressure now.
  • Key near term support is now at $1306

 

WATCH OUT FOR

Wednesday 2nd July

  • US – ADP Employment report (200k exp)
  • US – Janet Yellen speaking at the IMF

Thursday 3rd July

  • UK – Services PMI (58.3 exp)
  • Eurozone – ECB monetary policy update (no change  but more meat on the bones of TLTRO from Draghi)
  • US – Non-farm Payrolls (210k exp)

Friday 4th July

  • US – public holiday, Independence Day

 

NEXT WEEK

Tuesday 8th July

  • UK – Manufacturing Production (especially spare capacity)

Wednesday 9th July

  • China – CPI
  • US – FOMC meeting minutes

Thursday 10th July

  • China – Trade Balance
  • UK – Bank of England monetary policy

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