Live Chat

02/12/2014: Weekly Trading Notes


KEY DRIVERS

  • US dollar is looking to regain the ascendency moving into the crucial part of the week – his could drive breakdowns on EUR/USD and GBP/USD (look at USD/JPY, has already broken out). US Dollar Index is on the brink of breaking out again.
  • First of all ECB monetary policy decision along with Mario Draghi’s press conference will create euro volatility and drive equity markets. Draghi is unlikely to be able to push through full blown QE (sovereign debt purchases) quite yet, but he is likely to continue to jawbone the euro lower nonetheless.
  • A key look at the US labor market, starting with ADP (Wed), Weekly jobless numbers (Thu) and Non-farm Payrolls on Friday. The number is expected to be another month above 200,000 (last time it was below was January), with focus also looking for average weekly earnings growth.
  • Volatility remains high in commodities with oil (due to OPEC meeting) and Gold (due to Swiss Gold referendum) still yet to settle.
  • Watch for: ISM Non-manufacturing PMI, ECB rates, Non-farm Payrolls

Jobs

MARKETS

EUR/USD – Sell into strength within the range $1.2357/$1.2600, expect a downside break possibly on the ECB 

  • The euro remains a sell into strength with the key downtrend falling at $1.2490.
  • As we move closer to the ECB on Thursday the rate is coming under pressure again.
  • Draghi is unlikely to announce QE but his usual jawboning will create volatility.
  • The key question is whether jawboning is enough, the market knows what it wants and if Draghi continues to deny it, there comes a stage where disappointment will set in.
  • In the meantime, the strength of US data should continue to keep a lid on any euro gains.
  • Above $1.2600 changes the outlook.
  • Watch for: ECB rates/press conference and also Non-farm Payrolls

GBP/USD – Looking to sell into any strength

  • A recent consolidation band below $1.5736 should be resolved to the downside but for now the range continues.
  • Technical indicators remain in negative configuration.
  • Should just be a matter of “when” rather than “if” Cable breaks down.
  • Sub $1.5585 re-opens $1.5425.
  • Watch for: ISM Non-manufacturing PMI and Non-farm Payrolls

USD/JPY – Looking to hold on to a breakout above 119.07

  • Corrections continue to be used as a chance to buy, with the latest key lows at 117.22 and now at 117.86.
  • Any corrections are a chance to buy.
  • Bullish momentum is building again and the upside towards 119.85 is open.
  • Watch for: ISM Non-manufacturing PMI and Non-farm Payrolls

 

Gold – Outlook can be determined once volatility settles down

  • The “No” vote in the Swiss Gold Referendum should result in gold price weakness, but near term the sharp volatility and dollar weakness driven move needs to settle.
  • Ultimately though the pressure should continue to the downside with the dollar breaking out.
  • The key resistance is now the $1221 high from Monday and a breach would suggest the bulls are happy with the move.
  • The key pivot level at $1180.70 is the support.

Watch for: US dollar strength driven by US economic data.

 

Indices – Indices continue to gain on dovish central bank policy

With a lack of earnings growth this makes the tier 1 economic data crucial this week. There are a series of technical corrective signals coming through on these indices but strong economic data could blow them out of the water. Indices (such as the FTSE 100) with a large weighting to oil stocks have been volatile with the oil price movements and this could continue

  • S&P 500 has final got a deterioration in momentum and this could drive a near term correction. The support band is now around 2040.
  • DAX looks less corrective but today’s high was just 12 points below the all-time high at 10,050. There is a good support band around 9600/9800. RSI remains overbought.
  • FTSE 100 has been lagging the DAX but the rebound on Tuesday was due to the recovery in bombed out oil majors. Momentum is less stretched with the support 6600/6640 now needing to remain intact.

 

WATCH OUT FOR THIS WEEK

Wednesday 3rd December

  • Australia – Q3 GDP (Second reading)
  • China – Non-Manufacturing PMI
  • UK – Services PMI
  • US – ADP Employment Report
  • US – ISM Non-Manufacturing PMI
  • Canada – BoC monetary Policy

Thursday 4th December

  • UK – BoE monetary policy (plus statement)
  • Eurozone – ECB monetary policy (plus Mario Draghi press conference)

Friday 5th December

  • US – Non-farm Payrolls
  • Canada – Unemployment  

 

NEXT WEEK

Monday 8th December

  • China – Trade Balance

Tuesday 9th December

  • UK – Manufacturing Production
  • EU – ECOFIN meetings

Wednesday 10th December

  • China – CPI
  • UK – Trade Balance
  • New Zealand – RBNZ monetary policy

Thursday 11th December

  • Australia – Unemployment
  • Switzerland – SNB monetary policy
  • Eurozone – Targeted LTRO take up (2nd tranche)
  • US – Retail Sales

Friday 12th December

  • US – PPI
  • US – UoM Consumer Sentiment (prelim)

 


Ready to start trading?

Open an Account Try Demo

  • Archive

  • Topics

  • Videos