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05/08/2014: Weekly Trading Notes


KEY DRIVERS

  • Geopolitical concerns just calming down now slightly – ceasefire in Gaza, no escalation of tensions in Ukraine
  • US Earnings Season has been strong with around two thirds of companies that have reported beating estimates on revenue and around the same number beating on earnings.
  • Fears of Fed tightening have subsided for now following the flat average hourly earnings growth in the Non-Farm Payrolls report.
  • Calming down of equities selling pressure helping to reduce volatility – VIX back from 17 to 15.
  • Dollar strength remains a feature of forex trading, driven forward by market fear that the Fed may raise rates in the first half of 2015.
  • Gold/Silver remain under pressure due to dollar strength

 

EUR/USD – Extremely bearish. Sell into any strength

  • An attempted technical rally is running out of steam and any strength remains a chance to sell.
  • Next key support comes around $1.3300 (November low) and $1.3100 (September low).
  • The neckline resistance around $1.3475/$1.3500 should cap any attempted recovery.
  • Longer term downside target is $1.3000 from the head and shoulders top pattern.
  • Watch for: ECB rates decision and Mario Draghi’s press conference

GBP/USD – Near term correction towards 89 day ma. Now looking for a buy signal around $1.6900

  • The outlook has changes in the past week with the sharp selling pressure.
  • Breaching the support of the 89 day moving average and the last long term uptrend has changed the outlook.
  • Now an area of overhead supply $1.6920/$1.7000 and the rate could struggle to move above here now.
  • Watch for: UK Manufacturing, BoE rates decision

USD/JPY – A close above 102.80 would begin to change the outlook positive

  • The range 101.00/102.80 has been in place (on a closing basis) for 4 months.
  • Improving momentum is positive but there is yet to be a confirmed breakout (close above 102.80) needed to suggest a test of 104.10
  • Watch for: Performance of the Dollar Index (.DXY) to drive Dollar/Yen

 

Gold – Continues to struggle, looks to retest $1280

  • The safe haven trade is not benefiting gold as it has done previously, due to the dollar strength
  • Support at $1280 has remained intact but the pressure is mounting through a series of lower highs now.
  • Trading now consistently below the 144 day ma and momentum is deteriorating.
  • Sub $1280 opens $1259 and $1240.

 

Indices – Continue to much prefer S&P 500

Indices have come under big selling pressure which could lead to a technical rally near term.

However only Wall Street really maintains a positive outlook of the major indices.

DAX continues to underperform (exposure to Russia being cited by key companies now)

  • S&P 500 has formed support at 1916 and is way above the key rising 144 day ma (c. 1886)
  • DAX is oversold and could induce a technical rally – but key primary uptrend is broken and moving averages breached. There is a key overhead supply now between 9400/9600
  • FTSE remains very messy on technical basis, but longer term uptrend has been breached and rallies are now falling over at lower levels.

 

 

WATCH OUT FOR

Tuesday 5th August

  • US – ISM Non-manufacturing PMI

Wednesday 6th August

  • UK – Manufacturing Production
  • US – Trade Balance

Thursday 7th August

  • Australia – Unemployment
  • UK – Bank of England rates decision
  • Eurozone – ECB rates decision plus press conference
  • US – Weekly Jobless Claims

Friday 8th August

  • China – Trade Balance
  • Japan – BoJ rates decision
  • Canada – Unemployment

Saturday 9th August

  • China – CPI

 

NEXT WEEK

Tuesday 12th August

  • Eurozone – German ZEW Economic Sentiment
  • G20 meeting (Day 1)

Wednesday 13th August

  • China – Industrial Production
  • Japan – GDP (Prelim)
  • UK – Unemployment and Average Earnings
  • UK – Bank of England Inflation Report
  • US – Retail Sales
  • G20 meeting (day 2)

Thursday 14th August

  • Eurozone – French GDP (Prelim)
  • Eurozone – German GDP (Prelim)
  • Eurozone – CPI (final)
  • US – Weekly Jobless Claims

Friday 15th August

  • UK – GDP (1st revision)
  • US – University of Michigan Consumer Sentiment (Prelim)

 


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Research Risk Warning

At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.