- 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
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)