06/05/2014: Weekly Trading Notes

KEY DRIVERS

  • US earnings season a bit tepid – Failing to drive S&P forward. Still questions over whether there will be a “Sell in May and go away?” Markets have been driven by M&A more so.
  • Dollar under serious pressure – Dollar Index at an 8 month low. Key breakouts near term on EUR/USD, GBP/USD. Dollar/Yen breaking lower opens for a test of the bottom of the 3 month support band
  • Yellen and Draghi take centre stage
  • Political tensions in Ukraine are not going away, prospect of further sanctions against Russia

EUR/USD

  • Test of key high at $1.3967 is now on.
  • Yellen talks first, Slow and steady taper?
  • What will Draghi do to talk down the Euro this month? Further talk about QE is likely.
  • Second reading of Eurozone inflation next week plus GDP!!

GBP/USD

  • Highest since August 2009.
  • Driven by strong UK data.
  • Upgrade of OECD to UK GDP, downgrade to US
  • Overbought near term could lead to consolidation or a correction back towards $1.6900.

USD/JPY

  • Key low at 101.84 broken
  • Bottom of the 3 month range now being tested
  • 144 day moving average (a very decent gauge of support at 102.09) has been broken.
  • Next key low at 101.31 then the Feb low at 100.74

Indices

  • Key near term levels now being eyed on indices
  • FTSE 100 targeting the highs again at 6867, but will the urge to take profits result in a loss of momentum?
  • DAX ranging between 9367/9645
  • S&P at less than 1% off its all-time high again – but earnings season has failed to really give it much rocket fuel so far.

Gold

  • Has spiked on the Ukraine news.
  • Back above $1300 which is a near term gauge for bullish/bearish position
  • Can it now stay there?

WATCH OUT FOR

Wednesday 7th May

  • Japan – BoJ meeting minutes
  • US – Janet Yellen testifies to the Joint Economic Committee

Thursday 8th May

  • Australia – unemployment
  • China – trade balance
  • UK – BoE rates
  • ECB – rates and Draghi press conference
  • US – Weekly Jobless Claims
  • Friday 9th May
  • China – CPI

NEXT WEEK

Tuesday 13th May

  • China – Retail Sales and Industrial Production
  • Germany – ZEW survey

Wednesday 14th May

  • UK – Unemployment and Quarterly Inflation report

Thursday 15th May

  • Japan – GDP
  • Germany – GDP
  • Eurozone – CPI for April and GDP
  • US – CPI

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