09/07/2014: Trading outlook ahead of the US session

In the absence of any real market moving data, it has been a fairly quiet morning on the European markets amid low volumes. Equities have taken the disappointing Asian session and continued to drift lower in the main, led by the underperforming FTSE 100. However the DAX is remaining higher, possibly after bullish sentiment on the back of last night’s incredible result at the World Cup.

Traders are now looking towards the meeting minutes from the latest FOMC meeting for the Federal Reserve to provide some sort of direction. Updates to members’ economic projections will be interesting, whilst also detail on the discussions over an exit from ultra loose monetary policy will catch the eye. FOMC member Kocherlakota remained suitably dovish (no change there) as he spoke to reporters last night.

The big move of the day has been on the FTSE 100 which has fallen a further 0.6% and is seriously testing the primary uptrrend. The index has also fallen below 6700 for the first time since late April. With momentum in weak configuration, the bullish outlook is under threat.

FTSE   09072014

Sterling has come under a little pressure this morning as the rally on GBP/USD following the disappointing UK manufacturing index peters out. The support at $1.7100 remains an interesting near term gauge, but there is still a sense that this is just a consolidation more than a correction and any drift towards the $1.7060 support will be snapped up by the bulls once more.

EUR/USD has shied away from the near term resistance around $1.3640 once more and again the rallies will be viewed as a chance to sell. The Fed meeting minutes will be key for near term direction, whilst Mario Draghi is also talking later today and could influence.

USD/JPY has remained fairly flat throughout the European session after gains in Asia. With a complete lack of long term direction now, playing the 101.30/102.80 range seems to be the only viable way to trade for the time being.

Gold is another instrument that has consolidated in the European session in front of the FOMC minutes. Near term pressure is on $1326 but this is another rice constrained by recent dollar strength and again playing the range is the old viable near term trend.

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