10/06/2014: Weekly Trading Notes

KEY DRIVERS

  • ECB easing should be: Euro negative, positive for European indices and positive for peripheral Eurozone bonds (yields lower)
  • Dollar Index has broken above the pivot range 80.4/80.6 to a 4 month high
  • S&P 500 positing 8 closing all-time highs in past 10 sessions – driven by the record lows on the VIX (can it last?)
  • Gold has jumped into the resistance band $1260/$1268 but should be a chance to sell

 

EUR/USD

  • The short covering rally following the ECB monetary easing seems to be over.
  • A failure to break above key resistance at $1.3670 has resulted in a sell off.
  • Selling rallies into $1.3580/$1.3620 resistance band
  • Expect a retest of $1.3502

GBP/USD

  • Despite strong UK Manufacturing data the dollar is strengthening.
  • Cable falling below support at $1.6780 suggests selling into strength is the strategy.
  • Expect weakness towards $1.6700.
  • The resistance high at $1.6844 is strengthening as another potential lower high as the outlook for Cable continues to shift towards a stronger dollar.

USD/JPY

  • Is still a good gauge for the improvement in the Dollar Index and the higher low at 102.10 on Dollar/Yen needs to hold to maintain the recovery.
  • The pivot level around 102.00 still seen as a key near/medium term sentiment gauge.

Indices

The record lows on the VIX (hitting the lowest since early 2007) is helping to guide S&P 500 higher. DAX is also pushing to all-time highs, but the FTSE 100 continues to struggle.

  • S&P 500 is though overbought on RSI (which is now over 73 and the highest since January 2013).
  • DAX will look to hold above 10,000 but has a support band now 9900 to 9990.
  • FTSE is lagging still and continually failing to break through resistance – lagging on a day of strong data is a concern.

Gold

  • On-going lack of demand from Asia and now the removal of the “war premium” as Ukrainian tensions ease.
  • Arguable support from a global central bank easing monetary policy, but Dollar strength should counter that.
  • Therefore any bounces should be short-lived.
  • The price has rallied today through $1260 on increased volume as COMEX opened.
  • This move is still likely to be seen as a chance to sell.
  • Now into a resistance band $1260/$1268.
  • Expect a retest of $1231 in due course

 

Watch out for:

Wednesday 11th June

  • UK – Unemployment
  • New Zealand – monetary policy

Thursday 12th June

  • Australia – Unemployment
  • Eurozone – German & French CPI
  • US – Retail Sales

Friday 13th June

  • Japan – BoJ monetary policy
  • China – Industrial Production
  • US – University of Michigan sentiment (Prelim)

 

Next week:

Monday 16th June

  • Eurozone – CPI (May revision)

Tuesday 17th June

  • Australia – RBA meeting minutes
  • UK – CPI (May)
  • Eurozone – German ZEW Economic Sentiment
  • US – CPI (May)
  • US – Building Permits

Wednesday 18th June

  • UK – Bank of England Meeting Minutes
  • US – FOMC monetary policy PLUS press conference
  • New Zealand – GDP

Thursday 19th June

  • Switzerland – SNB monetary policy
  • UK – Retail Sales

Friday 20th June

  • Canada – CPI

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