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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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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.