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12/08/2014: Weekly Trading Notes


KEY DRIVERS

  • Wavering geopolitical concerns creating volatility in markets
  • But volatility beginning to calm down? VIX lower (below 15) and smaller ranges on forex pairs (such as Dollar/Yen) gold settling down.
  • US Earnings Season: 85% companies have now reported – just 16 corporate announcements this week and all the big guns having announced already.
  • Earnings have been positive with over two thirds beating estimates on revenue and around two thirds beating on revenue
  • Few US economic releases this week as Eurozone and UK take centre stage.
  • Dollar remains strong as it resists the signs of a correction for now.
  • Equity markets very much impacted by geopolitics and summer lull in volumes

 

EUR/USD – Showing signs of a technical recovery threatening. Possible rebound to $1.3475/$1.3500

  • Draghi tried to jawbone the euro lower in his press conference last week with talk of central bank divergence.
  • There is still a drift lower in price but the technical studies are suggesting limited downside potential.
  • Bullish divergences point to a potential technical rally.
  • The pullback towards the neckline of the huge top pattern $1.3475/$1.3500 is yet to be seen.
  • Watch for: German/French/Italian GDP and Eurozone HICP

GBP/USD – Weakness towards $1.6700 support band looks likely

  • Unlike with the euro, there has been very little sign of any recovery.
  • A 4 week downtrend continues and is on course to test the key support at $1.6700
  • The longer term outlook is increasingly becoming neutral.
  • The outlook would improve on a move above $1.6890
  • Watch for: UK Unemployment, BoE Quarterly Inflation Report

USD/JPY – Continue to play the range 101/103

  • Once more the calmer geopolitical tensions leading to lower volatility in the pair.
  • Tends to create a slight dollar positive bias.
  • Currently mid-range though
  • Watch for: Japanese GDP, Newsflow on geopolitics with increased tensions yen positive

 

Gold – Fluctuating on geopolitical tensions, looking to build now above $1300

  • Difficult to read as technical indicators are becoming very choppy.
  • There is still a slight upside bias (trading above moving averages, support at $1280 holding).
  • Holding above $1300 will begin to improve the outlook.
  • Sub $1280 opens $1259 and $1240.
  • Watch for: Newsflow on geopolitics increased tensions is gold positive

 

Indices – Continue to much prefer S&P 500

Seems to be a dichotomy between Wall Street and European markets.

S&P 500 outlook remains positive, whilst DAX, FTSE and CAC are still under big threat.

Proximity to Russian sanctions are a big element to this.

  • S&P 500 has formed support above 1900 and is way above the key rising 144 day ma (c. 1889)
  • DAX looked to recover but once again is under pressure. The March key low at 8913 is broadly intact though. There is a key overhead supply between 9400/9600
  • FTSE remains very messy on technical basis, there is now a resistance band 6640/6700.

 

WATCH OUT FOR

Wednesday 13th August

  • China – Industrial Production
  • Japan – GDP (Prelim)
  • UK – Unemployment and Average Earnings
  • UK – Bank of England Inflation Report
  • US – Retail Sales

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)

 

NEXT WEEK

Tuesday 19th August

  • UK – Consumer Price Index
  • US – Building Permits
  • US – Consumer Price Index

Wednesday 20th August

  • UK – Bank of England MPC meeting minutes
  • US – FOMC meeting minutes

Thursday 21st August

  • China – Manufacturing PMI (Flash)
  • Eurozone – French Manufacturing PMI (Flash)
  • Eurozone – German Manufacturing PMI (Flash)
  • UK – Retail Sales
  • US – Weekly Jobless Claims
  • US – Existing Home Sales

Friday 22nd August

  • Canada – Consumer Price Index

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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.