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13/05/2014: Weekly Trading Notes


KEY DRIVERS

  • Equity markets straining to breakout. Driven by M&A positivity rather than strength of earnings season. Will we seem profit taking up at these levels again on FTSE?
  • Dollar rallying again, driven by the market’s expectation of ECB action next month. Key breakouts near term on EUR/USD, GBPUSD. Dollar/Yen breaking lower opens for a test of the bottom of the 3 month support band
  • Gold still moves on geopolitical tensions in Ukraine
  • UK Quarterly Inflation report could impact sterling hugely

EUR/USD

  • After consolidation yesterday more pressure today on the Euro
  • Now back to the key support area $1.3680/$1.3700
  • 144 day moving average is the basis of support at $1.3700.
  • Even the Bundesbank has now stated that it is open for action: rate cut, negative deposit rates or even purchases of asset backed securities
  • Second reading of Eurozone inflation on Thursday plus GDP!!

GBP/USD

  • Corrected back into the important near term support band $1.6800/$1.6840
  • But the intraday chart shows a two week top pattern formed which would confirm on a move below $1.6800.
  • Selling pressure driven by dollar strength
  • But UK inflation report could indicate the need for rate tightening sooner than the guided Q2 2015 if growth and inflation targets are increased – also look for spare capacity reducing.

USD/JPY

  • Support band around 102 now.
  • Still is the classic reflection of trading sentiment.
  • Also yen strengthens on increased geopolitical tensions.
  • Japanese GDP on Thursday could impact

Indices

  • Look strong – not apparently impacted by geopolitics as Wall Street moves into new high ground
  • S&P at a closing all-time high again – but what happens when earnings season comes to an end, however the gains have been driven largely by M&A.
  • FTSE 100 brief peak above 6876, but will the urge to take profits result in a loss of momentum?
  • DAX was 10 points off its all-time high today of 9794

Gold

  • Incredibly uncertain moves.
  • Support band $1275/$1280.
  • Resistance band $1300/$1305.
  • Still spiking around on Ukraine news.

 

Watch out for:

Wednesday 14th May

  • UK – Unemployment and Quarterly Inflation report

Thursday 15th May

  • Japan – GDP
  • Germany – GDP
  • Eurozone – CPI for April (2nd reading)
  • Eurozone – GDP
  • US – CPI

Next week:

Tuesday 20th May

  • Australia – RBA meeting minutes
  • UK – CPI

Wednesday 21st May

  • Japan – Monetary policy & press conference
  • UK – BoE meeting minutes
  • UK – Retail Sales
  • US – FOMC meeting minutes

Thursday 22nd May

  • China – Flash manufacturing PMI
  • Eurozone – Flash manufacturing PMIs
  • European Parliamentary Elections (Thursday and Friday)
  • UK – GDP 2nd reading
  • US – Existing Home Sales

Friday 23rd May

  • Eurozone – German Ifo
  • Canada – CPI
  • US – New Home Sales

 


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