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

 

hide comments
  1. There are a number of reasons that can be pointed to.

    Economic data of late has been strong for UK. German GDP was positive today, but French GDP disappointed. FTSE 100 is performing in line with DAX today, both outperforming CAC 40.
    FTSE 100 has a large weighting in mining companies which have been performing strongly of late (specifically on better Chinese trade data), which DAX and CAC do not.
    DAX greater exposure to Ukraine is also a concern for investors.

    I hope this helps.

Leave a Reply

Your email address will not be published. Required fields are marked *