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15/07/2014: Weekly Trading Notes


KEY DRIVERS

  • Portuguese banking shock shows firstly how nervous investors still are but secondly how desperate investors are to buy dips.
  • Earnings season in the US underway – US big banks are beating expectations and with decent outlook statements/improvements in market conditions (Citi, Goldman Sachs, JP Morgan) now for Bank of America (Wed) and Morgan Stanley (Thu)
  • Peripheral Eurozone yields calming down after Portugal banking scare, but German and French yields continue to fall – fear of deflation?
  • Gold is moving around on market appetite to risk after Portugal
  • Eyes on Yellen’s testimony today and Wednesday, but also the Chinese GDP which could drive an improvement in risk on Wednesday
  • Oil prices continue to fall as geopolitical risks in Iraq and Ukraine quieten and Libyan supply increases – Brent testing Key April low $103.95, WTI sub $100

 

EUR/USD – Sell into strength, or on a break of $1.3574

  • The rate has done little in the past week, forming a trading band between $1.3574/$1.3650.
  • Longer term technical indicators suggest selling into strength

GBP/USD – Bullish, look to buy into weakness towards $1.7100

  • Strong UK economic data continues to underpin the rise in Cable.
  • UK CPI much higher than expected.
  • A dovish Yellen should continue to drive the rate higher.
  • Positive technical indicators shows a support band $1.7000/$1.7060.

USD/JPY – Look to sell within the range for a retest of 101.30

  • The technical indicators are now becoming on the bearish side of neutral.
  • Although the support band at 101.30 remains intact the downside pressure is growing.

Indices – Continue to much prefer S&P 500

With earnings season underway, expect S&P 500 to continue to outperform, European indices hit by weak data

  • S&P 500 set to burst to new all-time high ground above 1986 and push towards 2000
  • DAX held the primary uptrend and support of the 144 day ma. A move back above 9810 resistance would re-open the highs
  • FTSE is the big laggard still and broke its primary uptrend (which has longer term weak implications), into resistance band 6750/6800

Gold – Support at $1306 is key for the bull recovery

  • The longer term outlook is now less bearish having broken the downtrend dating back to October 2012.
  • A spike lower on improved risk sentiment has threatened the one month recovery.
  • A move below $1306 would quickly re-open the next real support which is not until $1280

 

WATCH OUT FOR

Tuesday 15th July

  • Janet Yellen testimony to Congress
  • New Zealand – CPI

Wednesday 16th July

  • China – GDP
  • UK – Unemployment
  • Canada – BoC monetary policy

Thursday 17th July

  • Eurozone – CPI (final June)
  • US – Building Permits

Friday 18th July

  • Canada – CPI
  • US – University of Michigan consumer sentiment

 

NEXT WEEK

Tuesday 22nd July

  • US – CPI
  • US – Existing Home Sales
  • G20 meeting

Wednesday 23rd July

  • Australia – CPI
  • UK – Bank of England meeting minutes
  • New Zealand – RBNZ monetary policy

Thursday 24th July

  • China – Manufacturing PMI (flash))
  • Eurozone – Manufacturing PMI (flash))
  • UK – Retail Sales
  • US – Weekly Jobless Claims
  • US – New Home Sales

Friday 25th July

  • Eurozone – German Ifo Business Climate
  • UK – GDP (Q2 preliminary)
  • US – Core Durable Goods

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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.