- 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
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