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17/06/2014: Weekly Trading Notes


KEY DRIVERS

  • Iraq tensions have weighed recently but markets starting to look past it perhaps.
  • Dollar Index back into the pivot range 80.4/80.6 but this should be a chance to buy – equates to the resistance band $1.3585/$1.3670 on Euro/Dollar.
  • Indices are showing signs of support again after the minor correction.
  • Gold has failed around the resistance band $1278 around the 144 day moving average
  • Focus on the Fed this week with the FOMC decision Wednesday, expect a further taper by $10bn but question of whether Yellen gives a hawkish leaning – will higher US inflation and the increased capacity utilisation yesterday put pressure on the Fed?

 

EUR/USD

  • Support around $1.3500 remains intact but the ceiling of resistance that starts around $1.3585 is aping the gains.
  • A lack to any real recovery signals on momentum suggests this is just another chance to sell.
  • Selling rallies into $1.3580/$1.3670 resistance band
  • Expect a retest of $1.3500 before $1.3475

GBP/USD

  • Lower UK inflation and higher US inflation (plus improved capacity utilisation for the US) could put downside pressure on Cable now in the run up to the Fed.
  • There is support band $1.6880/$1.6920
  • $1.7000 remains a big barrier with no clean break through yet.

USD/JPY

  • Abe looking to push through “Third Arrow” reform – also dovish leanings in monetary policy update last week.
  • The rate was looking fairly neutral again but is now pushing above the 102.00 pivot level again.
  • There is a sizeable resistance area 102.20/102.40 that needs to be overcome for the dollar bulls to claim control.

Indices

Equity indices have corrected as VIX volatility has jumped, but support is beginning to form once more.

  • S&P 500 forming support around 1926 – chance to buy?
  • DAX forming support above 9810.
  • FTSE is lagging still and breaching support at 6782 completed a top pattern implying 100 points downside.

Gold

  • Rallies as concern over Iraq increased.
  • But technical overhead supply around $1278 and the 144 day ma has capped the recovery which is falling away again – chance to sell?
  • Support for the US dollar could also pull gold lower.
  • Expect a retest of $1231 in due course

 

WATCH OUT FOR

Wednesday 18th June

  • UK – Bank of England Meeting Minutes
  • US – FOMC monetary policy PLUS press conference
  • New Zealand – GDP

Thursday 19th June

  • Switzerland – SNB monetary policy
  • UK – Retail Sales

Friday 20th June

  • Canada – CPI

 

NEXT WEEK

Monday 23rd June

  • China – Flash Manufacturing PMI
  • Eurozone – Flash Manufacturing PMIs
  • US – Existing Home Sales

Tuesday 24th June

  • Eurozone – German Ifo Business Climate
  • UK – Inflation Report hearings
  • US – Consumer Confidence
  • US – New Home Sales

Wednesday 25th June

  • US – Durable Goods

Thursday 26th June

  • US – Weekly Jobless Claims

Friday 27th June

  • Eurozone – German CPI

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