17/07/2014: Trading outlook ahead of the US session

The European trading session has been fairly quiet with little really to get the pulses racing. The Eurozone CPI came bang in line with expectations and to be honest, Euro/Dollar barely even blinked. In fact across the board this morning the forex majors have been extremely quiet. Safe haven flows had taken hold during the Asian session after the announcement of the Russian sanctions, but since then, other than a correction in equities, there has been little movement. The S&P 500 futures suggest that there will be a fall of around 12 points at the open.

Here’s hoping that traders in the US session can take control, or else today will be little more than a footnote amidst what has been an active week so far. The Weekly Jobless Claims will be looked upon to help provide some direction. The announcement at 13:30BST is expected to show the claims rising slightly to 310k (from 304k last week). However this would still be on trend for the improvement that continues to be seen in the US labor market. There is also some data to watch in the housing market, with Building Permits (1.04m exp) and Housing Starts (1.02m exp) when the data is announced at 13:30BST. Perhaps there will be some action as Fed member James Bullard speaks this afternoon (around 17:30BST). Bullard is a non-voting member of the FOMC but still his views may impact on the dollar.

The only real move made during the European session has been on GBP/USD which has been dragged back towards the support around $1.7100. I am still viewing corrections in Cable as a chance to buy as I see good support now between $1.7060/$1.7100. The Yen has merely consolidated the strength found during the Asian trading session. Most other forex majors are basically flat on the day aside from the Kiwi Dollar which has just started to break down again and seems destined to test the support around 0.8650.

Trading FTSE 100 or the DAX Xetra has been a difficult game of late. Whenever you think that a consistent trend might start to emerge, the next day there is a retracement. For a second time this week, a strong green candle on FTSE 100 has been followed by a sizeable decline again as the recovery bulls have their wings clipped. This week’s price activity just seems to be indicative of the problem that the FTSE 100 has faced over the past 3 months. An inability to hold any gains before the selling/profit-taking pressure resumes. The resistance comes in around 6800 now.

The recovery in gold amid the safe haven asset flows seems to have found resistance in the band $1306/$1310 this morning. This is a key level to now watch as if the gold price fails to breach the resistance it could begin to fall back towards the 144 day moving average again (currently $1291.80).

Leave a Reply

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