- “Moderate progress” in talks over reducing tensions in eastern Ukraine – helping improve investor sentiment
- Volatility continues to calm down, with VIX falling (below 12.5) and smaller ranges on forex pairs (such as Dollar/Yen) safe haven gold drifting lower.
- Concerns over European stagnation continues to drive Eurozone sovereign bond yields lower.
- Dollar remains strong and is looking to break higher once more after a period of consolidation.
- Corporate earnings have been positive in both US and Europe – but almost at an end now.
- Equity markets remain impacted by geopolitics and volumes have been
- Jackson Hole symposium – key speeches by Janet Yellen and Mario Draghi
EUR/USD – Consolidation between $1.3330/$1.3445
- Could be a volatile end to the week with the key Eurozone flash PMIs and then both Yellen and Draghi speaking at Jackson Hole.
- Possibility of a technical rally due to bullish momentum divergences, but euro bulls are struggling to gain control.
- A close below $1.3330 opens key November low at $1.3295
- The pullback towards the neckline of the huge top pattern $1.3475/$1.3500 is yet to be seen.
- Watch for: Fed meeting minutes, Eurozone flash PMIs and Jackson Hole and Eurozone HICP
GBP/USD – Selling any rallies Weakness towards $1.6700 support band looks likely
- Plummeting after that UK CPI figure dropped to 1.6% from 1.9% and well below the 1.8% forecast.
- Chances of a UK rate hike in 2014 now looking slim.
- Falling to test the April low at $1.6552 and possibly the March low at $1.6459
- Watch for: Meeting minutes from Bank of England and the Fed, Yellen at Jackson Hole
USD/JPY – Continue to play the range 101/103
- Slight bullish bias within the trading range 101/103.
- Calmer geopolitical tensions leading to lower volatility in the pair and a reduction in the “war premium”.
- Slightly positive technical indicators, but do not point to an imminent upside breakout of the range.
- Watch for: Geopolitical tensions and also Yellen at Jackson Hole
Gold – Price drifting lower as geopolitical tensions improve, sub $1300 opens $1280
- In the absence of a “war premium” gold trades weaker, but there has been a habit of this changing very quickly in the past few weeks if geopolitics deteriorate.
- The medium term outlook remains very mixed – with moving averages and momentum all neutral.
- Key support remains intact at $1280.
- Upside resistance remains $1324.50.
- Watch for: Newsflow on geopolitics, with increased tensions positive for gold
Indices – Continue to prefer S&P 500
Indices bouncing back again.
S&P 500 outlook remains positive, whilst DAX is hugely volatile around the Russian geopolitics, FTSE more sedate.
- S&P 500 is pushing through resistance levels and is once again eyeing the all-time high at 1991.
- DAX pushing back towards the 9490 implied target. There is a key overhead supply between 9400/9600
- FTSE has already hit its implied target of 6770 from its equivalent base and is pushing towards the key reaction high at 6834.
WATCH OUT FOR
Wednesday 20th August
- UK – Bank of England MPC meeting minutes
- US – FOMC meeting minutes
Thursday 21st August
- China – Manufacturing PMI (Flash)
- Eurozone – French Manufacturing PMI (Flash)
- Eurozone – German Manufacturing PMI (Flash)
- UK – Retail Sales
- US – Weekly Jobless Claims
- US – Existing Home Sales
Friday 22nd August
- Canada – Consumer Price Index
- Jackson Hole Symposium – speeches by both Janet Yellen and Mario Draghi
Monday 25th August
- Eurozone – German Ifo Business Climate
- US – New Home Sales
Tuesday 26th August
- US – Durable Goods Orders
- US – Consumer Confidence
Thursday 28th August
- Eurozone – German Consumer Price Index
- US – GDP (prelim)
- US – Pending Home Sales
Friday 29th August
- Eurozone – Consumer Price Index (Flash)
- Canada – GDP