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19/08/2014: Weekly Trading Notes


KEY DRIVERS

  • “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

 

NEXT WEEK

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

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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.