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22/07/2014: Weekly Trading Notes


KEY DRIVERS

  • Geopolitical tensions in Ukraine and Gaza – but these are now beginning to reverse
  • But possibility of “Stage 3” sanctions against Russia “far-reaching consequences for relations on a broad range of economic areas”
  • US Earnings Season progressing well with strong showing on both earnings and revenues – big tech stocks in focus this week – Apple and Microsoft
  • Geopolitics a key driver of oil – Brent Crude prices lost $10 in 3 weeks (due to recovering Libyan supplies) but has since recovered on events in Ukraine –
  • Chinese flash PMIs to drive risk appetite on Thursday

 

EUR/USD – Bearish. Sell into strength, or on a key break of $1.3475

  • The big February low at $1.3475 is being threatened now.
  • A breach would open the way towards the pattern implied target of $1.3375.
  • Momentum is poor but nearing a point at which a technical rally could set in.
  • Selling in the resistance band $1.3550/$1.3600 would be ideal.
  • Watch for: Eurozone flash PMIs

GBP/USD – Bullish. Looking for a buy signal in the support band $1.7000/$1.7060

  • Strong UK economic data continues to underpin the rise in Cable.
  • Positive technical indicators shows a support band $1.7000/$1.7060.
  • A slight consolidation drift continues but the bulls remain in control medium/long term.
  • Watch for a buy signal in the support band for a trigger to test the all-time highs again above $1.7191.
  • Watch for: UK MPC meeting minutes

USD/JPY – Look to sell within the range for a retest of February low

  • Risk aversion trade in forex, so yen has benefited from safe haven flows.
  • Dollar/Yen increasingly weak and testing key lows.
  • Deteriorating technical indicators suggest rallies are falling over at lower levels.
  • 101.60 to 102.00 is  decent band to sell.
  • Pressure on key Feb low at 100.74

 

Gold – Longer term technical outlook is showing signs of improvement

  • Support above $1280 with the 144 day moving average again the basis of support (currently $1293)
  • Currently moving on geopolitical tensions, and is calming down slightly as tensions ease.
  • But the longer term technical outlook is improving now – with longer term moving averages rising, downtrend since October 2012 broken

 

Indices – Continue to much prefer S&P 500

With earnings season doing well, S&P 500 is performing very strongly.

Interestingly though the FTSE 100 is now at an 8 month relative high versus the DAX Xetra.

DAX suffers more when Russian tensions surface due to reliance on its energy imports.

  • S&P 500 set to burst to new all-time high ground above 1986 and push towards 2000
  • DAX has breached the primary uptrend but support of the 144 day ma has held. Key support around 9600.
  • FTSE looks very messy on technical, having broken its primary uptrend. However it is now testing the resistance at 6800, above opens 6875

 

WATCH OUT FOR

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

 

NEXT WEEK

Monday 28th July

  • US – Pending Home Sales

Tuesday 29th July

  • US – CB Consumer Confidence

Wednesday 30th July

  • Eurozone – German CPI (July flash)
  • US – ADP Employment Report
  • US – GDP (Q2 Advance)
  • US – FOMC statement

Thursday 31st July

  • Eurozone – CPI (July flash)
  • Canada – GDP
  • US – Weekly Jobless Claims

Friday 1st August

  • China – Manufacturing PMI (Govt and HSBC)
  • UK – Manufacturing PMI
  • US – Non-farm Payrolls
  • US – ISM Manufacturing PMI

 


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Research Risk Warning

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.