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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