23/09/2014: Weekly Trading Notes

KEY DRIVERS

  • Flight into safe haven assets driven by air strikes on ISIS positions
  • Move into US treasuries impacting on US dollar negatively, however this should just be a near term
  • Subsequently initial signs of a dollar correction, with a near term top on Dollar/Yen and Sterling finding support
  • Gold rebounding on safe haven flow/dollar weakness
  • Equity markets in correction mode with safe haven flows and a lack of positive catalysts
  • The lack of tier 1 economic data means that traders will take their lead elsewhere this week.
  • WATCH FOR: US housing data and German Ifo, but end of week could quieten down in the build up for a huge week of data next week 

 

EUR/USD – Rallies continue to be sold into   

  • Another near term rebound is being seen, but still expect the move to be sold into.
  • Momentum indicators suggesting that any rallies continue to be opportunities to sell.
  • Key resistance remains at $1.3000 (above opens $1.3100).
  • Still expect a move back to the 61.8% Fib retracement at $1.2786.
  • Watch for: German Ifo, dollar strength resuming

GBP/USD – Volatility calming down post Scottish referendum vote

  • Sterling has started to settle down, with support beginning to form.
  • The higher low at $1.6160 is now key, with a test of the 10 week downtrend being seen.
  • Momentum indicators showing improvement
  • Watch for: US housing data

USD/JPY – Medium term buying into a near term correction towards 107.40/50 support

  • A near term correction has set in on a move below 108.48, but it is still just a correction within the strong bull run.
  • The outlook remains strong for the dollar and a move towards 110.65 should be seen.
  • Watch for: Japanese CPI

 

Gold – Use rallies towards $1240 seen as a chance to sell

  • The outlook for commodities has been under pressure from the strong dollar.
  • Use the near term rebound as a chance to sell as the dollar should continue to strengthen.
  • There is plenty of resistance between $1240/$1260 to use as a chance to sell.
  • The real resistance comes in at $1280.
  • Watch for: An end to the flight into safe haven assets

 

Indices – Continue to prefer Wall Street over European markets. Prefer DAX over FTSE

Cautious sentiment has dragged on equities but the flight into safe havens has also driven the selling pressure.

Indices also struggling for positive catalysts outside earnings season..

  • S&P 500 is in consolidation mode but a break below 1978 opens a correction toward 1950 support.
  • DAX needs to hold above the 9600 pivot level that is the support, with the 61.8% Fibonacci retracement of the big sell-off at 9612 also now supportive. Holding a break above 9800 re-opens the highs.
  • FTSE remains a concern with the top pattern complete that implies 6640. Resistance growing around 6800 now.

 

WATCH OUT FOR

Wednesday 24th September

  • Eurozone – German Ifo Business Climate
  • US – New Home Sales

Thursday 25th September

  • US – Durable Goods

Friday 26th September

  • Japan – CPI Inflation
  • US – Q2 GDP (final reading)
  • US – University of Michigan Consumer Sentiment (final reading)

 

NEXT WEEK

Monday 29th September

  • Eurozone – German Flash CPI
  • US – Pending Home Sales

Tuesday 30th September

  • China – Final Manufacturing PMI (HSBC)
  • UK – Current Account
  • Eurozone – Flash CPI
  • Canada – GDP
  • Eurozone – German Flash Manufacturing PMI
  • US – CB Consumer Confidence

Wednesday 1st October

  • China – Manufacturing PMI
  • Eurozone – German Final Manufacturing PMI
  • Eurozone – Final Manufacturing PMI
  • UK – Manufacturing PMI
  • US – ADP Employment Report
  • US – ISM Manufacturing PMI

Thursday 2nd October

  • US – Construction PMI
  • Eurozone – ECB monetary policy + Draghi’s press conference

Friday 3rd October

  • China – Non-Manufacturing PMI
  • US – Services PMI
  • US – Non-farm Payrolls
  • US – Trade Balance
  • US – ISM Non-Manufacturing PMI

 

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