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25/04/2014: Trading outlook ahead of the US session

Geopolitics surrounding Russia and Ukraine have remained a key driving element to trading this morning. The Ukrainian leadership have given a 48 hour deadline for Russia to explain the build up of a military presence on the border. Investors remain clearly concerned by this as stock markets have been hit by the news, with the DAX taking the brunt of the selling pressure in the major European indices. The gold price has been underpinned by the news and continues to push higher; whilst across the fx majors, it appears as though the dollar is under pressure. S&P futures are pointing to a decline of around 4 points at the open.

UK retail sales this morning gave a positive surprise as an annualised 4.2% growth beat expectations. Traders will now be looking towards the Michigan Consumer Sentiment this afternoon for a steer, however it is likely that investors will continue to focus on geopolitics and news driven trading.

EUR/USD has continued to push gradually higher through the morning with a series of higher lows. As I said in the morning report, there is a slight positive bias but the moves have little real conviction and bulls are very tentative still. I am running my long position, looking for a test of $1.3854.

GBP/USD continues with its slightly positive outlook within the trading band. The push higher came on the back of the Retail Sales data this morning, but this move has since settled but as yet there seems to be little intent on really pushing Cable higher for a breach of $1.6841. I would look to continue to play this range.

USD/JPY as I spoke about this morning, having fallen over at 102.50 it has continued the sequence of l lower lows. A breach of 102.07 has now opened 101.85 as the next support. I would continue to use rallies as a chance to sell.

Gold consolidated for much of the morning but has now begun to push higher. Breaching the $1297.90 high from yesterday, as I write this it is challenging the resistance around $1300. A successful breach and subsequent support above $1300 would change the outlook considerably, so watch for the to a move around these levels. Gold is very much trading on geopolitical news though now.

Indices remain under pressure, especially the DAX. The DAX reacted badly yesterday to the announcement of Russian military activity on the Ukrainian border and the move today is still on the legacy of this escalation. Extremely choppy trading this morning on the DAX is not helping sentiment, so it might be wise to let the dust settle before taking a meaningful view. FTSE 100 has coped far better this morning, but once more trading has been very choppy. I would be concerned if there were to be a breach of 6661 as this would complete a top pattern, but for now once more it may be best to wait and see here how geopolitical events develop before taking a view.

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