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30/09/2014: Weekly Trading Notes


  • Dollar strength continues to impact across markets.
  • Drop in core Eurozone CPI inflation has resulted in selling pressure on the euro and resulted in further broad dollar strength.
  • Pressure on Draghi and the ECB is mounting, but only expected to add meat to the bones of ABS and covered bonds purchases on Thursday.
  • Crucial economic data throughout the week will create volatility in forex markets – special focus on manufacturing PMIs, ECB and US employment data.
  • Non-farm Payrolls report is expected to show improvement back above 200k, but also watch for improving labor force participation and average earnings growth above +0.2%.
  • Strength of the dollar continues to put pressure on precious metals prices.
  • Indices looking for guidance only have another week to wait for the next earnings season.
  • WATCH FOR: ECB and Draghi’s press conference on Thursday, Non-farm Payrolls on Friday 


EUR/USD – Consolidation continues to be sold into   

  • The drop in Eurozone core CPI highlights problems in the region – and the pressure on the ECB to further ease monetary policy will heap further downside pressure on the euro.
  • Losing the $1.2660 support opens $1.2463 as the next low.
  • However there is very little real support now until the key July 2012 low at $1.2040.
  • Momentum remains incredibly weak.
  • Watch for: US ISM Manufacturing, ECB, Non-farm Payrolls

GBP/USD – Significant downside pressure suggests selling into strength

  • The outlook is weakening again.
  • The higher low at $1.6160 is being tested, if breached opens $1.6050 again.
  • Momentum indicators suggest the recent rebound was just a bear market rally and that any gains will be sold into now.
  • Watch for: UK PMIs for manufacturing and services, ISM Manufacturing, Non-farm Payrolls

USD/JPY – Looking to buy into any weakness for 110.65

  • A recent consolidation 108.24/109.45 has broken to the upside and implies a target of 110.65.
  • This is also the next key resistance from August 2008.
  • The outlook remains strong for the dollar and any weakness is being bought into.
  • There is a basis of support now 108.50/109.00.
  • Watch for: Non-farm Payrolls


Gold – Use rallies as a chance to sell for weakness to $1200 and then $1184.50

  • The outlook for commodities remains under pressure from the strong dollar.
  • The underside of the old downtrend channel (currently $1231) is an excellent basis of resistance in the past couple of weeks.
  • There is little reason to suspect that prices will not no retest the key December 2013 low at $1184.50.
  • Strong resistance comes in at $1241.
  • Watch for: Any dollar strength hitting commodity prices


Indices – Continue to prefer Wall Street over European markets.

Indices have struggled outside earnings season, but the Tier 1 macro data this week could be a positive drive.

  • S&P 500 has corrected recently but looks ready to resume the primary uptrend. Good support in the 1945/1955 band.
  • DAX remains in a corrective phase having lost the support at 9600. However the downside target of 9427 has been hit with support around 9400.
  • FTSE is similar to the DAX in having already hit its downside target at 6640, however there is no real support until the August low at 6529



Tuesday 30th September

  • 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



Tuesday 7th October

  • Japan – BoJ Monetary Policy & press conference
  • Australia – RBA Monetary Policy
  • Switzerland – CPI
  • UK – Manufacturing Production

Wednesday 8th October

  • US – FOMC Meeting Minutes

Thursday 9th October

  • Australia – Unemployment
  • UK – BoE Monetary Policy
  • US – Weekly Jobless Claims

Friday 10th October

  • UK – Trade Balance
  • Canada – Unemployment

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