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Weekly outlook key points

Last updated: May 3rd, 2017 at 09:58 pm

General Outlook:

  • Markets are still coming to terms with the dovish move from the Fed. In the absence of little significant US data and a shortened week due to the Easter holiday it is a quiet start to the week.

US trade weighted dollar

  • FX – US dollar could be set for a period of underperformance following the dovish Fed. EUR/USD is technically positive and set up to test $1.1375 and possibly the range high $1.1465. GBP/USD will be torn between a potentially weaker dollar and the threat of Brexit following internal UK Conservative Party ructions. USD/JPY is under downside pressure and is struggling to hang on to key support at 111.00. Commodity currencies should be supported by the accommodative Fed.
  • Indices – A dovish Fed should be positive for equities but Yellen’s concerns over global growth could be a concern. German DAX is holding on to uptrend gains and is set to test 101,122/101,165 resistance. S&P 500 is maintaining its strong momentum and is on course to test next resistance 2082, whilst 2000/2010 is supportive. FTSE 100 has struggled for the past month with resistance 6200/6235 and concern over faltering momentum.
  • Commodities Gold should be supported by a dovish (dollar weakening) Fed, but technically the momentum continues to wane in the rally. Key support at $1225. Oil is still a driver of market sentiment and the dovish Fed should be a positive; whilst the Doha meeting for OPEC/Non-OPEC on 17th April also a positive. WTI has strong support c. $36.25 with Brent Crude support at $38.25.

Key Economic Calendar events due this week:

Tue: Eurozone Flash PMI, UK CPI, German Ifo and ZEW; Wed: US New Home Sales, EIA oil inventories; Thu: UK Retail Sales, US Durable Goods, US Flash PMI, Japan CPI

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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.