Dollar Gaps Down To Start The Week

by Phil Moore September 16, 2013

The week kicks off with a big gap on the charts as the dollar drops at the opening on the news that Larry Summers will be opting out of the bid to be the next Federal Chairman. Across the board the dollar has been pushed back, giving an early indication of the bias that markets are likely to show over the week ahead.

The dollar’s slide could be fuelled later in the week by comments from the Fed as the monthly Statement is released. Markets continue to look for the start of QE tapering. Analysis and digesting of Bernanke’s comments on Wednesday could provide a hint of when this will take place. Jobless Claims and Existing Home Sales on Thursday could add further fuel to the slide if the figures don’t’ come out in line with current analysts’ expectations.

Elsewhere Monday kicks off with the ECB President Draghi addressing markets. Policy here, together with inflation figures for the Euro Zone, may also help to shape early trends for the week. Figures for the German ZEW Economic sentiment on Tuesday will also provide evidence of how the Euro Zones largest economy is performing.

The British Pound has enjoyed something of a resurgence in recent weeks and investors will be looking for more signs of recovery over the coming week. CPI figures, the MPC meeting minutes (Wednesday) and monthly Retail Sales figures (Thursday) will ensure that there is plenty of data to digest for Sterling in the upcoming sessions.

Turning to stocks, Apple could prove to be a good stock to watch his week as investors digest the latest iPhone 5C release. So far indications are that markets are less than impressed with the new offering, with the markets selling off on Friday. Watch for the potential for more losses this week.

Key News This Week

Currency Pairs

EUR/USD - The Pairs overnight jump to as high as 1.3385 failed to see expected follow on buying to test 1.34. Gaps tend to be filled and while we would expect that to bet the case here (i.e. look immediately lower) it is also possible for a further more to 1.3450 before longer term fall continues.

USD/JPY - Having posted above 100.00 the pair fell back last week. Look towards the falling trend line which currently sits at 97.50 for support. From here there could be strong bounce.
USD/CHF - Further falls and an uncertain outlook for the USDCHF. Pressure remains to the downside. While the price remains below 0.9370 stay bearish.
GBP/USD - Sterling continues to show strength. Last week we mentioned calling the pair lower from the 1.5850 level. This level has been reached and with the price gap created overnight, we would weigh the next move to the downside this week.

Major Indices

DOW - Closing back above the 15,000 level, expect further gains on the DOW over the upcoming sessions this week. 15,000 serves as support to a test of 16,000.
NASDAQ - 3600 held as the Index posted gains on the week. With the market ranging over the past few sessions we are looking for a close above 3700 or below 3600 to offer some conviction as to the next move.
FTSE - Building from support at 6400, the market posted gains over the week closing above 6500. We expect further gains over the coming session. Look higher for a test of 6700.

Commodities

Oil – Closing above $110 gives this market a bullish sign. With the price briefly touching $112 the week prior, expect some consolidation at this price level before a further move up.
Gold – The risk on tones of the markets have not been kind to the Gold price recently. However the close above $1300 looks to provide a base for the a move higher. Back above $1350 is needed to regain the bullish momentum.