February Rate Decisions And NFP Decisions In Focus
The lack of risk appetite continued for a second week, with once again, key markets giving up recent gains. Looking head key data due for release this week could well see the beginning of a more prolonged ‘risk-off’ tone. Alternatively it could simply mark this out a correction and see a resumption of the prior trend.
The news flow for the week kicks off with German, UK and US Manufacturing data, all due out on Monday. Further hints of a slowdown in the manufacturing performance of each region could stimulate further hopes of additional stimulus. However any stimulus plans while bullish for Stocks, will have a negative effect on the respective currency.
Rate decisions all feature heavily over the course of the week. We kick off with the Australian Rate decision on Monday evening, followed by both the European Central Bank and Bank of England’s decisions on Wednesday morning. Consensus market analysis shows little expectation of any imminent change to current rates, although markets will be watching for any hint of a near term rise, in the UK in particular.
Following US Trade balance figures on Thursday, the week ends with the release of the latest Non-Farm Payrolls figures. Last time these numbers disappointed, so given the recent Tapering efforts, markets will be keen to see if these figures hint at a further tightening of upcoming monetary policy.
On the commodity front, Oil looks likely to continue to rally from a technical perspective. Improving manufacturing figures could also spur on recent gains and see Crude push through the $100.00 mark. Gold on the other hand continues to look for direction. While the metal looks to be bottoming, there will likely be reduced appetite if the markets end the week less risk averse.
Key News This Week
EUR/USD – Having broken upper trend line support the bias now turns to the downside. 1.3522 should cap any rallies and we would look lower. 1.3470 looks to provide the first near term support while 1.3400 is a reasonable target this week if downside momentum remains.
USD/JPY – Putting in a bearish candle on the weekly chart bias remains lower into this week. Next levels of interest are 101.60 and ultimately 100.30. On the upside, a risk on market with a break back above 103.40 would indicate the resumption of the prior bullish trend.
USD/CHF – The pair is back above the previously mentioned falling trend line, ending the week at 0.90598. Having broken through and closed above 0.8986 we would expect further gains into the coming week. Targets include recent highs at 0.9100 and 0.9160.
GBP/USD – A pullback on the pair saw Cable end the week at 1.64341.The wider uptrend since the start of August 2013 remains in place but recent price action remains ‘choppy’. We would look for 1.6310 as the marker for a break of this current trend. 1.6525 provides near term resistance.
DOW – Last week saw another sell off in markets. The Index fell through the identified 15800 level, bouncing from 15600 to end the week at 15698. 15600 should offer strong support on a retest. Below here look to 15400 as the next level of support.
NASDAQ – The Nasdaq pulled back last week, bouncing from just below 4050 to end at 4103. The tech Index looks more bullish than its counterparts. While it has not been immune to the recent sell off, we continue to look higher while the close remains above a rising trend line on the chart.
FTSE – Closing at 6510 for the week the market bounced from just above the 6400 level as expected. While longer term the market outlook looks positive, the FTSE has been characterized by long periods of ‘ranging’. 6850 and 6400 define the range.
Oil – Despite a sell off over the course of the week, price closed off lows to finish at $97.48. The bigger picture remains broadly constructive with the pullback well contained above $97.00 support. Looking higher $98.50 provides the next target with $97.00 and $95.00 offering support to moves lower.
Gold – The gold commodity markets did not escape last week’s sell off, with the expected test of $1300 per ounce put on hold. However the market did show plenty of support despite selling off to end the week at $1244. We continue to expect the price to move higher from these levels.
Several companies are reporting this week. Here are the key Binary Stock Options –
Monday – Ryanair
Tuesday – BG Group, BP
Wednesday – GlasxoSmithKline, Coca-Cola, Walt Disney, Merck & Co, Time Warner
Thursday – AstraZeneca, Vodafone, General Motors Company, Kellogg Co
Friday – None