Markets Brace From FOMC Statement And Fridays’ NFP
Further gains were seen last week with most equity markets happy to push above recent highs. Markets have been buoyed by the current ‘risk on’ environment which has seen equities the key beneficiary.
News this week could however disrupt the current party. While generally news-flow is fairly light in most regions, the dollar (and therefore US markets) will be fully in the spotlight.
The biggest news items to look out for are the FOMC statement due for release on Wednesday and of course the Non Farm Payrolls figure. This data is due for release at the start of Fridays session.
Given the significance of both of these two fundamental factors, it is highly probable that markets will look to consolidate recent gains at the start of the week prior to these releases.
Key News This Week
- Monday – USD – Pending Home Sales
- Tuesday – USD - Consumer Confidence
- Wednesday – USD – ADP non-farm employment change, FOMC Statement , NZD - Rate statement
- Thursday – CAD - GDP (m/m), USD – Unemployment claims, AUD - PPI (q/q)
- Friday –GBP - Manufacturing PMI, CAD - Core CPI (m/m), USD - Unemployment rate, Non-Farm Payrolls, ISM Manufacturing
In Focus – USD/JPY
CALL – Following last week’s rate decision the Yen has continued to push higher against the greenback. It remains above its short term moving averages and despite recent gains, I think you have to continue to look higher.
I would use any dip back towards 90.25 to go long on the pair, looking for an eventual break of 91.50 on an end of day or end of week basis.
EUR/USD - Firmly pushing above 1.3400 and holding this level bodes well for the pair. A break above the top of the current rising channel at 1.3450 could signal further gains.
USD/JPY - In Focus
USD/CHF - The pair has remained above the recent lower moving trend line and the short term moving average has turned up. While above 9285 remain bullish.
GPB/USD - The UK economy has come into focus now the European fears have taken a back seat. This has hit the GBP hard. It could get ugly but be wary of any temporary bounce. Avoid for now.
DOW - I expect the DOW (and S&P500) to mark time early in the week and consolidate recent strong gains. Also don’t forget that news due for later in the week could shift the fundamental outlook dramatically.
NASDAQ - Much as above. With move big tech stocks reporting this week things could go either way. Poor results could see a reversal of recent gains as could the potential for poor fundamentals. Stand aside for now.
FTSE - A higher finish again on the FSTE as it mimics global share gains. The fundamentals for the UK economy are not looking good however. I would look for the Index to top around 6300 and then go lower - PUT
Oil – Oil sits between both higher resistance at 97.41 and lower rising trend line support around 95.30. Look for a move past either level and back in the direction of the break.
Gold – Gold spent most of last week testing the 1692 level but failed to hold gains above this level. 1630 looks good support and falling channel bottom around 1605. I would look higher if these levels are reached.
More big earnings reports are due this week with key technology companies in focus. Watch out for the following companies reporting after the bell this week - Yahoo (Monday), Amazon (Tuesday) and Facebook (Wednesday).
Other stocks reporting this week of note are Exxon Mobil (Friday Morning), Shell (Thursday) and Merck (Friday morning).