Where Now For Markets Following NFP’s?
Positive figures on the labor front with better than expected figures on Fridays Non-Farm Payrolls were the impetus for Indices to push higher. The broad benchmark index the S&P 500 pushed above 1600 showing the continued appetite for risk on the markets.
Moving into a new week expect continued momentum with little news due for release that is likely to derail the currency momentum. Taking a broader view of economic events, only the release of the latest Chinese CPI figures on Thursday, is likely to curtail this ‘risk on’ appetite.
This week the news flow is light. In the main focus is likely to key regional events such as the rate decisions due for release by the Bank of Australia and the Bank of England.
While neither of these banks is expected to signal any key shift in current rates, the RBA (Royal Bank of Australia) is perhaps the riskier of the two events. Any sign of continued slowing growth from China could see rates drop and the AUD/USD head into a tail spin.
Commodity markets remained mixed with oil showing little clear indication of direction, while the gold price continues to look vulnerable. With the current bullish momentum in equities, the gold price looks likely to remain under pressure until we start to see signs of weakness in the current rally.
Key News This Week
In Focus - Gold
Remaining below the bottom of a falling channel, the gold price remains vulnerable to further falls in the near term.
Expect bias to remain to the downside, with rallies towards 1500 providing what is likely to be a good level to go short. Look for a break to target and retest recent lows.
EUR/USD - Little has changed from a technical perspective on the pair. Pushing as high as 1.3240 last week, gains were erased with support again found at above 1.30 (1.3030 to be exact). Continue to play the range until we see a decisive break either way.
USD/JPY - Gaining strongly following the NFP figures, the pair looks likely to have overextended itself and could be due a pullback. While longer term 1.00 could well be broken, at present a decline from current highs back to 97.00 is expected.
USD/CHF - The pair tested the 92.00 level again as expected. Look for additional gains over the coming days. On a break of 0.9383 look for a quick move and daily close above 0.9400.
GBP/USD - Since hitting its low at 1.4830, the pair has posted a series of impressive daily gains. Expect high levels of volatility this week with the imminent rate decision. Look at 1.5600 as the likely ceiling for further gains.
DOW– Despite strong gains and a push above the 15000 level, the index closed just short of this level on a daily close. However given current sentiment, expect to see a further move on this level early this week. 1450 remains near term support.
NASDAQ – With a strong break through 3300, bias for the index remains bullish. Pull backs from recent highs are likely to be seen as new buying opportunities. Stay long from this level.
FTSE – The Index closed the week strongly, pushing towards the previous weeks high of 6530. Expect additional gains in the coming days with strong support how as 6500 and 6450.
Oil – Oil remains volatile and offers little in the way of a clear longer term picture. Bias remains modestly to the upside. Look for a break of 94..80 to open the way for additional gains. Support kicks in at 92.85 and 90.96.
Gold – See above