Markets kick off this week fresh off of the back of the Non Farm Payrolls jobs report released on Friday. This showed a significant and unexpected fall leading analysts to conjecture that we may see an early end to US quantitative easing measures.
Against this backdrop equity markets surged and the dollar enjoyed significant gains across the board. The biggest currency losers were the Euro zone currencies (EUR/GBP/CHF) where economic growth prospects have so far looked poor and signs of recovery are at best sporadic.
The tone of world markets is likely to continue where it left off on Friday this week. There is little economic news that is likely to disrupt this current path. Markets remain driven by risk and money flows at present are likely to see current trends pushed further for the time being.
The only blip on the horizon could come on Wednesday with the release of US Retail Sales figures. If not in line with expectations these figures could see a temporary pullback from recent highs. Given the recent gains any pullback as likely to be viewed as a healthy consolidation given the recent gains.
Key News This Week
- Monday – None
- Tuesday - GBP - Manufacturing Production (m/m)
- Wednesday – USD - Retail Sales, NZD - Rate Statement, AUD - Employment Change, Unemployment Rate
- Thursday – CHF- Libor, USD - PPI (m/m), Unemployment Claims
- Friday – USD - Core CPI (m/m), Preliminary Consumer Sentiment
In Focus
Boosted by global risk on sentiment and some surprise, better than expected economic results, the Index was able to propel 6400 last week.
A break of 6484 opens a test of 6500 for further gains. On the flip-side a move below 6360 looks good for a test of the first Fib level at 6430.
Currency Majors
EUR/USD - Pushing above 1.31 the pair fell back at the end of the week. Holding above 1.3000 on a daily close now looks pivotal to near term direction. Above this level look for additional gains up to the 1.33 region. If the pair fails to hold then a close below 1.2970 would be very bearish.
USD/JPY - Making a strong break through the 94.00 barrier, gains in the pair continue to be impressive. 95.80 and 95.40 provide immediate support and look good levels to go long.
USD/CHF - As expected the pair showed further gains last week, posting above 0.9500. 0.9512 could temporarily stall gains, with a push above this level opening the path for a move above 95.50 and ultimately a test of 96.00. Support comes in at 94.90 and 94.60.
GBP/USD - The break of 1.50 last week sees the bias for further falls remains. Looking lower 1.4850 is likely to provide at least a short term market bottom and should see the price bounce over the shorter term.
Major Indices
DOW - A strong set of gains which took the Index quickly through the key 14,000 level. However such strong gains could open up the potential for a period of consolidation. Pullbacks back to this level could offer the potential to go long on a weekly trade.
NASDAQ - Closing above 2800 opens up the potential for further gains this week towards highs at the 2850 level. 2770 and 2750 should provide strong support to pullbacks.
FTSE - (see above)
Commodities
Oil – Bouncing at support former support has now turned to resistance. 91.13 (50% Fibonacci) supports the potential for further gains towards 92.80. On the downside a break of key support levels could see a test of fresh lows at 89.34.
Gold – Much like oil, gold resisted fresh falls last week with daily closing prices maintained in the 1570 to 1585 range. Near term bias remains to the upside with a break of the upper level opening up a test of 1620.
Stocks
Apple could well be worth watching this week as news about a proposed new iWatch start doing the rounds. Given recent falls in the share price, investors are going to be looking for positives to generate some love for the stock.
Companies reporting this week of note for the binary options trader are Volkswagen, with results due for release to the market on Thursday.