Markets pushed higher last week as the ‘risk on’ environment continued. In what was a busy week for news the dollar came under further pressure while the S&P500 surged. In a week that is relatively light in terms of news flow, we look at where the markets may head this week.
Up at the start of the week are the latest monthly manufacturing figures from the UK. So far this year the British economy has performed well, leading to expectations for an early rate rise. Good figures could provide an additional boost at the start of the week for both FTSE and the British Pound.
Next up are the New Zealand Dollar rate decision and the Australian employment change. Both the NZD/USD and AUD/USD pairs enjoyed a rally at the end of last week. No surprises are expect from either release with risk trends move likely to govern movement in both pairs.
The US dollar comes back into the spotlight at the end of the week. Following better than expect Nonfarm Payrolls figures on Friday, this week the spotlight turns to Retails Sales figures. Soaring US indices have put a break on any dollar recovery. A good set of figures here could add more pressure onto the beleaguered dollar.
Key News This Week
Forex
EUR/USD – A surge in the pair saw it briefly touch 1.3914 before setting back to end the week at 1.38748. The current surge and break of the former triangle puts a firmly bullish spotlight on the pair. Target 1.4000 with support at 1.3813 and 1.3780.
USD/JPY – Breaking higher the pair ended off highs at 103.24. This is directly below a descending trendline which has been in place from the start of the year. We believe the pair retains a bullish tone however. 102.80 is near support.
USD/CHF – The pair continues to move lower, offering little real conviction that the current downtrend is at an end. Price remains governed by the falling trend line. There are better opportunities to trade. Near term support is at 0.8700, resistance 0.8840.
GBP/USD – Ending lower for the week the pair looks to look range bound. Given the failure to break higher we would look lower. A daily close back below 1.6580 would indicate that the broader uptrend has come to an end. Immediate support is at 1.6685.
Major Indices
DOW – The Dow pushed higher over the week to end at 16421. With the current uptrend still intact we would expect to see the market rise again over the coming week. 16350 offers near term support if needed. 16500 is resistance.
NASDAQ – The Index ended lower for the week to finish at 4352 although the technical picture remains bullish. However given the rate of gain in the Index this year we anticipate some consolidation. Look higher with caution. Near term support is at 4340.
FTSE – A failure to hold above the 6800 level by the weekend changes our stance on this market to neutral. 6760 provides immediate support with the 6720-6700 area needing to hold to keep alive a bullish view on the Index.
Commodities
Oil – Crude fell away over the week giving up previous gains. Support held above the psychologically important $100 per barrel level to lose at $101.23. The outlook for the week looks broadly constructive if a close back above $102 can be achieved.
Gold – The Gold price has continued to test resistance all week finally closing at $1350 per ounce. We remain positive on the metal to come up with further gains. However a close above $1360 is needed to confirm that a broader uptrend is in place.
Stocks
Not much to take note of this week. The exception is UK Insurer Prudential, which is reporting preliminary results on Wednesday.