Big risks return to markets this week with volatility expected to reach a high. The Non-farm Payrolls promise to add some fireworks on Friday and will cap off what is a week full of news flow.
Following a week where dollar financial markets pulled back strongly from highs earlier in the week, a slew of manufacturing data and rate decisions will come to the fore. Of these the European Bank rate meeting on Thursday could prove the most significant. Possibly early signs of a rate increase from the current 0.25% level could stir markets.
Other key news to look out for includes German, US and UK manufacturing PMI figures, all due for release on Tuesday. Watch for further signs of economic progress which could help formulate trading strategy. A surprise to the downside will hit markets and accelerate the sell off in equities that we saw towards the end of last week.
The Canadian economy also comes into focus with this week. Money sees GDP figures released while key Employment data and PMI figures hit the markets on Friday.
On the commodity front, Gold struggled to make headway last while Crude pared back gains made earlier in the week. The outlook for both remains somewhat mixed. Fundamentals this week are likely to play a big part in determining near term direction.
Key News This Week
Forex
EUR/USD – Further falls this week with the pair ending at 1.3750. A move lower from here could complete a head and shoulders pattern, started in November. Look for a move lower to accelerate falls to support at 1.3650.
USD/JPY – Ending at 102.80 the pair continues to trade within the range of the wider triangle. Resistance at 103.40 and support at 101.70 remain levels of interest. A break of either level is likely to see accelerated momentum in the direction of the break.
USD/CHF – Moving back under falling trendline resistance, the outlook for USD/CHF remains neutral. Last weeks close at 0.8866 perpetuates the bearish outlook for the pair. Resistance sits at 0.8878 and 0.8902. Support sits at 0.8820 and 0.8786.
GBP/USD – Bouncing from the rising lower trend line at 1.6464, GBPUSD continue to gain over the week, closing short of highs at 1.6650. Given the current bullish momentum we would look higher. 1.6666 offers first resistance.
Major Indices
DOW – Despite the Dows push above 16400 the Index closed lower by the end of the week to finish at 16323. From a technical perspective the outlook is somewhat mixed. We would look for a break of 16400 for bullish momentum. 16250 provides near term support.
NASDAQ – The tech Index moved lower for the sixth week in a row and the market shows no sign of changing near term direction. The bearish candle points to further near term falls. 4150 provides initial support. Below 4100 negates the wider bullish trend.
FTSE – The footsie moved higher but failed to close above the top end of the recent range at 6500. Ending the week at 6620 we see the index to continue to be range bound between 6500 and 6650.
Commodities
Oil – Despite failing to hold highs, Crude ended higher over the week at $101.53 per barrel. The ‘shooting star’ on the chart gives a bias to the downside over the coming week. Look lower with support beginning at the $100 level.
Gold – Moving lower over the week the recent bullish rally looks to be in jeopardy. Wider bias remains up but near term we expect the price to consolidate at current levels. Look for a break back above the $1300 level to see price pushing higher.
Stocks
No major companies of note reporting this week.