Potential For Dollar Surge In Volatile Trading
Last week ended on ‘risk off’ tone which is likely to continue in what is expected to be highly volatile week of trading. The dollar hit back against several major currencies including the British Pound which lost over 170 pips on Friday alone.
This week sees busy news flow with a number of high impact statements due for announcement starting with the German IFO business Climate Index on Monday. The Euro pulled back towards the end of the week and could again be on the back foot if these figures disappointment.
The big news of the week is the FOMC statement and markets are unlikely to commit too much in direction until this statement is released. The dollar is looking ready to rally from a technical perspective and add in a continued risk off sentiment with clues on tapering and we could see strong inflows into the Greenback.
On the commodity front the price of Gold continues to grind higher and Oil looks to be ready for a strong break. Although caution is advised in both markets, the technical bias hints at looking higher this week.
A number of big companies are reporting this week including several big technology companies. Apple is perhaps one of the more interesting and it will be interesting to see if it is able to post better figures and avert its previous slide.
Key News This Week
Forex
EUR/USD – The pair moved higher from its lows at 1.3500 although it failed to close above 1.3575 resistance. Given the pullback at the end of the week and upcoming news this week we think bias is to the downside. Current lower trend line support is around 1.3550.
USD/JPY – The Yen strengthened over the week pushing the pair lover to end at 102.24. The pair now sits at the bottom of a falling channel. A break of 102.55 would send the pair lower while a bounce could target a move back towards 104.50.
USD/CHF – Moving back lower over the course of the week the pair ended at 0.8942. Bias remains to the downside and this week could see a break of 0.8900. Below this level the picture moves lower are likely to accelerate.
GBP/USD – The sharp fall on Friday following comments from Bank of England Governor Mark Carney saw Cable pull back to the risking support line which as limited price action since July last year. Despite this fall the bias remains to the upside while price remains above this level. A break of 1.6440 would negate this view.
Major Indices
DOW – The Dow feel heavily over the week, plunging through the 16200 and back below 15789. We would look for a bounce at that start of this week provided that the 15800 level holds.
NASDAQ – We wrote last week that markets may be prone to a pullback but 4100 should prove strong support. The Index did indeed pullback, finally ending at a low for the week at 4128. From this level we would expect strong support, viewing the current fall as corrective.
FTSE – In line with most major markets the FTSE saw losses over the week. 6600 has proven strong resistance to the market and should act as strong support on the way down. Below this 6400 is the next significant level of support. Watch for a bounce at either of these levels if reached.
Commodities
Oil – Price has rebounded back above the $96.00 handle giving a strong bullish tone to this market. A push back above $98 is a strong signal to go long on this market. Watch for a break at this level.
Gold – Gold has continued to move higher over the week as expected. $1300 offers the next key level of resistance. Watch this level. A break here could see the current rally from recent lows start to accelerate.
Stocks
Companies reporting this week –
Monday – Apple, Caterpillar
Tuesday – Forex, Pfizer, AT&T, Yahoo
Wednesday – Antofagasta, Facebook, Philips
Thursday – Diago , Kazkhmys, Nations Grid, United Utilities, Amazon, Time Warner, Exxon Mobil
Friday – BT Group, Chevron, Rank
