Will Event Risk Fuel Or Reverse Dollar Falls?

Poorer than expected NFP figures could help to fuel speculation of a reduction in Federal in tapering efforts over the coming weeks. However while figures in last week’s report fell short of expectations by over 67,000, importantly the actual number of jobs created remained positive.

Upcoming data this week will perhaps help stabilize the near term direction for the dollar. The Greenback has been on the defensive in recent sessions so traders will be listening intently when Fed Chairman Yellen testifies on Tuesday. Core retail sales figures due for release on Thursday could also help shape policy.

On the other side of the Atlantic the Euro has enjoyed a sudden resurgence. The German Constitutional Courts last week effectively destroyed any thoughts of a European liquidity plan. While this could have ramifications for economic growth going forward, it will almost certainly strengthen the Euro going forwards. ECB President Draghi addresses the markets on Wednesday.

Other key fundamental news to look out for this week includes the Bank of England inflation report, Swiss CPI and the Australian Employment change.

News This Week

Forex

EUR/USD – The pair exploded higher for the second day on Friday to end the week at 1.3642. However the both the fundamental and technical picture look weak for the Euro (German court ruling on ECB and falling trend line resistance at 1.3650). A break either above 1.3650 and or below 1.3580 will define price action for the rest of the week.
USD/JPY – Seeing constructive price movement towards the end of the week, USD/JPY moved higher from support at 100.80. Friday’s bullish candle opens up the prospect for further gains and we would look higher from current levels. 102.85 offers the first resistance.
USD/CHF – In parallel with the rise on the EUR/USD, USD/CHF moved lower over the course of the week to end back below 0.9000 at 0.8957. The pair remains above the falling trendline that has controlled action for several weeks. Near term support begins at 0.8939 and 0.8902.
GBP/USD – Cable fell heavily over the course of the week before recovering to end at 1.6409. The technical picture looks to show a pair that is ‘topping’ out following its recent bull run. While we expect to see some additional rallies, possibly back to 1.66, the broader interpretation is bearish.

Major Indices

DOW – We noted last week that 15400 should provide support on the Dow. The Index fell heavily at the start of the week to find support just below this level from where it bounced strongly. Ending at 15784 the chart looks bullish. An early week close above 15800 would add credibility to further gains.
NASDAQ – The market pulled back heavily last week, briefly dipping below the 4000 level before finding support. The rally at the end of the week took the Index back to 4125. Given the strong bounce we would retain a bullish stance on this market.
FTSE – The Index remains range bound, bouncing from just above the 6400 level to end the week at 6571. We continue to expect the FTSE to oscillate in a range for the foreseeable future. The near range is marked as 6400-6600 with the wider range from 6300 to 6800.

Commodities

Oil – The Crude price advanced back above the $97 barrel mark over the course of the week. Volatile trading conditions remain, although while above this level we see scope for additional gains. Tentatively look higher.
Gold – Price moved higher over the week although there is little real conviction in this ‘rally.’ Broadly speaking a base looks to have formed on the chart although $1300 is the topside target to look towards while $1200 defines lower support. A break of either level is needed to firm up the longer term picture.

Stocks

There are quite a few big name Stocks reporting this week.

Rolls Royce could provide a high return binary options trading opportunity. Recent contract wins could see the stock appreciate over the day. Statistically this Thursday also tends to be an ‘Up’ day for the FTSE.

• Monday – Ryanair
• Tuesday – Barclays
• Wednesday – Tullow Oil, Cisco
• Thursday – Imperial Tobacco, Lloyds Banking, PepsiCo, Rio Tinto, Rolls Royce, SABMillar
• Friday – Anglo American, Severn Trent