This market brief is an overview of the week ahead and some of the events we see as being important to the markets.
Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES
AUSTRALASIA
ASX – 5319 ( -107 or -1.97% )
The ASX is having a having a hard time breaking out of this month-long sideways consolidation.
VOLATILITY ALERT: RBA Interest Rate Announcement on Tuesday.
For a continued move to the upside we would like to see this market break hold above 5294. Should this occur, we will look for a move back up to 5373 – 5390. A strong break and close above this level could see the market trade to 5487, and if momentum remains very strong we could see the ASX rally to 5589 by the end of the week.
If we fail to hold above 5294, we will look for a move back down to 5248-5238. A break below this could result in a move back into 5161, and further breaks to the downside could see the ASX head to 5238. Should we see a complete reversal to the downside, we will watch for a move back down to 5090.
EUROPE
DAX – 10108 ( -189 or -1.84% )
The DAX remained in a very tight range for most of last week until a breakdown on Friday following movements in the US.
VOLATILITY ALERT: ECB President Draghi speaks on Thursday.
For a continued move to the upside we would like to see the DAX break back above 10158. A strong break and close above this level could see a retest of 10345. Should we see a strong break and close above this level we will look for a move to 10413, and a continued move to the upside could see the DAX trade back up to the April high at 10524.
If we fail to break above 10158, we will look for a move back down to 10013. A strong break and close through this level could see further downside to 9822, and if momentum remains very strong on the downside we will look for a move all the way down to 9620.
US
SP500 – 2099 ( +0 or +0% )
Friday saw some shock NFP numbers released and clients of our Member Portal were in for a treat as we covered this event live. After a strong sell-off following NFP, the S&P recovered most of its losses to finish of the week unchanged.
We will be discussing this market in more depth this week in the LIVE CHAT ROOM.
VOLATILITY ALERT: Fed Chair Yellen speaks on Monday, Prelim Consumer Sentiment on Friday.
For a move higher we would like to see a the S&P hold above 2097. Should this occur we will look for a move back up into 2106. A strong break and close above 2106 will like result in a move to 2112 before another pause. If momentum remains strong, a break above 2112 could see the S&P quickly test 2126 and then on it’s way to test the all-time high at 2137.
If we cannot hold above 2097, we will watch for a move back down into 2076 before a pause. A strong break and close below this level could see the S&P head back down into 2054, and a further break below this level may mean another test of the important 2040 area.
FOREX
AUD/USD – 0.7364 ( +180 or +2.51% )
Last week we said it was all about NFP and we were not left wanting. The AUD was gradually higher going into NFP, and then we saw a fantastic rally going right into 0.7364.
This week we will be watching the RBA rate announcement on Tuesday and will be covering this in our MEMBER PORTAL.
VOLATILITY ALERT: RBA Interest Rate Announcement on Tuesday.
For a move higher we would like to see the AUD break above 0.7364, followed by a break and close above 0.7447. A strong break and close above this level could then see a quick move to 0.7489 before a pause; and if momentum remains strong we will look for a move into 0.7561.
If we cannot break above 0.7364, we will look for a move back down to 0.7282. A strong break below this level may result in a move back down into 0.7229 before another potential pause. Any subsequent breaks of this level however may result in a very fast move down to 0.7169.
EUR/USD – 1.1363 ( +251 or +2.26% )
Like the $AUD, the EURO took off following Friday’s NFP release. On Friday we mentioned this was a very strong move and likely to continue into the session close.
VOLATILITY ALERT: German Factory Orders on Monday, ECB President Draghi speaks on Thursday.
For a sustained move higher we would like to see a break and close above 1.1435. Should we break this level we will look for a move to 1.1496. If momentum remains strong we could then see a very strong move to test 1.1613.
If we cannot break above 1.1435, we will look for a move back down to 1.1347. A strong break and close below this level could see the EURO trade back down to 1.1249. If a larger sell-off ensues, we will be watching for a full fade back down to 1.1201 and 1.1163.
GBP/USD – 1.4513 ( -105 or -0.72% )
We are now less than 3 weeks away from the Brexit referendum as cable has been chopping back and forth.
VOLATILITY ALERT: Manufacturing Production on Wednesday, Goods Trade Balance on Thursday.
For a move to the upside we would like to see a strong break through 1.4630. A break and close above this level may likely result in a move to 1.4790 before a pause. If momentum remains very strong, we cannot rule out moves into 1.4896 and 1.4984
If we cannot close above 1.4630, we will look for a move back down into 1.4469. A break below this level will likely result in a move to 1.4382; and if the move to the downside is very strong we will watch for a move back down to 1.4223.
USD/JPY – 106.45 ( -378 or -3.43% )
The USD/JPY was once again sold off very heavily and we now find ourselves back at the May lows. Friday’s NFP was again a perfect example of the impact news can have on markets.
We will again be discussing this market, and other YEN pairs in our LIVE CHAT ROOM this week.
VOLATILITY ALERT: Current Account on Wednesday.
For a continued move to the upside we would now like to see the market hold 106.30 and close above 107.75. Should this occur we will then be looking for a move into 108.31. A strong break and close above 109.21 could then see a quick move into 109.94 before a pause. If we are to see a complete V-reversal and fade to the upside this week, we will not rule out a move to 111.09 by the end of the week.
If however the USD/JPY cannot hold above 106.30, we will look for a move down to 105.79. A break below this level could see the USD/JPY trade quickly down to 104.97 before a potential pause. Should we continue to trade lower and see continued downside pressure on the USD/JPY- a sharp move to 103.99 is possible.
COMMODITIES
GOLD – 1244 ( +32 or +2.64% )
GOLD spent the majority of last week testing the 1206 level before a huge rally on Friday sent Gold almost $40 higher following weak NFP numbers.
For a continued move higher we would like to see GOLD close above 1247, followed by a break above 1257. A break and close above this level could see Gold trade to 1276, and should we break strongly through this level we will look for a move to 1294. If momentum remains very strong we cannot rule out a move back up into 1303 this week.
If Gold cannot break and close above 1247, we will look for a move back down to 1226 and 1221. If momentum remains strong, a break and close below this level could see a full fade back down to 1206.
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