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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes. For up to the minute market analysis see our live trading room.
INDICES
AUSTRALASIA
ASX – 7504 (-15 or -0.2%)
The ASX paused/edged lower, but did manage to hold up firmly despite US equities taking a hit.
VOLATILITY ALERTS:
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher we would like to see the ASX hold above 7485. Should this occur, a move into 7545 could be expected; and if momentum is strong we cannot rule out moves to 7640 and 7800.
Failure to hold above 7485 means a potential move back into 7400. 7272 is the next support level down if 7485 doesn’t hold. If downside momentum is really strong then we could see another leg down into 7200.
EUROPE
DAX – 14235 (-214 or -1.48%)
The DAX moved lower as sellers looked to regain control.
For the DAX to move higher we would like to see it hold above 14140. Should this occur then 14780 is the next level ahead. If upside momentum is strong then 15050 and 15345 cannot be ruled out.
To the downside, should we not see it hold above 14140, we will look for a move into support at 13610. A strong break and close below this handle and 13250 is the next level down. If downside pressure mounts then 12445 cannot be ruled out.
US
S&P 500 – 4484 (-61 or -1.34%)
The SPX moved lower as the Fed continued with its ultra-hawkish tone throughout the week.
VOLATILITY ALERTS:
Tues 22:30 – US CPI
Weds 02:10 – Fed Member Brainard speaks
For a move higher we would like to see the S&P hold above 4480. Should this occur, we will look for a move to 4555; and if momentum is strong we cannot rule out moves to 4600 and 4655.
If we cannot hold above 4480, we could see this market move down into 4430. A break of this level however may result in a quick move down to 4375, and if momentum to the downside remains strong we may see a fast move back down to 4330.
FOREX
AUD/USD – 0.7460 (-37 or -0.49%)
A highly volatile week for the Aussie Dollar as Tuesday’s spike following a hawkish RBA was fully faded, as flow went into the USD.
VOLATILITY ALERTS:
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher this week, we would like to see it close above 0.7475. We will then be targeting a move through 0.7530. If we see a strong break and close above this level then we can’t rule out a move to 0.7600. Should momentum to the upside be really strong then 0.7640 could be targeted.
If this market cannot close above 0.7475, we could see a move down into 0.7392. A strong break of this level may result in a move into 0.7345, however, any weakness below this level could see a sharp drop into 0.7285.
EUR/USD – 1.0876 (-172 or -1.56%)
The Euro remains in big trouble as concerns continue to surround energy payments to Russia, as well as the ECB / Fed policy divergence.
VOLATILITY ALERTS:
Tues 22:30 – US CPI Y/y and M/m
Thurs 22:30 – Core Retail Sales Y/y and M/m
For a move higher we would like to see the Euro close above 1.1000. Should this occur we could see a move into 1.1105. A break of this level could see this market rally further to 1.1155 and 1.1225.
If the EURO cannot close above 1.1000, we will see a move into 1.0875. A strong break of this level may result in a move into 1.0780, however, any weakness below this level could see a sharp drop into 1.0575.
GBP/USD – 1.3035 (-77 or -0.59%)
The Cable almost posted a new 52 week low close but just held on late in the day on Friday.
VOLATILITY ALERTS:
Weds 16:00 – CPI Y/y
For a move to the upside, we would like to see Cable close above 1.3056 before a break higher into 1.3198. If this market can see a strong close above this level we may then see a strong push back into 1.3290. If upside momentum is really strong then a move back into 1.3435 can’t be ruled out.
Should we fail to close above 1.3056, we will look for a move down to 1.2980. A break below this level however could see Cable further depreciate to 1.2855 by the week’s end and if momentum is very weak we cannot rule out a move to 1.2765.
USD/JPY – 124.27 (+45 or +0.37%)
The Dollar Yen continued its ascendancy as US bond yields continue to climb – will it break through the 125 handles?
VOLATILITY ALERTS:
Tues 22:30 – US CPI
Thurs 22:30 – Core Retail Sales Y/y and M/m
For a move to the upside, we must now see this market hold above 123.65. Should this occur we will look for a move into 125.20, and if upside momentum is strong we could see a move higher into 125.85 and potentially 127.
If we cannot hold above 121.75, we could see a move back to test 120.40 before a pause to the downside. A break below this level may result in a sharp move lower into 119.35, and any further breaks to the downside may see a bigger move into 118.55.
COMMODITIES
GOLD – 1945 (+21 or +1.09%)
Gold continues to contract – which way will it break next?
VOLATILITY ALERTS:
Tues 22:30 – US CPI
For a move higher we need to see this market hold above 1915. Should this occur we could see a move back into 1965, and any break of this level could see a stronger move into 2000. If momentum is strong then 2015 cannot be ruled out.
If Gold cannot hold above 1915, we will look for a move back down to 1900. A break below this level could see a move lower into 1875, and if momentum is very strong to the downside we could see a move to 1830.
CRYPTOS
BITCOIN – 43161 (-3420 or -7.34%)
BTC sold off as risk assets suffered across the board – the start of a new leg down?
For a move higher we must now see this market close above 44000. Should this occur we could see a move into 48570 before retesting 50000. If upside momentum is really strong then we can’t rule out 52150.
Failure to hold above 43233 could see a move down to 39839. If selling pressure takes control then we could see a move down to 35050. A close below this level and 32300 can’t be ruled out, maybe even a 29300 print.
