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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 7345 (-191 or -2.53%)
The ASX looks to have posted a triple top at the all-time high and will now look for support at the 200 DMA which it has closed just above.
VOLATILITY ALERTS:
Weds 11:30 – CPI and Trimmed CPI q/q
For a move higher we would like to see the ASX close above 7400. Should this occur, a move into 7485 could be expected; and if momentum is strong we cannot rule out moves to 7545 and 7640.
Failure to close above 7400 means a potential move back into 7272. 7200 is the next support level down if 7272 doesn’t hold. If downside momentum is really strong then we could see another leg down into 7095.
EUROPE
DAX – 14034 (-61 or -0.43%)
While the DAX has underperformed this year, it held up slightly better than its peers last week but did close slightly lower.
VOLATILITY ALERTS:
Mon 18:00 – German IFO Business Climate
For the DAX to move higher we would like to see it close 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 close 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 – 4246 (-131 or -2.99%)
A very hawkish Fed continues to spook markets – however, is the worst now priced in?
VOLATILITY ALERTS:
Tues 22:30 – Core Durable Goods orders
Weds 00:00 – US Consumer Confidence
Thurs 22:30 – Advanced GDP q/q
Fri 22:30 – Core PCE Index M/m
For a move higher we would like to see the S&P hold above 4235. Should this occur, we will look for a move to 4285; and if momentum is strong we cannot rule out moves to 4330 and 4375.
If we cannot hold above 4235, we could see this market move down into 4140. A break of this level however may result in a quick move down to 4035, and if momentum to the downside remains strong we may see a fast move back down to 3965.
FOREX
AUD/USD – 0.7244 (-106 or -1.44%)
A global macro risk-off trade on Friday saw the Aussie Dollar sink – where have the longs gone?
VOLATILITY ALERTS:
Weds 11:30 – CPI and Trimmed CPI q/q
For a move higher this week, we would like to see it close above 0.7250. We will then be targeting a move through 0.7285. If we see a strong break and close above this level then we can’t rule out a move to 0.7345. Should momentum to the upside be really strong then 0.7390 could be targeted.
If this market cannot close above 0.7250, we could see a move down into 0.7220. A strong break of this level may result in a move into 0.7170, however, any weakness below this level could see a sharp drop into 0.7100.
EUR/USD – 1.0796 (+16 or +0.15%)
A few hawkish comments from ECB members during the week saw the Euro hold up slightly better than its peers against the USD.
For a move higher we would like to see the Euro hold above 1.0780. 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 1.0780, we will see a move into 1.0720. A strong break of this level may result in a move into 1.0575, however, any weakness below this level could see a sharp drop into 1.0495.
GBP/USD – 1.2837 (-175 or -1.34%)
The Cable got smashed on Friday with new yearly lows broken and more potential downside to come.
For a move to the upside, we would like to see Cable close above 1.2855 before a break higher into 1.2980. If this market can see a strong close above this level we may then see a strong push back into 1.3055. If upside momentum is really strong then a move back into 1.3200 can’t be ruled out.
Should we fail to close above 1.2855, we will look for a move down to 1.2765. A break below this level however could see Cable further depreciate to 1.2680 by the week’s end and if momentum is very weak we cannot rule out a move to 1.2585.
USD/JPY – 128.55 (+166 or +1.31%)
Policy divergence between US and Japan central banks continues to push the Dollar Yen higher, though we have seen a momentary pause at 129.
VOLATILITY ALERTS:
Tues 22:30 – Core Durable Goods orders
Weds 00:00 – US Consumer Confidence
Thurs 22:30 – Advanced GDP q/q
Fri 22:30 – Core PCE Index M/m
For a move to the upside we must now see this market hold above 127.75. Should this occur we will look for a move into 129, and if upside momentum is strong we could see a move higher into 130 and potentially 130.85.
If we cannot hold above 127.75, we could see a move back to test 125.85 before a pause to the downside. A break below this level may result in a sharp move lower into 125.20; and any further breaks to the downside may see a bigger move into 123.65.
COMMODITIES
GOLD – 1931 (-46 or -2.33%)
Gold tumbled after a firm early week rejection off the 2000 handle – is a move south of 1900 now more likely?
VOLATILITY ALERTS:
Fri 22:30 – Core PCE Index M/m
For a move higher we need to see this market hold above 1915. Should this occur we could see a move back into 1935, and any break of this level could see a stronger move into 1965. If momentum is strong then 2000 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 1850.
CRYPTOS
BITCOIN – 39590 (-1180 or -2.89%)
Sellers remain in control of cryptos as risk assets continue to be held down.
For a move higher we must now see this market hold above 39555. Should this occur we could see a move into 43233 before retesting 48570. If upside momentum is really strong then we can’t rule out 50000.
Failure to hold above 39555 could see a move down to 35050. If selling pressure takes control then we could see a move down to 32300. A close below this level and 29300 can’t be ruled out, maybe even a 28500 print.
