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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 7448 (-27 or -0.36%)
The ASX closed the week slightly down but managed to hold above key support levels.
VOLATILITY ALERTS:
Tues 11:30 – Monetary Policy Minutes
Tues 13:30 – RBA Gov Lowe Speaks
For a move higher we would like to see the ASX hold above 7400. Should this occur, a move into 7500 could be expected; and if momentum is strong we cannot rule out moves to 7600 and 7732.
Failure to hold above 7400 means a potential move back into 7272. 7202 is the next support level down if 7091 doesn’t hold. If downside momentum is really strong then we could see a sharp move to 7000.
EUROPE
DAX – 16150 (+68 or +0.42%)
The DAX crept higher after managing to find support at the 16000 handles throughout the week – however, will new lockdown fears in Germany dampen sentiment?
For the DAX to continue its move higher we would like to see it hold above 16150. Should this occur then 16500 is the next level ahead. If upside momentum is strong then 16750 and 17000 cannot be ruled out.
To the downside, should we not see it hold above 16150, we will look for a move into support at 16050. A strong break and close below this handle and 16000 is the next level down. If downside pressure mounts then 15800 cannot be ruled out.
US
S&P 500 – 4704 (-4 or -0.09%)
A minor midweek pullback was forgotten about as the SPX closed flat – as such, our levels remain unchanged.
VOLATILITY ALERTS:
Weds 00:30 – Core Retail Sales M/m
For a move higher we would like to see the S&P hold above 4700. Should this occur, we will look for a move to 4750, and if momentum is strong we cannot rule out moves to 4780 and 4800.
If we cannot hold above 4700, we could see this market move down into 4635. A break of this level however may result in a quick move down to 4600, and if momentum to the downside remains strong we may see a fast move back down to 4550.
FOREX
AUD/USD – 0.7330 (-67 or -0.91%)
The Aussie Dollar continued to move towards a full fade of the recent move higher after more concerning inflation numbers out of China.
VOLATILITY ALERTS:
Tues 11:30 – Monetary Policy Minutes
Tues 13:30 – RBA Gov Lowe Speaks
For a move higher this week, we would like to see it close back above 0.7342. We will then be targeting a move through 0.7423. If we see a strong break and close above this level then we can’t rule out a move to 0.7500.
If this market cannot close above 0.7342, we could see a move down into 0.7250. A strong break of this level may result in a move into 0.7222, however, any weakness below this level could see a sharp drop into 0.7170.
EUR/USD – 1.1443 (-126 or -1.09%)
The Euro is in free fall and with a dovish ECB v more hawkish Fed it’s difficult to make a bullish case for it right now.
For a move higher we would like to see the Euro close above 1.1500. Should this occur we could see a move into 1.1525 before a pause. A break of this level could see this market rally further to 1.1570.
If the EURO cannot hold above 1.1500, we will see a move back into 1.1425. A strong break of this level may result in a move into 1.1325, however, any weakness below this level could see a sharp drop into 1.1238.
GBP/USD – 1.3413 (-82 or -0.61%)
Despite an early week bounce the cable took another move lower, mainly thanks to broad USD strength following the hot CPI numbers.
VOLATILITY ALERTS:
Weds 18:00 – CPI Y/y
Fri 18:00 – Retail Sales M/m
For a move to the upside, we would like to see Cable close above 1.3435 before a break higher through 1.3534. If this market can see a strong close above this level we may then see a strong push back into 1.3620. If upside momentum is really strong then a move back into 1.3666 can’t be ruled out.
Should we fail to close above 1.3435, we will look for a move down to 1.3290. A break below this level however could see Cable further depreciate to 1.3200 by the week’s end and if momentum is very weak we cannot rule out a move to 1.3055.
USD/JPY – 113.92 (+54 or +0.48%)
A false downside breakout leaves the Dollar Yen back in the recent few weeks trading range and testing multi-year highs.
VOLATILITY ALERTS:
Weds 00:30 – Core Retail Sales M/m
For a move to the upside, we must now see this market hold above 113.70. Should this occur we will look for a move into 114.55, and if upside momentum is strong we could see a move higher into 115.47 and potentially 116.11.
If we cannot hold above 113.70, we could see a move back to test 113.20 before a pause to the downside. A break below this level may result in a sharp move lower into 112.25, and any further breaks to the downside may see a bigger move into 111.70.
COMMODITIES
GOLD – 1864 (+47 or +2.59%)
A strong Friday saw Gold close the week above 1800 for the first time since August – can it build on this momentum?
VOLATILITY ALERTS:
Gold was one of the week’s biggest movers with the old inflation hedge narrative supporting a break higher – is it set for a new trend higher now?
For a move higher we need to see this market hold above 1850. Should this occur we could see a move back into 1875, and any break of this level could see a stronger move into 1905. If momentum is really strong then 1930 cannot be ruled out.
If Gold cannot hold above 1850, we will look for a move back down to 1833. A break below this level could see a move lower into 1814, and if momentum is very strong to the downside we could see a move to 1786.
CRYPTOS
BITCOIN – 63619 (+1828 or +2.96%)
A gain on the week but choppy, volatile interweek conditions leave bears thinking they still have a chance of spoiling the fun.
For a move higher we must now see this market hold above 63500. Should this occur we could see a move into 64920 before retesting the ATH of 68350. If upside momentum is really strong then we can’t rule out 70000.
Failure to hold above 63500 could see a move down to 60000. If selling pressure takes control then we could see a move down to 58000. A close below this level and 55000 can’t be ruled out.
