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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 6811 (-394 or -5.47%)
The ASX got sold off aggressively all week and is now at a critical level – double bottom or another leg lower?
VOLATILITY ALERTS:
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher we would like to see the ASX close above 6825. Should this occur, a move into 6910 could be expected; and if momentum is strong we cannot rule out moves to 7000 and 7090.
Failure to close above 6825 means a potential move into 6740. 6650 is the next support level down if 6550 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6500.
EUROPE
DAX – 13829 (-690 or -4.75%)
A week with growth concerns aplenty as the ECB delivered its most hawkish meet in some time.
VOLATILITY ALERTS:
Thurs 21:45 – Main Refinancing Rate and Monetary Policy Statement
Thurs 22:30 – ECB Press Conference
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 – 3908 (-198 or -4.82%)
The bear market is over as sellers reinforced their belief that equities need to be driven lower in this macro environment.
VOLATILITY ALERTS:
Tues 22:30 – PPI and Core PPI M/m
Weds 22:30 – Retail Sales and Core Retail Sales M/m
Thurs 04:00 – FOMC Statement and Rate Decision
Thurs 04:30 – FOMC Press Conference
Thurs 22:30 – Philly Fed Manufacturing Index
Fri 22:45 – Fed Chair Powell Speaks
For a move higher we would like to see the S&P close above 3965. Should this occur, we will look for a move to 4035; and if momentum is strong we cannot rule out moves to 4140 and 4235.
If we cannot close above 3965, we could see this market move down into 3870. A break of this level however may result in a quick move down to 3830; and if momentum to the downside remains strong we may see a fast move back down to 3725.
FOREX
AUD/USD – 0.7207 (-166 or -2.3%)
A reversal in the trend as the Aussie got sold in the global risk-off trade seen later in the week.
VOLATILITY ALERTS:
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher this week, we would like to see it close above 0.7060. We will then be targeting a move through 0.7100. If we see a strong break and close above this level then we can’t rule out a move to 0.7170. Should momentum to the upside be really strong then 0.7220 could be targeted.
If this market cannot close above 0.7060, we could see a move down into 0.6995. A strong break of this level may result in a move into 0.6945, however, any weakness below this level could see a sharp drop into 0.6900.
EUR/USD – 1.0513 (-205 or -1.91%)
Not even a hawkish ECB could save the Euro as growth concerns outweigh and potential rate hiking moves.
VOLATILITY ALERTS:
Tues 22:30 – US PPI and Core PPI M/m
Weds 22:30 – US Retail Sales and Core Retail Sales M/m
Thurs 04:00 – FOMC Statement and Rate Decision
Thurs 04:30 – FOMC Press Conference
For a move higher we would like to see the Euro close above 1.0570. Should this occur we could see a move into 1.0645. A break of this level could see this market rally further to 1.0755 and 1.0805.
If the EURO cannot close above 1.0570, we will see a move into 1.0500. A strong break of this level may result in a move into 1.0445, however, any weakness below this level could see a sharp drop into parity at 1.0355.
GBP/USD – 1.2307 (-178 or -1.43%)
The Cable sold off amongst other G10’s against the USD on Friday as traders raise their bets on a more aggressive Fed.
VOLATILITY ALERTS:
Thurs 21:00 – BoE Rate Decision and Monetary Policy Summary
For a move to the upside, we would like to see Cable close above 1.2390 before a break higher into 1.2580. If this market can see a strong close above this level we may then see a strong push back into 1.2675. If upside momentum is really strong then a move back into 1.2780 can’t be ruled out.
Should we fail to close above 1.2390, we will look for a move down to 1.2245. A break below this level however could see Cable further depreciate to 1.2160 by the week’s end and if momentum is very weak we cannot rule out a move to 1.2075.
USD/JPY – 134.33 (+351 or +2.68%)
The Dollar Yen has been ripping to new two decade highs as the policy diversion between the BoJ and Fed continues to widen.
VOLATILITY ALERTS:
Tues 22:30 – PPI and Core PPI M/m
Weds 22:30 – Retail Sales and Core Retail Sales M/m
Thurs 04:00 – FOMC Statement and Rate Decision
Thurs 04:30 – FOMC Press Conference
Thurs 22:30 – Philly Fed Manufacturing Index
Fri 22:45 – Fed Chair Powell Speaks
For a move to the upside we must now see this market hold above 133.72. Should this occur we will look for a move into 134.55, and if upside momentum is strong we could see a move higher into 135.3 and potentially 137.2.
If we cannot hold above 133.72, we could see a move back to test 132.35 before a pause to the downside. A break below this level may result in a sharp move lower into 130.85; and any further breaks to the downside may see a bigger move into 129.
COMMODITIES
GOLD – 1871 (+21 or +1.14%)
Is Gold ready to finally start acting like a true inflation hedge? Friday’s price action would suggest so…
VOLATILITY ALERTS:
Weds 22:30 – US Retail Sales and Core Retail Sales M/m
Thurs 04:00 – FOMC Statement and Rate Decision
Thurs 04:30 – FOMC Press Conference
For a move higher we need to see this market hold above 1850. Should this occur we could see a move into 1875; and any break of this level could see a stronger move into 1900. If momentum is strong then 1915 cannot be ruled out.
If Gold cannot hold above 1850, we will look for a move back down to 1830. A break below this level could see a move lower into 1800; and if momentum is very strong to the downside we could see a move to 1785.
CRYPTOS
BITCOIN – 29158 (-97 or -0.33%)
Downside pressure still remains but BTC held up better than equities this week – which leads to thinking could a floor already be in?
For a move higher we must now see this market close above 30000. Should this occur we could see a move into 33000 before retesting 35000. If upside momentum is really strong then we can’t rule out 37265.
Failure to close above 30000 could see a move into 28500. If selling pressure takes control then we could see a move down to 27000. A close below this level and 25875 can’t be ruled out, maybe even a 23675 print.
