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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 7206 (+222 or +3.18%)
The ASX enjoyed tailwinds provided by the post-US CPI trade with risk on appetite seen across the equity space.
VOLATILITY ALERTS:
Tues 11:30 – Monetary Policy Minutes
Weds 11:30 – Wage Price Index
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher we would like to see the ASX hold above 7140. Should this occur, a move into 7240 could be expected; and if momentum is strong we cannot rule out moves to 7300 and 7440.
Failure to hold above 7140 means a potential move into 7020. 6875 is the next support level down if 7020 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6745.
EUROPE
DAX – 14313 (+819 or +6.07%)
The DAX ripped higher and the question now is if this move has enough support behind it.
For the DAX to move higher we would like to see it hold above 14265. Should this occur then 14710 is the next level ahead. If upside momentum is strong then 14915 and 15050 cannot be ruled out.
To the downside, should we not see it hold above 14265, we will look for a move into support at 13970. A strong break and close below this handle and 13565 is the next level down. If downside pressure mounts then 13375 cannot be ruled out.
US
S&P 500 – 3991 (+228 or +6.06%)
Risk appetite returned to equities thanks to softer-than-expected US inflation data – have markets got it right?
VOLATILITY ALERTS:
Weds 00:30 – Empire State Manufacturing Index and PPI
Thurs 00:30 – US Core Retail Sales M/m
Fri 00:30 – Philly Fed Manufacturing Index
For a move higher we would like to see the S&P hold above 3965. Should this occur, we will look for a move to 4095; and if momentum is strong we cannot rule out moves to 4145 and 4215.
If we cannot hold above 3965, we could see this market move down into 3915. A break of this level however may result in a quick move down to 3840, and if momentum to the downside remains strong we may see a fast move back down to 3740.
FOREX
AUD/USD – 0.6706 (+241 or +3.73%)
A strong week for the Aussie Dollar as the USD sold off aggressively.
VOLATILITY ALERTS:
Tues 11:30 – Monetary Policy Minutes
Weds 11:30 – Wage Price Index
Thurs 11:30 – Employment Change and Unemployment Rate
For a move higher this week, we would like to see it hold above 0.6670. We will then be targeting a move through 0.6715. If we see a strong break and close above this level then we can’t rule out a move to 0.6830. Should momentum to the upside be really strong then 0.6960 could be targeted.
If this market cannot hold above 0.6670, we could see a move down into 0.6580. A strong break of this level may result in a move into 0.6485, however, any weakness below this level could see a sharp drop into 0.6415.
EUR/USD – 1.0352 (+394 or +3.96%)
The Euro rallied strongly post FOMC with flow coming out of the USD across the board.
VOLATILITY ALERTS:
Weds 00:30 – Empire State Manufacturing Index and PPI
Thurs 00:30 – US Core Retail Sales M/m
Fri 00:30 – Philly Fed Manufacturing Index
For a move higher we would like to see the Euro close above 1.0355. Should this occur we could see a move into 1.0470. A break of this level could see this market rally further to 1.0600 and 1.0760.
If the EURO cannot close above 1.0355, we will see a move into 1.0215. A strong break of this level may result in a move into 1.0070, however, any weakness below this level could see a move into parity at 1.000.
GBP/USD – 1.1832 (+460 or +4.05%)
The Cable’s ascendancy continues with a strong weekly close above the September high.
VOLATILITY ALERTS:
Weds 18:00 – CPI Y/y
Thurs 01:15 – BOE Gov Bailey Speaks and Monetary Policy Report Hearings
For a move to the upside, we would like to see Cable hold above 1.1740 before a break higher into 1.1930. If this market can see a strong close above this level we may then see a strong push back into 1.2145 If upside momentum is really strong then a move back into 1.2280 can’t be ruled out.
Should we fail to hold above 1.1740, we will look for a move down to 1.1610. A break below this level however could see Cable further depreciate to 1.1490 by the week’s end and if momentum is very weak we cannot rule out a move to 1.1410.
USD/JPY – 138.76 (-785 or -5.35%)
A successful BoJ intervention? The USD endured its worst week since the start of the Covid pandemic.
VOLATILITY ALERTS:
Weds 00:30 – Empire State Manufacturing Index and PPI
Thurs 00:30 – Core Retail Sales M/m
Fri 00:30 – Philly Fed Manufacturing Index
For a move to the upside, we must now see this market close above 139.25. Should this occur we will look for a move into 140, and if upside momentum is strong we could see a move higher into 142 and potentially 143.25.
If we cannot close above 139.25, we could see a move back to test 137.70 before a pause to the downside. A break below this level may result in a sharp move lower into 135.60, and any further breaks to the downside may see a bigger move into 134.50.
COMMODITIES
GOLD – 1770 (+90 or +5.36%)
Gold had its best week in 2 years as traders priced in a less aggressive Fed and bond yields plummeted.
VOLATILITY ALERTS:
Weds 00:30 – Empire State Manufacturing Index and PPI
Thurs 00:30 – Core Retail Sales M/m
Fri 00:30 – Philly Fed Manufacturing Index
For a move higher we need to see this market hold above 1765. Should this occur we could see a move into 1785; and any break of this level could see a stronger move into 1805. If momentum is strong then 1830 cannot be ruled out.
If Gold cannot close above 1765, we need to see it hold at 1735. A break below this level could see a move lower into 1720; and if momentum is very strong to the downside we could see a move to 1695.
CRYPTOS
BITCOIN – 16832 (-4357 or -20.56%)
More promising signs for BTC bulls as we closed higher for the week despite equities moving lower.
For a move higher we must now see this market hold above 20000. Should this occur we could see a move into 21715 before retesting 23675. If upside momentum is really strong then we can’t rule out 25875.
Failure to hold above 20000 could see a move into 18700. If selling pressure takes control then we could see a move down to 17560. A close below this level and 14000 can’t be ruled out, maybe even a 12325 print.
