What to Watch for this Week?
It was a pretty weird trading week last week with traditional market correlations completely scrambled.
Declines in the USD have come as U.S. Treasury yields hit four-year highs and as stronger-than-expected U.S. inflation bolstered bets that the Federal Reserve could increase interest rates as many as four times this year.
It appears the market is befuddled by what seems to be changing inter-market relationships … The week before, the stock market was falling off because of rising yields. This week yields rose and stock markets rallied… go figure!
The USD index limped back from a three-year low on Friday but still marked its fifth weekly loss out of seven weeks this year, driving the Euro up to its highest level 1.2555 since December 2014.
For USDJPY, we’re seeing a tendency towards a stronger yen, despite easy monetary policy in Japan. It seems like the markets are beginning to test the BOJ’s resolve.
It’s going to be a slow start to the week
It’s going to be a slow start to trading with China, USA & Canada all on holidays…… Kung Hei Fat Choy to all of our Chinese friends!
We have the RBA Meeting Minutes on Tuesday but trading for the majors won’t really kick off until Wednesday.
The FOMC minutes will be the main game with traders looking for any changes to the FED’s outlook. Much stronger CPI last week has the market on alert for a potential upgrade to their interest rate plans for 2018. That’s potentially 4 hikes instead of 3.
Outside of that Friday’s got a lot of potential with Eurozone & Canadian CPI scheduled.
So take it easy Monday & Tuesday – spend the time on getting your analysis up the curve and identifying market conditions & witch potential strategies you’re going to employ this week.
Don’t forget to check out our latest Advanced Trading Strategy – Utilising the SAR (Parabolic Stop & Reverse). You’ll find it in ‘Scalping the Market’ section.
This strategy is a very good ‘probability enhancer’ to include when the market is trending!
This Weeks Key Fundamental Drivers
AUST RBA Meting Minutes
Forecast: No change to their current plans
UK Claimant Count Change, Unemployment Rate, Average Weekly Earnings
Forecast: 8.6K, 4.3%, 2.5%
EURO ZONE Manufacturing & Services PMI
Forecast: 58.5 & 57.7
US FOMC Minutes
Forecast: Increase in rate hike outlook
EURO ZONE Monetary Policy Meeting Accounts
Forecast: Looking for updates to tapering plans
CANADIAN Retail Sales
EURO ZONE CPI M/M, Y/Y
Forecast: -0.9%, 1.3%
CANADIAN CPI M/M, Y/Y
Forecast: 0.4%, 1.4%
Technical Set Up – What’s Happening with the Majors
After Friday’s rally on the USD the majors are all back trading mid-range. We have new highs/lows in place so we’ve got new trendlines to work with & that’s a great start to the trading week.
I’ve also incorporated the SAR on a few charts to give you an idea of what it looks like. If the USD continues to trend we’ll be seeing this a lot more frequently.
Plan the Trade, Trade the Plan!
The idea of our “Market Insight” is to give you some guidance into your daily preparation.
Your Daily Analysis needs to become habitual.
Make sure you don’t waste unnecessary time in front of the screens.
Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.
The key to your sucess: Isolate the opportunities that work for you and focus on them.
Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behaviour will take over).
Tune up your charts & get ready to trade.