Market Brief

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Quiet before the storm? With the China closed for half the week, are the markets preparing for something bigger on re-open?

Read below what our desk thinks, and the important levels to watch this week.

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 6826 ( -6 or -0.09% )

The ASX remained relatively flat last week as markets digest the COVID situation in Australia. We will be discussing this in our LIVE CHAT ROOM this week.

VOLATILITY ALERTS:

Tue 11:30 – Monetary Policy Meeting Minutes
Thu 11:30 – Unemployment Rate

For a continued move higher we must now see the ASX hold above 6804. Should this occur, we will look for a move into 6850, and if momentum to the upside is very strong we cannot rule out a move to 6960.

If the ASX cannot hold above 6804, we will look for a move back down to 6682. A strong break and close below this level however could see the ASX retest of 6550, and if downside momentum is very strong, we could see a move down to 6500.

EUROPE

DAX – 14071 ( +6 or +0.04% )

The DAX also remained flat and as such our levels remain unchanged.

VOLATILITY ALERTS:

Fri 19:30 – German Flash Manufacturing PMI, Services PMI

For a continued move to the upside we must now see the DAX close above 14210. Should this occur, we will look for a strong move up into 14450, and if momentum remains strong a push back higher into 14600.

If the DAX fails to close above 14210, we may see a retest back down into the key level of 13800. A close below this level is likely to see a retest of 13520; however if momentum is very strong to the downside we cannot rule out a move to 13266.

US

SP500 – 3941 ( +51 or +1.31% )

The S&P continues to lead global equities higher and this is the market to watch going into the all important 4000 level. We are watching this market closely now for signs of bigger moves. We will be discussing this in our LIVE CHAT ROOM this week.

NOTE: Monday is a public holiday in the US (President’s Day)

VOLATILITY ALERTS:

Thu 00:30 – Retail Sales (monthly)
Thu 06:00 – FOMC Meeting Minutes
Fri 00:30 – Philly FED Manufacturing Index
Sat 01:45 – Flash Manufacturing PMI

For a move higher we would like to see the S&P hold above 3900. Should this occur, we will look for a move to 3952; and if momentum is very strong we will look for moves.

If we cannot hold above 3850, we could see this market move lower into 3790. A break of this level however may result in a quick move down to 3720; and if momentum to the downside remains strong we may see a fast move down to 3650.

FOREX

AUD/USD – 0.7760 ( +83 or +1.08% )

The Aussie Dollar found important support last week and has made its way back higher into the 77 handle.

VOLATILITY ALERTS:

Tue 11:30 – Monetary Policy Meeting Minutes
Thu 11:30 – Unemployment Rate

For a move higher, we would first like to see the AUD hold above 0.7750. Should this occur we will look for a move into 0.7823, and if upside momentum remains very strong we cannot rule out a move to 0.7997 before a pause.

If the AUD cannot close above 0.7750, we will look for this market to break lower through 0.7662. A break and close below this level could see a sharp decline into 0.7617; and if momentum to the downside remains strong we cannot rule out a move into 0.7550.

EUR/USD – 1.2118 ( +70 or +0.58% )

The Euro also found important buyers last week as it continues to trade in a large sideways range.

VOLATILITY ALERTS:

Fri 20:00 – Euro Area Flash Manufacturing PMI, Services PMI

For a move higher we would like to see the EURO close above 1.2120. Should this occur we could see a retest of 1.2256. A break of this level could see this market rally further and if momentum is very strong, we would be on the lookout for a move to 1.2300. 

If the EURO cannot hold above 1.2120, we could see a fast move down into 1.2002 before a pause. A strong break of this level may result in a move into 1.1980, however any weakness below this level could see a sharp drop into 1.1925.

GBP/USD – 1.3851 ( +113 or +0.82% )

Cable has broken through a very key area and this week we look to see if this market can continue higher. We will be discussing this in our LIVE CHAT ROOM  this week.

VOLATILITY ALERTS:

Wed 18:00 – CPI (annual)
Fri 18:00 – Retail Sales (monthly)
Fri 20:30 – Flash Services PMI, Manufacturing PMI

For a move to the upside now, we would like to see Cable close above 1.3875, before a break higher through 1.4041. If this market can hold above this level we may then see a strong push into 1.4120 before another pause. A break through this level sets Cable up for a move up to 1.4250.

Should we fail to close above 1.3875, we will look for a move down to 1.3743. A break below this level however could see Cable further depreciate to 1.3534 by the week’s end and if momentum is very weak we cannot rule out a move to 1.3410.

USD/JPY – 104.92 ( -45 or -0.43% )

The $/YEN finished the weak lower as we await important GDP data this week.

VOLATILITY ALERTS:

Mon 10:50 – GDP (quarterly)

For a move to the upside we must now see this market hold above 103.80. Should this occur we will look for a push into 105.50, and if momentum is very strong we cannot rule out a move higher to 106.92.

If we cannot hold above 103.80, we could see another move back down into 103.21. A break below this level may result in further downside to 102.80; and any further breaks to the downside may trigger a bigger move into 100.65.

COMMODITIES

GOLD – 1824 ( +11 or +0.61%)

Gold is in a real battle as both buyers and sellers struggle to take control of this market. We will discuss this market in detail in the LIVE CHAT ROOM.

For a continued move higher we must now see this market close above 1850. Should this occur we would then need to see a strong break back above through 1900. Should this occur we could see further upside into 1920; and if momentum is very strong we may see a retest of 1950.

If Gold cannot close 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 1750 and 1726.

Additional analysis including charts available in our platform

Commentary from our trading desk – written by our Head of Trading.

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