25.05.2020 - Mon - WMB (Can Lagarde inspire confidence)

Market Brief – Monday 25th May 2020

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.
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INDICES

 

AUSTRALASIA

 

ASX – 5571 ( +133 or +2.45% )

 

The ASX continues to grind its way higher as we enter yet another important week within a larger sideways range. 

 

VOLATILITY ALERTS:
Thu 11:30 – Private Capital Expenditure (quarterly)

 

For a continued move higher we must now see the ASX close above 5590 followed by a move higher into 5746. Should this occur we will look for a move into 5985, and if momentum to the upside remains strong we cannot rule out a move to 6020.

If the ASX cannot close above 5590, we will look for a move back down to 5408. A strong break and close below this level could see the ASX move lower into 5102; and any break of this level could see a sharp retest lower into 4820.

 

EUROPE

 

DAX – 11127 ( +598 or +5.68% )

 

The DAX managed to hold on to its early week gains and is now testing a key area. We will be discussing this in the MEMBER PORTAL this week.

 

For a move to the upside we must see the DAX hold above 11050. Should this occur we will look for a retest of 11266. If the DAX can break strongly through this level, we will look for a move into 11366 and if momentum is very strong we cannot rule out a strong move to 11755.

If the DAX fails to hold above 11050, we will look for a move back down to 10760 before a pause. Any break below this level however could see the DAX sell-off sharply into 10266, and if momentum is very strong to the downside we cannot rule out a move back down to 10010.

 

US

 

SP500 – 2960 ( +100 or +3.5% )

 

The S&P was also up last week following a strong Monday despite spending the rest of the week in consolidation. 

 

NOTE: Monday is a public holiday in the US (Memorial Day)

 

VOLATILITY ALERTS:
Wed 00:00 – CB Consumer Confidence
Th 22:30 – Prelim GDP (quarterly)
Fri 00:00 – Pending Home Sales (monthly)
Fri 23:45 – Chicago PMI
Sat 00:00 – Revised UoM Consumer Sentiment
Sat 01:00 – Fed Chair Powell Speaks

 

For a move higher, we would like to see the S&P hold above 2902. Should this occur we will look for a move into 2998. A strong break above this level could see this market rally strongly to 2140. 

If we cannot close above 2902, we could see this market sell-off into 2838. If momentum to the downside is strong we may see a move lower into 2780; and a close below this level may result in a very fast move down to 2678.

 

FOREX

 

AUD/USD – 0.6534 ( +119 or +1.86% )

 

The Aussie Dollar also remains in it’s tight sideways consolidation having failed to hold above the key 66c level.

 

VOLATILITY ALERTS:
Thu 11:30 – Private Capital Expenditure (quarterly)

 

For a move higher, we would first like to see the AUD hold above 0.6456. Should this occur, we will look for a retest of 0.6592, and if upside momentum remains very strong, we may see a push higher into 0.6692 before a pause.

 

If the AUD cannot hold above 0.6456, we could see this market break lower and retest 0.6282. If momentum to the downside is very strong, a move back down to 0.6092 cannot be ruled out.

 

EUR/USD – 1.0903 ( +84 or +0.78% )

 

Like the Aussie Dollar, the EURO is also range bound as we wait to see what this market will do this week. Can it finally break out?

 

VOLATILITY ALERTS:
Wed 17:30 – ECB President Lagarde Speaks
Wed 18:00 – ECB Financial Stability Review

 

For a move higher, we would like to see the EURO hold above 1.0902. Should this occur, we will look for a move to 1.1033; and if momentum is very strong we cannot rule out a move to 1.1117.

 

If the EURO cannot hold above 1.0902, we could see a move back down into 1.0814. If this market continues to sell-off a move lower into 1.0652 is very possible; and if momentum is very strong to the downside we could see a fast and sharp move down into 1.0525.

 

GBP/USD – 1.2164 ( +63 or +0.52% )

 

Cable managed to find some support last week however is in trouble of retesting this area. We will be discussing this market again in the LIVE CHAT ROOM this week.

 

NOTE: Monday is a holiday in the UK (Spring Bank Holiday)

 

For a continued move to the upside, we need to see the Pound close above 1.2297. Should this occur we may see a move into 1.2480, and if momentum is very strong we cannot rule out further upside into 1.2720.

If the Pound cannot close above 1.2297, we could see a move lower back down to 1.2080. A break of this level however sets up for a move down to 1.1896; and if momentum to the downside is very strong 1.1706 cannot be ruled out.

 

USD/JPY – 107.60 ( +51 or +0.48% )

 

The $/YEN finished the week higher despite the BoJ’s actions last week to extend its stimulus programme. 

 

For a move to the upside we must now see this market close above 108.31. Should this occur we will look for a retest of 109.21, and if momentum is very strong we could see a move higher into 109.94 and potentially 111.73.

 

If we cannot close above 108.31, we could see a move lower into 106.52. A break below this level may result in a sharp move lower into 105.50; and any further breaks to the downside may see a bigger move into 104.97.

 

COMMODITIES

 

GOLD – 1735 ( -7 or -0.4% )

 

Gold was flat having also failed at the key 1750 level and as such our levels remain unchanged.

 

For a continued move higher we must now see this market hold above 1724. Should this occur we could see a strong move to 1755; and any break of this level could see a stronger move to 1786.

 

If Gold cannot hold above 1724, we will look for a move back down to 1674. A break below this level could see a move lower into 1648; and if momentum is very strong to the downside we could see a move to 1605.

 

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