Market Brief

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As Europe continues to battle the Coronavirus pandemic, can the ECB come up with a plan to help its struggling economies? Click below to see what our desk thinks, and the important levels to watch this week.

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Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes.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 – 6189 ( -25 or -0.4% )

The ASX was slightly lower last week as we head into yet another important week for this market.

VOLATILITY ALERTS:
Wed 11:30 – CPI (quarterly)

For a continued move higher we must now see the ASX close above 6206 followed by a push into 6250. Should this occur we will look for a move into 6266, and if momentum to the upside remains strong we cannot rule out a move to 6345 and 6434.

If the ASX cannot close above 6206, we will look for a move back down to 6140 before a pause. A strong break and close below this level however could see the ASX retest 6000, and if downside momentum is very strong we could see a move down to 5980.

EUROPE
DAX – 12661 ( -239 or -1.85% )

The DAX was one of the poorer performers last week as the Coronavirus pandemic continues to weigh heavily on European equities.

VOLATILITY ALERTS:
Thu 23:45 – ECB Interest Rate Announcement
Fri 00:30 – ECB Press Conference
Fri 18:00 – German Prelim GDP (quarterly)

For a continued move to the upside we must now see the DAX close above 12714. Should this occur, we will look for a move higher into 12921, and if momentum remains strong a push back higher into 13100.

If the DAX fails to close above 12714, we may see a move back down into the key level of 12566. A close below this level is likely to see a retest of 12266; however if momentum is very strong to the downside we cannot rule out a fast and sharp move down into 12050.

US
SP500 – 3460 ( -12 or -0.35% )

The S&P remained flat and with less than 10 days to the upcoming election, all eyes are on this market now. We will be discussing this in the MEMBER PORTAL this week.

VOLATILITY ALERTS:
Tue 01:00 – New Home Sales
Tue 23:30 – Durable Goods Orders (monthly)
Thu 23:30 – Advance GDP (quarterly)
Fri 01:00 – Pending Home Sales (monthly)
Fri 23:30 – Personal Spending (monthly)
Sat 00:45 – Chicago PMI
Sat 01:00 – Revised UoM Consumer Sentiment

For a move higher we would like to see the S&P close above 3498. Should this occur, we will look for a move higher into 3560. A strong break above this level however sets the stage for a move higher into 3620; and if momentum is very strong we cannot rule out a move to 3650.

If we cannot close above 3498, we could see this market move lower into 3395. A break of this level however may result in a quick move down to 3300; and if momentum to the downside remains strong we may see a fast move down to 3274 and 3210.

FOREX

AUD/USD – 0.7136 ( +59 or +0.83% )

The Aussie Dollar held its ground last week but with the potential for heightened volatility- can the Aussie Dollar continue to stay above 70c?

VOLATILITY ALERTS:
Wed 11:30 – CPI (quarterly)

For a move higher, we would first like to see the AUD hold above 0.7113. Should this occur we will look for a move into 0.7197, and if upside momentum remains very strong we cannot rule out a move to 0.7282 before a pause.

If the AUD cannot hold above 0.7113, we will look for the AUD to 0.7014. A break and close below this level however could see a sharp decline into 0.6934; and if momentum to the downside remains strong we cannot rule out a move into 0.6873.

EUR/USD – 1.1861 ( +147 or +1.25% )

The EURO was also stronger last week and we are watching this market again closely this week.

VOLATILITY ALERTS:
Thu 23:45 – ECB Interest Rate Announcement
Fri 00:30 – ECB Press Conference
Fri 18:00 – German Prelim GDP (quarterly)

For a move higher we would like to see the EURO hold above 1.1834. Should this occur we could see a retest of 1.1925. A break of this level could see this market rally further to 1.1950; and if momentum is very strong, 1.2042 cannot be ruled out.

If the EURO cannot close above 1.1834, we could see a fast move down into 1.1738 before a pause. A strong break of this level may result in a move into 1.1678, however any weakness below this level could see a sharp drop into 1.1613 and 1.1553.

GBP/USD – 1.3043 ( +134 or +1.04% )

Cable was also stronger but with new numbers over the weekend showing less confidence in the BoJo government- how will this market react this week?

For a continued move to the upside, we would like to see Cable hold above 1.3035, followed by a retest into 1.3161 before a pause. If however momentum is very strong we may see a strong push into 1.3277.

Should we fail to hold above 1.3035, we could see a move back down to 1.2867. A break below this level however could see Cable further depreciate to 1.2720 by the week’s end.

USD/JPY – 104.70 ( -68 or -0.65% )

The $/Yen continues its flatline behaviour. Could this be the week to shake things up?

For a move to the upside we must now see this market close above 105.50. Should this occur we will look for a push into 106.52, and if momentum is very strong we cannot rule out a move higher to 106.92.

If we cannot close above 105.50, we could see another move back down into 104.02. A break below this level may result in further downside to 103.21; and any further breaks to the downside may trigger a bigger move into 102.80.

COMMODITIES

GOLD – 1901 ( +3 or +0.16% )

GOLD was flat last week and so our levels remain unchanged; but we are also watching this market very closely.

For a continued move higher we must now see Gold close above 1920. Should this occur we will look for a move to 1938 and 1950. A break above this level sets Gold up for retests of 2012 and 2033.

If Gold cannot close above 1920, we will look for a move back down to 1900. A break below this level could see a move lower into 1871; and if momentum is very strong to the downside we cannot rule out a sharp move down to 1850.

Additional analysis including charts available in our platform

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

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