Weekly Outlook: 2014, December 07 - 14

Silver markets initially fell during the course of the week but as you can see found enough support below the $15 level to find pressure enough to break out to the upside and form a nice-looking hammer. This hammer suggests that if we can get above the $17 level, we could see a nice bounce towards $18, and then possibly $19. However, we are negative of silver overall, so we look at any of those rallies as a bit more dangerous than selling a resistant candle which of course is what we would like to see.



the source

Gold markets had a pretty volatile week, as we went back and forth and settled just below the $1200 level. Because of this, we feel that the gold markets are ready to continue going sideways, and that it’s only a matter of time before we get some type of action that can be reacted to, but quite frankly we just don’t have it right now. With that, we feel that this is a market that will be favored by a short-term traders and as a result longer-term traders will probably be on the sidelines for the time being.



the source

The USD/JPY pair initially fell during the course of the week, but as we guide the nonfarm payroll numbers out of America, the US dollar shot straight up against the Japanese yen, and we sliced through the 120 handle. With that being the case, the market should continue to go higher, as we have started the next leg higher in our opinion. With that, we look at pullbacks as buying opportunities, and we fully anticipate that this market will continue to go much higher over the longer term.



the source

The USD/CAD pair tried to break out during the course of the session on Friday, but as you can see pullback to form a shooting star. That tells us that this market will more than likely pullback to the 1.13 level, and then possibly even as low as the 1.12 level. It doesn’t matter though, we are buyers of pullbacks and as soon as we see signs of support, we are willing to start buying the US dollar again. On the other hand, if we break above the 1.15 level, we are buyers as well and that scenario.



the source

The NZD/USD pair tried to rally during the course of the week, and as a result we turned back around and fell rather hard. We tested the 0.77 level, which of course was a significant support barrier. With that, we feel that a break down below the recent lows would be a reason to start selling the New Zealand dollar again, as the Royal Bank of New Zealand continues to work against the value of the Kiwi dollar. After all, they have recently suggested that this pair should be down to the 0.68 level. With that being the case, we feel that the central bank out of Wellington will continue to favor a weaker New Zealand dollar, as they have not only express their opinion verbally, but they have actually stepped into the market in order to sell.

Any rally at this point in time should continue to show weakness eventually. The 0.80 level continues to be the “ceiling” in this market, as it has been so reliable for the sellers recently. Ultimately, we believe the 0.75 level should be tested first, and then possibly down to the 0.70 level. Whether or not we can get down to the 0.68 level is of course a completely different conversation altogether. Ultimately, this should be one of those markets you can sell every time it rallies as the New Zealand dollar certainly is overvalued and is so highly influenced by the commodity markets. The commodity markets look horrible in general, and as a result the US dollar should continue to be favored overall, giving us a bit of a “one-way trade” going forward.

The market has been reliable for some time, and the market consolidating was simply the sellers taking a breather in our opinion. Quite often, you will see markets make impulsive moves like we did a couple of months ago, and then simply grind sideways. Eventually, and the trend continues and we think that’s about to happen going forward in this marketplace. It doesn’t mean they’re ready to go lower yet, but if we make a fresh new low that’s reason enough for us to start selling.



the source

The GBP/USD pair tried to rally during the course of the week, but as you can see struggled above the 1.58 level as the nonfarm payroll numbers showed real strength in the United States. The resulting candle is the second shooting star in a row, and as a result we feel that the GBP/USD pair will continue to go much lower. We are still above the 1.55 level though, which of course is a significant support level on the longer-term charts. With that being the case, the market will more than likely test that area and finally break below and go much lower.

Any rally at this point in time looks very suspicious to us, and we will continue to short the British pound, at least against the US dollar as it is the strongest currency in the world. The 1.50 level of course will be attractive to longer-term traders as well, so it would make sense to see this market go down and test that level. With this, the market is one that we cannot buy at this point in time, as the GBP/USD pair has substantially broke below the 61.8% Fibonacci retracement level.

It is not until we get above the 1.60 level that we would consider buying this pair and that the trend may have been broken. Ultimately, the market is one that we feel the sellers are in control oh, as the US dollar is favored against everything. The British pound itself isn’t so bad, but the truth is that you really can’t sell the US dollar against anything right now, be it another currency or commodity. The world favors the US dollar, and the fact that we had a stronger than anticipated nonfarm payroll number come out it makes sense that it will continue to do so. The US dollar continues to be the strongest currency out there for the next couple of months in our opinion, and as a result we are sellers of this pair going forward. We do expect a massive bounce off of the 1.50 handle though if we get down to that area.



the source

The EUR/USD pair initially tried to rally during the course of the week, but found the 1.25 level to be far too resistive. That being the case, the market fell rather hard. However, we believe that there is still more downtrend left in this market, and we had to the 1.2050 level. Ultimately, we believe that you cannot buy this market, and it is not until we get above the 1.30 level that we would even consider buying. Obviously, that’s not going to happen anytime soon as there is still plenty of bearish pressure.



the source

The dollar rallied to fresh multi-year highs against a basket of other major currencies on Friday after a particularly strong U.S. employment report prompted investors to bring forward expectations for a hike in U.S. interest rates.

The Labor Department reported that the U.S. economy added 321,000 jobs in November, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The unusually strong data saw investors bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 before the report.

The dollar has strengthened in recent months on the back of the diverging monetary policy stance between the Federal Reserve and central banks in Europe and Japan, who are expected to continue monetary easing.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

USD/JPY hit seven year highs 121.69 and was last at 121.43, up 1.38% for the day. For the week, the pair jumped 2.17%.

EUR/USD fell to two-year lows of 1.2272 and settled at 1.2281, off 0.78% for the day.

The euro had moved broadly higher on Thursday after European Central Bank President Mario Draghi indicated that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

Sterling fell to 15-month lows, with GBP/USD down 0.56% to 1.5583 in late trade, while USD/CHF ended at 18-month highs of 0.9790.

The Canadian dollar fell to more than five year lows against the greenback on Friday, following the release of unexpectedly weak domestic jobs data.

Statistics Canada reported that the Canadian economy shed 10,700 jobs last month, compared to expectations for jobs growth of 5,300.

USD/CAD hit highs of 1.1476 before pulling back to 1.1435 in late trade, still up 0.46% for the day.

In the week ahead investors will be awaiting Thursday's U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

China is to produce what will be closely watched reports on trade, consumer prices and industrial production. Central banks in New Zealand and Switzerland are also to hold policy setting meetings next week.

Monday, December 8

• Japan is to release final data on third quarter gross domestic product and a report on the current account.
• China is to publish data on the trade balance, the difference in value between imports and exports.
• Switzerland is to publish reports on retail sales and consumer price inflation, which accounts for the majority of overall inflation.
• Later Monday, Canada is to produce data on building starts and housing permits.

Tuesday, December 9

• Australia is to publish private sector data on business confidence.
• The UK is to publish a report on industrial and manufacturing production.

Wednesday, December 10

• Australia is to produce private sector data on consumer sentiment, as well as official data on home loans.
• Japan is to report on its BSI manufacturing index.
• China is to publish data on the consumer price index.
• The U.K. is to release data on the trade balance.
• Later in the day, the Reserve Bank of New Zealand is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.

Thursday, December 11

• Japan is to release data on core machinery orders and tertiary industry activity.
• RBNZ Governor Graeme Wheeler is to testify before the Finance and Expenditure Select Committee in Wellington. His comments will be closely watched.
• Australia is to publish data on the change in the number of people employed and the unemployment rate.
• The Swiss National Bank is to announce its libor rate and publish its monetary policy assessment. The bank is to hold a press conference to discuss the monetary policy decision.
• Later Thursday, Bank of Canada Governor Stephen Poloz is to speak at an event in New York.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• China is to release data on industrial production and fixed asset investment.
• The euro zone is to publish a report on industrial production.
• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source

The dollar rose to fresh seven-year peaks against the yen on Friday after data showing that the U.S. economy added jobs at the fastest rate in nearly three years last month underlined the diverging monetary policy stance between the Federal Reserve and the Bank of Japan.

The U.S. economy added 321,000 jobs in November the Department of Labor said, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

USD/JPY hit peaks of 121.69, the most since July 2007 and was at 121.43 in late trade, 1.38% higher for the day. For the week, the pair jumped 2.17%.

The particularly strong jobs report prompted markets to bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 ahead of the data. In contrast, the BoJ unexpectedly expanded its stimulus program in late October.

The yen remained weaker after Japanese media outlets reported Thursday that Prime Minister Shinzo Abe's coalition government could retain its majority in the lower house of parliament in elections due to be held on December 14.

Abe dissolved parliament last month, clearing the way for elections to seek a fresh mandate for his economic policies, which call for a weaker yen. The decision came after

Japan’s economy unexpectedly fell into recession in the third quarter.

The euro rose to six-year highs against the yen on Friday, with EUR/JPY at 149.23 in late trade.

The single currency was boosted after European Central Bank President Mario Draghi said Thursday that it would not embark on quantitative easing for now, saying the bank would reassess its stimulus program in the first quarter of 2015.

Meanwhile, the U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday’s U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery. Japan is to publish revised data on third quarter economic growth on Monday.

Monday, December 8

• Japan is to release final data on third quarter gross domestic product and a report on the current account.

Wednesday, December 10

• Japan is to report on its BSI manufacturing index.

Thursday, December 11

• Japan is to release data on core machinery orders and tertiary industry activity.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source

The U.S. dollar rose to more than five-year highs against the Canadian dollar on Friday following the release of a particularly strong U.S. jobs report and unexpectedly weak Canadian employment data.

The U.S. economy added 321,000 jobs in November the Department of Labor said, far more than the 225,000 forecast by economists and the largest monthly increase in almost three years.

September’s figure was revised up to 243,000 from a previously reported 214,000 and the unemployment rate remained unchanged at a six-year low of 5.8%.

The report also showed that average hourly earnings rose by a larger than forecast 0.4% and were 2.1% higher on a year-over-year basis.

The unusually strong jobs report prompted markets to bring forward expectations for the first hike in U.S. interest rates to mid-2015 from September 2015 ahead of the data.

At the same time, Statistics Canada reported that the Canadian economy unexpectedly shed 10,700 jobs last month, following two months of strong jobs growth.

Economists had expected the economy to create 5,300 jobs.

The Canadian unemployment rate ticked up to 6.6% from 6.5% in October, in line with expectations.

USD/CAD hit highs of 1.1476, the most since July 14, 2009 before pulling back to 1.1435 in late trade, still up 0.46% for the day.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, hit a peak of 89.50, the strongest level since March 2009 and ended the day up 0.82% to 89.39.

In the week ahead investors will be awaiting Thursday’s U.S. data on retail sales and jobless claims and Friday’s report on consumer sentiment for further indications on the strength of the economic recovery.

Monday will bring a look at Canada’s housing sector, but the economic calendar is light for the rest of the week, with no major economic reports scheduled for release.

Monday, December 8

• Canada is to produce data on building starts and housing permits.

Thursday, December 11

• Bank of Canada Governor Stephen Poloz is to speak at an event in New York; his comments will be closely watched.
• The U.S. is to release data on retail sales, the government measure of consumer spending, as well as the weekly report on jobless claims.

Friday, December 12

• The U.S. is to round up the week with data on producer prices and a preliminary report on consumer sentiment.

the source