Weekly Outlook: 2014, April 13 - 20

Chinese Yuan Risks Drop to 12-Month Lows On Heavy Data

Fundamental Forecast for the Renminbi: Neutral

• A rebound for the Yuan faltered quickly this past week and put the currency back at 12-month lows versus the dollar
• Risk trends are a key aspect for this currency, but it isn’t as sensitive as other emerging market counterparts
• 1Q GDP will be this week’s top scheduled event risk, but financial measures should be paid an equal mind

Attachment 6517

The Chinese Yuan (also called the Renminbi) attempted a recovery in its opening move of this past week, but the currency would ultimately end back up on the cusp of 12-month lows against its US counterpart. No doubt risk trends played a significant role in this failed attempt at liftoff. With global equities on the lam, the frequent financial headlines lamenting China’s slowing growth, impending wave of defaults and asset bubbles are taken more seriously. Will the international market’s scrutiny increase this week as speculators come under pressure? Will heavy economic docket alter the Yuan’s position on the global scale? These are the question we should ask to determine whether USDCNH will mark its break above 6.2500 or below 6.1750.

Historically speaking, USDCNH maintains a strong negative correlation to the S&P 500. In other words, the Chinese currency has risen consistently alongside the ‘risk trends’. Fundamentally, this makes sense. Investors seeking higher return on their capital put their money to work in China where relative returns mirrors the country’s astounding growth rate. Naturally, when the tide goes back out on sentiment, funds are repatriated to seek stability. However, the situation is a little more unique with China.
First and foremost, there is an issue with the scale of risk aversion. While we have seen genuine stumbles in exuberance these past years, we haven’t seen anything on the scale that would shake highly leveraged positions nor the less liquid investments in China. To turn the Yuan into a more sensitive emerging market currency (like the South African Rand, Brazilian Real or Indonesian Rupiah), we need to see a greater sense of conviction.

Another unusual aspect that has kept this pair from deviating from its long-term depreciation (Yuan gain) are the external controls – and the speculative distortion that has. The PBoC sets the USDCNY reference every day and doesn’t allow fluctuation greater than 2 percent around its band. Under the assumption that Chinese authorities will continue to loosen the exchange rate as it approaches ‘fair value’, investors feel particularly confident about investing in the country expecting stability. That has led to what many call the ‘China Carry Trade’. Yet, debt defaults, asset bubbles and curbs on capital outflow can quickly work against those same investors.
A more traditional route to volatility – event risk – may be tempted in the week ahead. China’s calendar is dotted with foreign reserves, lending, foreign direct investment (all without specific days for release) as well as precisely timed business activity, fixed assets, retail sales and industrial production figures for March. However, the big ticket item will certainly be the first quarter (1Q) GDP report. The consensus is for the country’s pace of growth to slow from 7.7 percent in the final months of 2013 to 7.3 percent. The Premier and Central Bank Governor have both said that would be within the tolerable band, but will investors be so confident as defaults mount and officials deny fresh rounds of stimulus?

Gold at Major Inflection Point Ahead of Fed Beige Book- $1327 Key

Fundamental Forecast for Gold:Bearish

• Crude Oil Retreats To $103, Gold At A Crossroads Ahead of US Data
• Gold Recovery Continues, SPX 500 Vulnerable to Deeper Losses

Attachment 6518

Gold is up 1.1% on the week with the precious metal trading at $1318 ahead of the New York Close on Friday. The rally comes on the back of a substantial sell-off in broader risk assets with US stock indices off by 2-3% across the board. Gold prices have found support on risk-aversion flows and Fed rhetoric after coming off seven week lows at $1277. The advances are likely to remain limited however as the technical picture keeps the broader focus weighted to the downside.

The release of the minutes from the March FOMC policy meeting noted that several Fed officials said ‘forecasts overstated the rate rise pace,’ suggesting that the central bank does in fact expect to keep rates anchored well after the cessation of QE. Remarks by Philadelphia President Charles Plosser, a voting member this year, further reinforced the central bank’s stance, saying that the ‘dot forecasts are not the FOMC consensus.’

Interest rate expectations were subsequently pushed out, offering support for bullion as the greenback came under tremendous pressure. The Dow Jones FXCM Dollar Index (Ticker: USDOLLAR) fell to levels not seen since October with a decline of more than 1.2% heading into the close of the week. However, with the US docket picking up next week, the greenback may find some support, limiting the fuel needed to sustain the gold rally.
Traders will be closely eyeing key US data prints next week including retail sales, the consumer price index (CPI), housing data and the release of the Fed’s Beige Book. Inflation data on Tuesday is expected to show a n increase in the pace of year on year price growth to 1.4% from 1.1% with core and m/m inflation expected to hold steady at 1.6% and 0.1% respectively. The updated assessment of the Fed’s twelve districts on Wednesday will likely highlight the week’s docket as investors look for signs that the recovery remains on firm footing.

From a technical standpoint, gold remains at risk below the March opening range low at $1327, with only a move surpassing $1348 shifting our focus back to the topside. This level represents the 61.8% retracement of the decline off the March highs and would require a breach back above the 2012 trendline resistance we broke last month. Bottom line: we’ll be looking for short triggers next week to offer favorable entries targeting objectives into $1270 with only a breach/close above $1327 invalidating our medium-term bias. Such a scenario eyes a break above $1348 to put resistance objectives at $1366, $1383 and $1408 in view.

What’s the Risk of a Much Larger Japanese Yen Breakout?

Fundamental Forecast for Japanese Yen: Bullish

• Bank of Japan sends Japanese Nikkei 225 sharply lower, Yen higher
• Forex sentiment grows very one-sided, sounds warning for JPY pairs
• Technical forecasts suggest the USDJPY could fall to fresh lows

Attachment 6519

The Japanese Yen surged against major forex counterparts as the S&P 500 and Japanese Nikkei 225 tumbled. A rush to safety favored the JPY, and the fact that it trades at critical resistance (USDJPY support) suggests the week ahead could bring further volatility.

Japanese equities bore the brunt of the global shift towards safe-haven assets as the Nikkei posted its single-largest weekly decline in three years. The highly-correlated Dollar/Yen exchange rate looks especially at risk if the Nikkei falls to further lows.
Sharp domestic equity underperformance can partly be blamed on a disappointing Bank of Japan monetary policy announcement. Central bankers left the current pace of Quantitative Easing purchases unchanged, and surprisingly hawkish rhetoric from BoJ Governor Kuroda sunk hopes that they would ease policy further. To that end it will be important to monitor commentary from the BoJ chief this week; we suspect that Nikkei weakness and JPY surges would likely soften the bank’s stance on further QE.

Similarly surprising commentary from the US Federal Reserve put further pressure on the US Dollar/Yen exchange rate in particular. Minutes from the recent Federal Open Market Committee meeting showed that several members believed interest rates would rise more gradually than staff projections predicted. The effect on US interest rate futures was clear: implied yields for the December, 2015 interest rate futures fell to their lowest since the USD traded to ¥101.20 just one month ago.
There’s certainly risk that this may be the start of a larger USDJPY breakdown and Japanese Yen break higher. Yet it’s important to note that FX options show volatility prices remain near multi-year lows. In plain words: traders aren’t necessarily betting on/hedging against much larger USD moves.

Until we see a more significant shift in FX market conditions it’s difficult to argue for a much larger JPY break higher (USDJPY breakdown). Yet it would be foolish to ignore the clear risk that the Nikkei 225 could fall further, and clear pressure on US interest rates could likewise keep the Dollar under pressure through the days and weeks ahead.

GBP/USD Remains Poised for Higher High on Stronger U.K. Recovery

Fundamental Forecast for Pound:Bullish

• GBP/USD Reverses After Making New Multi-Year High
• British Pound Soars, U.K. Factory-Production Data Better-Than-Expected

The British Pound struggled to hold above the 1.6800 handle after failing to clear the February high (1.6821), but the fundamental developments coming out next week may generate fresh highs in the GBP/USD as the economic recovery in the U.K. gathers pace.

Even though the International Monetary Fund (IMF) lowered its global growth forecast for 2014, the group sees the U.K. outpacing the other advanced economies as the region is now expected to grow an annualized 2.9% this year, and the Bank of England (BoE) may come under increased pressure to normalize monetary policy sooner rather than later as U.K. Jobless Claims are projected to contract another 30.0K in March, while wage growth is anticipated to pick-up for the third consecutive month in February.

With that said, the U.K. Core Consumer Price Index may continue to highlight sticky inflation in the U.K. amid the ongoing pickup in economic activity, and Governor Mark Carney may do little to halt the ongoing appreciation in the British Pound as it helps the Monetary Policy Committee (MPC) to achieve the 2% target for price growth.
In turn, the BoE Minutes due out on April 23 may sound more hawkish this time around, and a further shift in the policy outlook may heighten the bullish sentiment surrounding the sterling as the central bank moves away from its easing cycle. As a result, we will continue to look for opportunities to ‘buy dips’ in the British Pound, and the GBP/USD may continue to carve a series of higher highs & higher lows this year as it retains the bullish trend carried over from 2013. The next topside objective for the GBP/USD comes in around 1.6850-60, the 78.6% Fibonacci expansion from the October advance, and we will continue look for a higher high as it carves a higher low earlier this month.

Dollar: A Thunderous Collapse or Slow Revival

Fundamental Forecast for Dollar:Bullish

• The worst S&P 500 and US equity drop in nearly two years has yet to resurrect the greenback’s safe haven status
• A tempered forecast for the Fed’s first rate hike has driven the dollar lower, particularly against its core counterparts

Attachment 6520

The dollar has suffered. A 1.1 percent tumble through the past week marks the currency’s worst performance since October 18 – notably, when the greenback bottomed out a three-month slide. On the verge of a stark trend change on a individual basis (the Dow Jones FXCM Dollar Index is standing just above a mulit-year trendline and 12-month range low around 10,400) and its important pairings (EURUSD close to 1.4000, GBPUSD at four-year highs and USDJPY looking heavy above 100), the potential for a crippling collapse or dramatic recovery is tangible. Bears will point to the recent slide in Treasury yields and rate expectations as their cue for the next leg. Bulls see the tumble in capital markets last week as the currency’s salvation. What we find is likely something in the middle…and perhaps still bullish.
While FX markets carved hefty moves and tested serious levels, the top financial headline of this past week was the drop in equities. In particular, the S&P 500’s 2.6 percent slide through the period was the benchmark’s worst since the period ending June 1, 2012. In this move, there is the potential for dollar’s salvation – though it isn’t especially high. This benchmark for risk appetite is down 4 percent from the record high set last Friday. For many, such an abrupt move translates into substantial ‘risk aversion’. If there is enough ‘fear’ in this correction such that it infects the broader financial system, the dollar could regain its traction amid a scramble for liquidity.

The difficulty in turning this recent volatility swell into a lever for the dollar is the balance of conviction. To tap the currency’s unique safe haven status, we need the level of speculative unwind that redirects investors from higher yields in the Eurozone, China and the UK to the deep markets and regulations of the US. That is easier said than done. There have been plenty of temporary corrections during the past 5-year dominant bull trend that have petered out and inevitably acted as a spring board for opportunistic speculators. Such consistency has led to an extraordinary sense of complacency and certainty.
Whether we are looking at the bigger picture from a technical view (record high stocks), a fundamental view (high valuations) or structural view (excessive leverage); the potential for a ‘cleansing fire’ is high. The risk that it happens over the coming weeks or months is higher now than it has been in the past years, but it will be particularly difficult to generate the kind of panic that revives the dollar’s safe haven status this week. For one, there are few events that tout the kind of influence necessary to single-handedly redefine sentiment. Perhaps more a burden is that the trading ranks will be severely thinned out by a market holiday for much of the western world on Friday.

It is important to maintain a healthy sense of skepticism for scenarios that are low probability – especially those that we desire for more favorable trading conditions – but it is just as important to have a plan in place should they be realized. If we do manage to see sentiment ignite in flames, the dollar would do more than bounce – it would surge.

A more engaged fundamental theme for FX traders to keep track of this week is the development in interest rate forecasts. The greenback’s tumble these past three months – and particularly the past week – have been heavily influenced by a substantial corrosion in rate forecasts. From a time frame as competitive as early as 1Q 2015, the market is conforming to the mid-2015 by the Fed. This has led to a drop in Treasury yields and market rates – and the dollar in turn. Yet, while the USDollar stands on the cusp of a major trendline break, it is important to differentiate a loss of premium from an actual dovish turn for US forecasts. The latter could sink the greenback, but that is not the circumstances we are working with. The question is how far the premium retreat goes. Does it end this week with March CPI and Fed Chair Yellen speeches or does it continue to weigh? Be ready.

Australian Dollar Rally at Risk as Soft Chinese Data Looms Ahead

Fundamental Forecast for Australian Dollar: Neutral

• Australian Dollar Hits Five Month High on Firming RBA Policy Bets
• Soft Chinese Economic Data May Undermine Aussie in the Week Ahead

Attachment 6521

The Australian Dollar continued to recover last week, finishing Friday’s session with the highest close in five months against its US counterpart. The move tracked a pickup in RBA interest rate hike expectations, with a Credit Suisse gauge tracking the priced-in outlook now at levels unseen since November and pointing to an interest rate hike within 12 months.

A hefty helping of top-tier Chinese economic data may undermine Aussie strength in the week ahead however. The first quarter GDP report takes top billing, with expectations pointing to a slowdown to 7.3 percent on the year-on-year growth rate. That would mark the weakest pace of expansion since the Great Recession trough recorded in March 2009. Softening retail sales and industrial production readings are likewise on tap.

Data from Citigroup shows Chinese economic news-flow has increasingly underperformed relative to consensus forecasts since mid-February. Indeed, the gap between expectations and realized outcomes is now at its most dramatic in five years. That suggests analysts continue to underestimate the extent of the slowdown in the world’s second-largest economy, opening the door for disappointing outcomes.

China is Australia’s largest trading partner. That means that a slowdown in the East Asian giant may spill over into Australia via ebbing cross-border demand, undermining the case for RBA tightening. Needless to say, that bodes ill for the Aussie Dollar. The release of minutes from April’s monetary policy meeting where Governor Glenn Stevens and company once again argued in favor of a period of stability in baseline rates may further temper hawkish bets.

On the external front, a busy docket of scheduled commentary from Federal Reserve officials including Chair Yellen as well as the release of the central bank’s Beige Book survey of regional economic conditions may prove market-moving. AUD/USD has moved closely in line with the Australia-US front-end bond yield spread. If last week’s disappointment in minutes from March’s FOMC minutes is softened by supportive outcomes on these fronts, a pro-taper shift in policy bets may likewise put pressure on the Aussie.

Forex Weekly Outlook Apr. 14-18

The US dollar had a terrible week, falling across the board. Can it stabilize now, or will the sell off continue? US retail sales, German ZEW Economic Sentiment, US Inflation data, Janet Yellen and US Haruhiko Kuroda speeches, Unemployment Claims and the Philly Fed Manufacturing Index are the highlights of this week. Here is an outlook on the main market movers coming our way.

The greenback took a big hit following the relatively dovish FOMC minutes release where forward guidance was forsaken for a promise of low rates after the bond buying program ends. Fed Chair Yellen also surprised markets by saying that bond buying will finish in 6 months. However, later that week, the Jobless claims release was a positive surprise, plunging 32,000 to 300,000 claims, the lowest level since December 2013, indicating the US job market is on a solid growth trend. Will the US economy continue its growth trend after the QE is over? In the euro-zone, weak inflation data from France was dismissed. Strong industrial data from the UK boosted the pound, upbeat Australian data energized the Aussie and the lack of action from the BOJ fueled the yen. Let’s start,

Updates:

1. US Retail sales: Monday, 13:30. U.S. retail sales expanded more than expected in February, after harsh weather conditions slowed activity in recent months. Retail sales edged up 0.3%, following a revised 0.6% decline in January. The reading was higher than the 0.2% rise anticipated. Meanwhile Core sales, excluding automobiles, gasoline, building materials and food services increased 0.3% after a 0.3% decline in the previous month. Analysts anticipate retail sales would improve further in the coming months. U.S. retail sales are expected to rise 0.8%, while core sales are predicted to gain 0.5%.
2. UK inflation data: Tuesday, 9:30. The UK inflation rate fell to a four-year low of 1.7% in February, amid a sharp decline of 0.8% in petrol prices. This was the second consecutive reading falling below the BOE’s 2% inflation target. Prime Minister David Cameron noted that the figures support the government’s economic strategy to provide stability and security for hard-working people. But Labour’s Shadow Treasury Minister Catherine McKinnell said prices are still rising faster than wages badly affecting household consumption. CPI is expected to rise 1.6%.
3. German ZEW Economic Sentiment: Tuesday, 10:00. Investor sentiment in Germany continued to decline in March, falling for the third consecutive month to 46.6 points, from 55.7 in February. The release came in below forecasts of a 52.8 points reading. The possible reasons for this weak reading could be, a softer outlook for emerging market activity, a strong euro and mounting deflation risks and tensions in the Ukraine. Investor climate is expected to reach 46.3.
4. US Inflation data: Tuesday, 13:30. U.S. inflation stayed mild in February. Consumer Price Index inched 0.1% for the second month consecutive month after a drop in gasoline prices offset the largest rise in the cost of food in nearly 2-1/2 years. On a yearly base, consumer prices increased only 1.1%, weaker than the 1.6% rise in January. Meanwhile Core prices, excluding volatile energy and food components increased 0.1% for a third straight month and remained steady at 1.6% on a yearly base. However, the stable state of inflation is positive for business planning for hiring and capital spending. Both CPI and Core CPI are expected to gain 0.1%.
5. Janet Yellen speaks: Tuesday, 13:45, Wednesday 17:15. Federal Reserve Chair Janet Yellen will speak in Stone Mountain and in New York. Yellen may speak about the recent improvement in the US job market as well as the ongoing tapering process, its duration and its effects on the US economy. Volatility is expected, especially after her previous important comment triggered a big USD rally.
6. UK employment data: Wednesday, 9:30. The UK’ unemployment rate remained stable at 7.2% for the third consecutive month, however, the number of people claiming unemployment benefits declined more than expected, reaching 34,600, indicating the labor market continues to improve. The BoE revised its forward guidance policy, which linked interest rate decisions to the unemployment rate, since the rate fell unexpectedly towards the 7%, marking the start of rate hikes. The Bank hinted that the first rate hike will occur in the second quarter of 2015. UK number of unemployed is expected to decline by 30,200, while the unemployment rate is expected to remain 7.2%.
7. US Building Permits: Wednesday, 13:30. The number of building permits surged in February to 1.018 million units from January’s total of 945,000. These four-month high topped analysts’ predictions for 970,000 units. Contrary to this release, U.S. housing starts declined by 0.2% in February a seasonally adjusted 907,000 units from January’s total of 909,000, disappointing expectations for an increase of 3.4% to 910,000 units. Nevertheless the rise in the number of permits ensures the continuation of growth in the housing industry. The number of building permits is expected to reach 1 million.
8. Canadian rate decision: Wednesday, 15:00. The Bank of Canada was concerned about the soft inflation rate on its last meeting in March, despite the rise in consumer prices occurred in January. The bank noted that a rate change is possible in the next policy meeting however analysts do not expect a rate change until the third quarter of 2015. The rate report was nearly unchanged from January when Governor Stephen Poloz said the door was “slightly more open to a rate cut. Meanwhile, the Canadian dollar, dipped in value against its U.S. counterpart in recent months which may help to boost exports, business confidence and investment. Interest rates are expected to remain unchanged at 1.00%.
9. Canadian inflation data: Thursday, 13:30. Canadian consumer prices edged up 0.8% in February, following a 0.3% rise in the previous month. The rise was better than the 0.6% predicted by analysts. However, on a yearly base, the index dropped to 1.1% from 1.5% in January. Canadian Core prices rose 0.7% while expected to reach 0.5%. The year-over-year core rate moderated to 1.2% from 1.4% in January. The sharp rise indicates that seasonal factors were involved. However, despite the recent increase, inflation remains rather tame. CPI is expected to edge up 0.4% and Core CPi is expected to increase by 0.3%.
10. US Unemployment Claims: Thursday, 13:30. The number of Americans filing initial claims for unemployment benefits dropped sharply last week to the lowest level since December 2013, reaching 300,000, signaling a pick-up in the US job market. Positive weather and stronger growth boosted the labor market causing the 32,000 drop. This stronger than expected release will also contribute to the second quarter growth rate. Unemployment claims are expected to increase to 316,000.
11. US Philly Fed Manufacturing Index: Thursday, 15:00. Manufacturing activity in the Philadelphia-region soared in March, reaching 9 points after posting minus 6.3 in February, easing concerns over the U.S. economic outlook. Analysts had forecasted the index to rise to 4.2 in March. The survey’s showed new orders, and shipments increased and recorded positive readings indicating growth trend is returning following weather-related weakness in February. Manufacturing activity is expected to improve further to 9.6 points.

Nikkei forecast for the week of April 14, 2014, Technical Analysis

The Nikkei as you can see fell during the totality of the week, closing below the ¥14,000 level. However, there is a significant amount of support below this level as well, and therefore we are not quite ready to start selling. This area could produce a supportive candle, and we would be willing to take a supportive candle on either the daily or weekly chart, as we believe ultimately this market will test the ¥16,000 level yet again as the uptrend should continue. Selling is not an option at this moment.

http://youtu.be/UduFSDwxbSQ


Attachment 6522

DAX forecast for the week of April 14, 2014, Technical Analysis

The DAX as you can see fell hard during the week, closing near the €9300 level. This of course is a very bearish candle and we believe that the market may very well continue lower from here, especially considering that there was a gap on Friday. The €9000 level has been very supportive in the past, and because of that we think that a supportive candle in that general region would be perfect for a buy signal. It doesn’t have to be on the weekly chart, it can be on the daily chart as well, but either way we would be very interested in buying in that area.

http://youtu.be/YBDlP2ZYDU0


Attachment 6523

NASDAQ Forecast April 14, 2014, Technical Analysis

The NASDAQ as you can see initially try to rally during the week, but found enough resistance at the 4200 level, sending the market much lower. We found the 4000 level supportive though, as one would expect. The end of the day on Friday saw the market stopped, and as a result we think that this market will more than likely find a supportive candle in this region. We are more than willing to buy a supportive candle in this region, but recognize that closing at the bottom of the range suggests that we probably have a little bit of selling to do still.


http://youtu.be/gMYl-THqd7E


Attachment 6524

MIB forecast for the week of April 14, 2014, Technical Analysis

The MIB as you can see fell hard during the week, bouncing off of the 21,000 level as support. This area would attract buyers in our opinion, just as we would expect to see support all the way down to the 20,000 level. Any supportive weekly candle is reason enough to start buying as far as we can tell, and as a result we will do exactly that. We are not willing to sell this market though, even though it is a bit on the parabolic side and the pullback could be rather vicious.

http://youtu.be/KyNaIwP2toE


Attachment 6525

IBEX forecast for the week of April 14, 2014, Technical Analysis

The IBEX as you can see fell during the bulk of the week, finding the €10,100 level supportive. That being the case, the market looks as if we could find support in this general vicinity, especially considering the €10,000 level is a large, round, psychologically significant number. That being the case, we are looking for supportive candle in order to start buying as the IBEX of course is a massive uptrend. We see no reason for that the change anytime soon, and as a result we feel that you can only buy this market.


http://youtu.be/2SVxVSRHVaY

CAC forecast for the week of April 14, 2014, Technical Analysis

The Parisian index fell during the course of the week, finding the €4300 level as support. That is an area that we would expect to see some support in, and as a result we are looking for supportive candle in order to start buying. We would do that from the daily or weekly chart, as the market is most certainly and an uptrend. That uptrend should continue to attract buyers, and as a result we feel that selling just is not going to be possible in this market at this time.

http://youtu.be/BfAgLFHwejQ


Attachment 6526

S&P 500 forecast for the week of April 14, 2014, Technical Analysis

The S&P 500 fell during the course of the week, breaking the bottom of the shooting star from the previous week. This of course is a very negative sign, but as you can see the market has plenty of support down near the 1780 area. Down in that general vicinity we would expect to see support, and then would start buying on that type of candle in that particular area. This signal could come on the daily chart though, but at the end of the day we believe that ultimately this market should continue to go higher.3

http://youtu.be/D3jiWPE5LgM


Attachment 6527

FTSE forecast for the week of April 14, 2014, Technical Analysis

The FTSE fell hard during the week as you can see, closing towards the very lows of the range. However, it appears that the market has quite a bit of support just below, especially near the 6500 level. Because of this, we are not ready to sell this market, but we certainly don’t want to step into this market until we get a supportive candle near this area, at least on the daily chart. Because of that, it appears that we will eventually be buying, but we will be patient.

http://youtu.be/oHfxRHWvdfU


Attachment 6528

Dow Jones 30 forecast for the week of April 14, 2014, Technical Analysis

The Dow Jones 30 as you can see fell hard during the week, slamming into the 16,000 region. We are still well within consolidation though, and as a result we think that there’s plenty of support just below in order to keep this market higher. We would not sell this market right now, and as a result we are looking for some type of supportive candle in order to start buying. Ultimately, we think that this market continues higher and breaking above the recent high would of course be given the next leg up.

http://youtu.be/P3tU1-vDQtk


Attachment 6529

US Dollar Index forecast for the week of April 14, 2014, Technical Analysis

The US Dollar Index fell during the course of the week, but remains above the 79 handle. The 79 handle of course is supportive, and what we believe is a major inflection point. We believe that this market will be dictated by what happens at the 79 handle, so this of course makes this next week or two very important when it comes to the value of the US dollar going forward.

We would absolutely love to buy a supportive candle in this general vicinity, but will have to remain very patient to see what happens. A daily candle could work, but it would be even better if we saw some type of supportive candle on the weekly chart. Nonetheless, we do recognize the 79 is an area where the market essentially “flips”, meaning that is a massive area that the market respects and deals with time and time again. However, you can see that since the beginning of 2012, the market has found the area to be very supportive, and that means that it makes sense that we would continue to bounce from this area.

Top of that, you can also make an argument for consolidation between this area and the 81.25 level, as we have seen in the last six months proved to be relatively tight. With that, we most certainly have an upward bias at this point, but recognize that a breakdown below the 79 handle would in fact be very significant. On that move, we would expect this market to drop all the way down to the 75 handle, but it would take some time. 78 would of course offer support as well, but it is much more of a minor area than the 79 is as we continue to see the market bounce from his handle. If we can break above the 81.25 handle, we feel that this market will go to the 84 level, given enough time in order to see the bulls continue to take control of a market that they’ve had a strong presence in.


http://youtu.be/apT6OCFTS8U


Attachment 6530

Silver forecast for the week of April 14, 2014, Technical Analysis

The silver markets as you can see went back and forth during the course of the week, essentially doing nothing. The $20 level just above is significant resistance, and as a result we feel that the market will probably still tread water in this general vicinity. However, we think that the market is essentially trying to form some type of a bottom now, and as a result we should go to the $22 level. A break of the top of the weekly range is reason enough to start buying in our opinion. We have no interest in selling until we get below the $19 level.

http://youtu.be/DjMG373jzPI


Attachment 6531

Crude Oil forecast for the week of April 14, 2014, Technical Analysis

The light sweet crude markets rose during the week after initially falling down towards the $100 level. The $100 level of course offered enough support to cause the market to bounce and test the 104.50 level, an area that has been resistance previously. Because of this, we feel that the market will more than likely continue to have bullish momentum, and a pullback here should offer a nice buying opportunity. On the other hand, if we break above the 104.50 level right away, we feel that the market would the $105 level, and then ultimately the $110 level. We are bullish of this market longer term anyway, and believe that there is a significant amount of support down to the $100 level without a doubt. It is down in that area that we feel that the most buying pressure would reenter the market, as it would become more of a longer-term bullish move.

Attachment 6532

Brent

The Brent markets had a back and forth week as well, but testing the $105 level for support significantly, and thereby made a serious attempt to break down. The fact that we could not do so of course makes us more bullish, and we realize that the market heads to the $108 level and find resistance there as well. We need to get over the $108.50 level in order to get overly bullish, and at that point time we feel that the market would head to the $111 area. In that general vicinity, we expect to see a significant amount of resistance, but ultimately believe that the market will break through that barrier. Once that happens, all bets are off and we would suspect Brent would head to the $115 level as it is the next natural large, round, psychologically significant number on the chart. Don’t get us wrong, it’s not that we expect this market to be bullish in a straight line, just that overall and over time, the buyers should win out. Selling therefore isn’t something that we are interested in, at least until we get below the $104 level.


http://youtu.be/o_RJOaAL3-k

Attachment 6533

Natural Gas forecast for the week of April 14, 2014, Technical Analysis

The natural gas markets rose during the course of the week, breaking above the $4.60 handle. That being the case, the market looks as if it is ready to continue going higher, but the question then becomes whether or not we can make a fresh new high. If we can get above there, then the market should continue to go higher. However, if we fail to break above that you will see this market pulled back down. It is a bit disconcerting that the market has shot straight up and hasn’t pulled back significantly yet. Because of that we are suspicious.

http://youtu.be/PRqrCVSEI4w


Attachment 6534

Gold forecast for the week of April 14, 2014, Technical Analysis

The gold markets rose during the course of the week, as you can see on the chart. Having said that, we broke the top of the hammer from the previous session, and we now believe that this market will continue to go higher. Perhaps this could be the beginning of a build up momentum to the upside as the markets did not reach the bottom of the larger consolidation this last time. By breaking the top of the hammer, this suggests that the buyers are starting to come back into play. Because of this, we believe that the momentum will build, and that we will more than likely bust through the $1400 level.

This area leads to the $1500 level as far as I can tell, and as a result we believe that this market will continue to grind higher. That of course is the key phrase there: grind. That being the case, you will have to have the wherewithal to hang onto the trade, but ultimately it does look in fact like we are trying to form some type of bottoming pattern overall. You have a lot of different ways to play goal of course, you could do it with physical metals for that matter. That of course takes all of the leverage out of the position, but you also have the ability to trade gold via the CFD markets.

Ultimately, the $1500 level is probably the real target, and we would fully expect to see this market reach that level given enough time. Of course being positive, it will be a little bit more difficult to hang onto the trade simply because so much in the market has been negative. However, we think that the market will ultimately turn things back around as we are in a longer-term uptrend, regardless what this particular chart looks like. It was just a couple years ago that we were well below $1000 an ounce. That being the case, we believe that the market will ultimately continue higher, especially considering that the US dollar looks a little bit on the soft side these days.

http://youtu.be/J0jvE-zi-cQ


Attachment 6535

USD/JPY forecast for the week of April 14, 2014, Technical Analysis

The USD/JPY pair fell hard enough during the week to break down below the bottom of the shooting star and test the 101.50 level. That is the bottom of the reason consolidation area that we’ve been stuck in, so quite frankly we don’t really see much in this chart at the moment. We don’t think any things change, and quite frankly feel that the market is simply biding its time if you will, in order to go higher. After all, when markets go higher, they will often pull back slightly in order to go higher after building momentum.

The uptrend line that strong on the chart shows that we are certainly still bullish, and as a result we feel that the market will continue to find buyers every time we dip. With that being said, we would like to see some type of supportive candle, even if it’s only on the four hour chart in order to continue to go higher in the uptrend. We feel that the market should continue to go to the 103 level again and again, eventually breaking higher to the 105 level.

The 105 level will continue to be resistive, but we feel that the market should find enough momentum to eventually break out above that area, which of course would be very bullish turn of events. We believe that the uptrend is the real deal, and that the interest-rate differential should continue to drive the markets higher given enough time. Ultimately, we think that this is the beginning of a longer-term buy-and-hold type of phase for the USD/JPY, something that we have seen over and over again through the decades. Granted, we always many should dip a little bit lower but it would not surprise us at all to see an uptrend form that last for 3 to 5 years, which is common for this pair as it tends to do well in “risk on” type of marketplaces as the Japanese yen it tends to be considered a safety currency. As long as the Bank of Japan continues to try and devalue the Yen, we’re still bullish.

http://youtu.be/Q6U4UGNpeGg


Attachment 6536

USD/CAD forecast for the week of April 14, 2014, Technical Analysis

The USD/CAD pair initially fell during the week, but found enough support to bounce and form a nice-looking hammer this hammer of course is a very bullish sign, and the fact that it is focused on the 1.09 area leads us to believe that the market should continue to go higher given enough time. That being the case, we are bullish of the USD/CAD pair given enough time, as the bullish momentum should continue based upon not only the hammer, but the fact that the hammer formed exactly where did leads us to believe that we are going to continue to consolidate in a market that has been very bullish to begin with. Typically, and these situations consolidation in some been continuation.

The recent action in this marketplace suggests to us that perhaps a rest was needed, and as a result we should continue to go higher, probably testing the 1.12 level which is the top of this rectangle. With that, if we break above the 1.12 level, this market should head to the 1.15 level given enough time. At the end of the day, we believe that the Canadian dollar is in trouble overall, and this hammer of course only suggests the same thing. After all, the Bank of Canada recently suggested that Ray cuts warrant necessarily out of the question, which is the complete opposite with going on in the Federal Reserve. The Federal Reserve is trying to cut back on quantitative easing which of course is bullish for the US dollar.

It is not until we break down below this hammer that we would consider selling, but at the end of the day we believe that the support comes back into play at the 1.07 level, which extends all the way down to the 1.06 handle. With that, we would only be short-term bearish, and then start looking for the supportive candle in order to go higher as we would still be in an uptrend at that point as well. One thing to keep in mind though, you can draw an uptrend line that would touch the bottom of this hammer.

http://youtu.be/KsZjHzn82Es


Attachment 6537

NZD/USD forecast for the week of April 14, 2014, Technical Analysis

The NZD/USD pair fell after initially rising during the week. However, you can see that we have broken out to the upside at least momentarily, and as a result we feel that the market will continue to go higher, probably aiming for the 0.90 handle given enough time. We do believe that the bullishness is warranted, and in fact will continue to go on as the market continues to build more of a “risk on” type of attitude. With that, we are bullish of the New Zealand dollar, and pullback should represent buying opportunities.

http://youtu.be/vBbyTaZYdKw


Attachment 6538

GBP/USD forecast for the week of April 14, 2014, Technical Analysis

The GBP/USD pair broke higher during the week, but as you can see pulled back to the 1.68 handle. That to us is the area that we need to get above in order to start buying again, as we feel that the market will go to the 1.70 handle without too many issues. However, we also recognize that the 1.65 level is supportive, and as a result we should find a supportive candles down there to start buying as well. We are bullish of the British pound in general.

http://youtu.be/vRMiIk3SmpA


Attachment 6539

EUR/USD forecast for the week of April 14, 2014, Technical Analysis

The EUR/USD pair rose during the week, breaking above the 1.38 level handily. However, we need to get above the 1.3950 level, and for that matter the 1.40 level in order to feel comfortable enough to start buying and holding onto the position. If we do that though, it would break above a downtrend line from the monthly timeframe, which of course would be a massive bullish sign in a market that has been actually in a downtrend since the financial crisis began. Granted, we’ve had long moves up and down, but if you look at the monthly charts, you will see that we are in fact in a downtrend.

http://youtu.be/7SPs1t2IgEg


Attachment 6540

Weekly outlook: April 14 -18

The dollar edged higher against a basket of major currencies on Friday as a global selloff sent equities markets lower, but gains looked likely to be temporary amid expectations that U.S. interest rates are likely to remain on hold for some time.

USD/JPY ended Friday’s session at 101.61, after weakening to 101.31 earlier in the trading day, the lowest since March 19. For the week, the pair lost 1.41%.

Demand for the yen continued to be underpinned after the Bank of Japan indicated earlier in the week that it was unlikely to implement further stimulus measures in the short term.

The dollar was almost unchanged against the euro at the close of trade, with EUR/USD trading at 1.3884, after touching session highs of 1.3905 earlier. The pair ended the week 1.04% higher, the largest weekly gain since September.

The greenback briefly found support after data on Friday showed that U.S. producer prices rose 0.5% in March, the largest increase in nine months and ahead of expectations for a 0.1% increase.

However, the dollar remained under pressure after the minutes of the Federal Reserve’s March meeting indicated that an interest rate increase is unlikely to be warranted for some time.

The Fed’s March meeting minutes, released on Wednesday, showed that policymakers discussed whether to keep interest rates at record lows until inflation moves higher, and did not elaborate on a possible timeframe for when rates could start to rise.

Last month the U.S. central bank reduced the monthly pace of asset purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.”

The dollar gained ground against the pound on Friday, with GBP/USD falling 0.32% to 1.6729 at the close. The drop in sterling came after data showed that U.K. construction output fell in February as heavy rain, which led to flooding in parts of the country, delayed work.

The dollar was also higher against the commodity linked Australian and Canadian dollars. AUD/USD slipped 0.18% to 0.9398 on Friday, paring back the week’s gains to 1.42%, while USD/CAD advanced 0.41% to 1.0978.

In the week ahead, market watchers will be focusing on speeches by Fed Chair Janet Yellen, as well as reports on U.S. retail sales and housing starts. Data on first quarter Chinese economic growth and a rate decision by the Bank of Canada will also be closely watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 14

• The euro zone is to release data on industrial production.
• The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Tuesday, April 15

• The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.
• Switzerland is to release data on producer price inflation.
• The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.
• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• Canada is to publish data on manufacturing sales. At the same time, the U.S. is to produce data on consumer inflation. Later Tuesday, Fed Chair Janet Yellen is to speak; her comments will be closely watched.

Wednesday, April 16

• New Zealand is to release a report on consumer inflation.
• China is to publish data on first quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The nation is also to release data on industrial production.
• Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.
• The U.K. is to release official data on the change in the number of people unemployed and the unemployment rate, as well as data on average earnings and public sector borrowing.
• The ZEW Institute is to publish a report on economic expectations in Switzerland, a leading indicator of economic health.
• The euro zone is to release revised data on inflation.
• The U.S. is to produce reports on housing starts, building permits and industrial production.
• The Bank of Canada is to announce its benchmark interest rate and publish its monetary policy statement, which outlines economic conditions and the factors affecting the bank’s decision. The announcement is to be followed by a press conference.
• Later Wednesday, Fed Chair Janet Yellen is to speak at an event in New York.

Thursday, April 17

• Australia is to release private sector data on business confidence, as well as official data on new vehicle sales.
• The euro zone is to publish data on the current account, while Germany is to produce data on producer price inflation.
• Canada is to publish data on consumer inflation.
• The U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.

Friday, April 18

• Markets in Europe and the U.S. will be closed for the Good Friday holiday.

USD/JPY weekly outlook: April 14 -18

The yen ended the week broadly higher against the dollar after the Bank of Japan refrained from implementing fresh stimulus measures at its latest policy meeting, while dovish Federal Reserve minutes weighed on the dollar.

USD/JPY ended Friday’s session at 101.61, after weakening to 101.31 earlier in the trading day, the lowest since March 19. For the week, the pair lost 1.41%.

The pair is likely to find support at 101.20 and resistance at 102.12, Thursday’s high.

The greenback briefly found support after data on Friday showed that U.S. producer prices rose 0.5% in March, the largest increase in nine months and ahead of expectations for a 0.1% increase.

Demand for the yen continued to be underpinned after Bank of Japan Governor Haruhiko Kuroda said Tuesday the economy can weather a sales tax increase without further monetary policy measures to offset it.

Earlier Tuesday, the BoJ voted to keep its policy target of increasing the monetary base unchanged at an annual pace of 60 trillion to 70 trillion at the end of its two-day policy meeting.

Kuroda said economic growth and inflation were likely to continue to pick up in the coming months despite a sales tax increase in April.

The dollar came under heavy session pressure after the minutes of the Federal Reserve’s March meeting indicated that an interest rate increase is unlikely to be warranted for some time.

The Fed’s March meeting minutes, released on Wednesday, showed that policymakers discussed whether to keep interest rates at record lows until inflation moves higher, and did not elaborate on a possible timeframe for when rates could start to rise.

Last month the U.S. central bank reduced the monthly pace of asset purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.”

Fed Chair Janet Yellen had indicated that the bank could begin to raise interest rates about six months after its bond-buying program winds up, which is expected to happen this fall.

In the week ahead, market watchers will be focusing on speeches by Fed Chair Janet Yellen and BoJ Governor Haruhiko Kuroda, as well as reports on U.S. retail sales and housing starts.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 14

• The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Tuesday, April 15

• Fed Chair Janet Yellen is to speak; her comments will be closely watched.

Wednesday, April 16

• BoJ Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.
• The U.S. is to produce reports on housing starts, building permits and industrial production.
• Later Wednesday, Fed Chair Janet Yellen is to speak at an event in New York.

Thursday, April 17

• The U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.

Friday, April 18

• U.S. markets will be closed for the Good Friday holiday.

EUR/USD weekly outlook: April 14 -18

The dollar ended the week close to three-week lows against the euro on Friday as dovish Federal Reserve minutes tempered expectations that U.S. interest rates would rise sooner than had been anticipated.

EUR/USD ended Friday’s session at 1.3884, after touching session highs of 1.3905 earlier. The pair ended the week with gains of 1.04%, the largest weekly increase since September.

The pair is likely to find support at 1.3835, Thursday’s low and resistance at 1.3900.

The euro eased back from session highs against the dollar on Friday after data showed that U.S. producer prices rose 0.5% in March, the largest increase in nine months and ahead of expectations for a 0.1% increase.

A separate report showed that the University of Michigan’s U.S. consumer sentiment index rose to 82.6 this month, its highest level since July.

But the greenback remained under pressure after the minutes of the Fed’s March meeting indicated that an interest rate increase is unlikely to be warranted for some time.

The Fed’s March meeting minutes, released on Wednesday, showed that policymakers discussed whether to keep interest rates at record lows until inflation moves higher, and did not elaborate on a possible timeframe for when rates could start to rise.

Last month the U.S. central bank reduced the monthly pace of asset purchases by $10 billion, to $55 billion, and repeated it is likely to continue paring the program in “further measured steps.”

In mid-March Fed Chair Janet Yellen had indicated that interest rates could start to rise around six months after the end of the Fed’s bond purchasing program, suggesting a rate hike could occur in the early part of 2015.

The single currency continued to remain supported after comments by European Central Bank officials earlier in the week tempered expectations for quantitative easing.

ECB governing council member Yves Mersch said Monday there is no immediate risk of deflation in the euro zone and therefore no urgent need to implement large-scale bond purchases.

Separately, Bundesbank president Jens Weidmann said that monetary policy cannot solve the financial crisis, and urged euro zone political leaders to keep reforming their economies.

In the week ahead, market watchers will be focusing on speeches by Fed Chair Janet Yellen, as well as reports on U.S. retail sales and housing starts. Meanwhile, Germany is to release its ZEW economic sentiment index.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, April 14

• The euro zone is to release data on industrial production.
• The U.S. is to produce data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.

Tuesday, April 15

• The ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health.
• Later Tuesday, Fed Chair Janet Yellen is to speak.

Wednesday, April 16

• The euro zone is to release revised data on consumer price inflation.
• The U.S. is to produce reports on housing starts, building permits and industrial production.
• Later Wednesday, Fed Chair Janet Yellen is to speak at an event in New York.

Thursday, April 17

• The euro zone is to publish data on the current account, while Germany is to produce data on producer price inflation.
• The U.S. is to publish data on initial jobless claims and a report on manufacturing activity in the Philadelphia region.

Friday, April 18

• Markets in Europe and the U.S. will be closed for the Good Friday holiday.

EUR/USD trading forecast for Monday

During Friday’s trading session EUR/USD traded within the range of 1.3863-1.3905 and closed at 1.3885.

Fundamental view

Industrial production in the euro zone probably rose 0.2% in February from the previous month, according to the median analyst’ estimate. In January, industrial output unexpectedly declined 0.1%. Industrial production is an indicator of the business cycle that shows the activity and development in the industry as a whole, by measuring the change in volume for a certain period of time. Information on industrial production is raised through special studies for EU members, which are called Prodcom. They cover between 5000 and 6000 products. The index measures the percentage change from the previous month.

A larger than expected increase in the industrial output would heighten the appeal of the euro. The official report is due out at 09:00 GMT on Monday.

Meanwhile, retail sales in the United States probably increased 0.8% in March on a monthly basis, according to the median forecast by experts. In February sales rose 0.3%. The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. US Census Bureau, which is a part of the Department of Commerce surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.

US core retail sales (retail sales ex autos) probably rose 0.5% in March compared to a month ago, following a 0.3% increase in February. This indicator removes large ticket prices and historical seasonality of automobile sales.

The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of nation’s total Gross Domestic Product. Therefore, a larger than expected increase in sales would heighten the appeal of US dollar. The official report is due out at 12:30 GMT on Monday.

AUD/USD forecast for Monday

During Friday’s trading session AUD/USD traded within the range of 0.9364-0.9426 and closed at 0.9398.

Fundamental view

Retail sales in the United States probably increased 0.8% in March on a monthly basis, according to the median forecast by experts. In February sales rose 0.3%. The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. US Census Bureau, which is a part of the Department of Commerce surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.

US core retail sales (retail sales ex autos) probably rose 0.5% in March compared to a month ago, following a 0.3% increase in February. This indicator removes large ticket prices and historical seasonality of automobile sales.

The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of nation’s total Gross Domestic Product. Therefore, a larger than expected increase in sales would heighten the appeal of US dollar. The official report is due out at 12:30 GMT on Monday.

Because of your time adaptability, on certain days you can submit a few hours taking a gander at the charts. Be that as it may, on days when your timetable tops off, you can just stand to look at the charts for a few minutes each time. You like to differ your trading style as indicated by the time you have. At the point when time licenses, you prefer to go through hours taking a gander at the charts and scalp, taking a couple of pips each time. At the point when time is a factor, you prefer to pick the best exchange arrangement for that day.