Weekly Outlook: 2014, July 06 - 13

US Dollar Index forecast for the week of July 7, 2014, Technical Analysis

The US Dollar Index fell during the first part of the week, but as you can see found enough support below the 80 handle to turn things back around and form a nice-looking hammer. This hammer of course suggests that the market is going to go higher, and we do believe that a break above the top of the hammer is a decent enough buying opportunity. We think that the market goes to the 81.50 level first, and then possibly as high as 84 given enough time. 79 continues to be the “floor” in this market.

Silver forecast for the week of July 7, 2014, Technical Analysis

Silver markets went back and forth during the course of the week, ultimately settling very little by the time we closed. However, we are above the $21 level and that of course is a positive sign. We believe that you can only be long of silver right now, and shorting is nothing short of reckless. With the impulsive move that we’ve seen recently, we think it’s only a matter of time before we break out above the $22 handle, and that should signal a run it towards the $25 level.

Natural Gas forecast for the week of July 7, 2014, Technical Analysis

The natural gas markets tried to rally during the course of the week, but found the $4.50 level to be resistive enough to turn the market back around. The market has formed a shooting star for the week of course, and we also have to point out that we have been rather consolidated of lately, as the market has been stuck between the $4.85 level on the top, and the $4.30 level on the bottom. That is what makes this shooting star forming where he did interesting to us, the fact that we are sitting on top of a well-established support level.

One has to pay attention to the fact that it is the summertime in the northeastern part of the United States, an area that is one of the most eager consumers am natural gas, but mainly for heating purposes. True, some industrial uses continue to propel the market as the demand for power will continue with a stronger than anticipated jobs number out of America, but ultimately that is not enough to change the demand picture for the time being.

If we get a break below the $4.30 level, we believe that this market could find its way down to the four dollars level given enough time. There is a lot of noise between here and there though, so expect a bumpy ride regardless. On the other hand, if we break above the $4.50 level, or more specifically the top of the shooting star, that signals that enough buying has come back into the marketplace to probably send price back towards the $4.85 handle, the top of the consolidation.

With this in mind, we need to see at least a daily close below the $4.30 before we start selling, and at that point in time we would also recognize that the market will more than likely move and its own accord, and we will have to be very patient with that move lower. We do think however, that a move above the $4.50 level in towards the top of consolidation would probably be the quicker of the two possibilities.

Gold forecast for the week of July 7, 2014, Technical Analysis

The gold markets did very little during the course of the week, which really wouldn’t be a big surprise simply because of the Independence Day holiday in America. Half of New York was away at holiday to begin with, and then of course liquidity falls from that already low point during the course of the week. That being the case, we feel that this market still need to get above the $1350 level in order to be one that can be bought with confidence, but we are also bullish longer-term. With that, we look at pullbacks as potential buying opportunities.

USD/JPY forecast for the week of July 7, 2014, Technical Analysis

The USD/JPY pair rose during the course of the week, showing that the support still holds at the bottom of this consolidation area. However, the market is still start between the 101 and the 103 levels, so it’s difficult to place any longer-term trades. On a break above the 103 level, at that point in time we think that the market could go to the 105 level. However, until that happens we don’t really see much in the way of it trade as the area below 101 looks so supportive.

USD/CAD forecast for the week of July 7, 2014, Technical Analysis

The USD/CAD pair went back and forth during the course of the week, showing the uptrend line that we have been following for some time now to remain supportive. With this, we believe that this market will continue to find buyers just below, and the 1.06 level has in fact been an area where buyers continue to step in. We believe that a break above the top of the range for the week should be reason for the market to continue going higher. We think that the 1.08 level will in fact they’ll offer a significant amount resistance, but ultimately this market should continue to climb higher than that once we break out to the upside.

A move above the 1.08 level we think sends this market looking for the 1.10 handle, and then the 1.12 level which had been resistive enough to send the market down to where we have seen it lately. The market should continue to have some influence from the oil markets, but remember that the Americans are producing more of their own petroleum these days, so it won’t have asked drastic have an effect as we used to see. We believe that this market continues to be choppy as it typically is, but ultimately we should see an impulsive move in one direction or the other.

If history has anything to say about it, we will certainly see a move and it will be drastic. This pair tends to move suddenly, with great expanses of sideways action over the longer term. We are positive of this market as long as we can stay above the aforementioned uptrend line, but do recognize that we need to see the buyers step in in order to feel comfortable being long at all. On the other hand though, if we do close below the 1.06 level, we would expect a little bit of a pickup as far as support is concerned at the 1.05 handle, but we feel that the level should give way to the sellers and we will more than likely go to the parity level after that.

NZD/USD forecast for the week of July 7, 2014, Technical Analysis

The NZD/USD pair had a slightly negative week over the last five sessions, that’s not to be very surprising in general, simply because this is the high that we had seen the pullback from. Nonetheless, we believe that this market doesn’t factor higher, and a move above the 0.88 level since this market looking for the 0.90 level given enough time. We believe that the 0.85 region is in fact the “floor” in this market at this moment in time, and therefore have no interest in selling the New Zealand dollar.

GBP/USD forecast for the week of July 7, 2014, Technical Analysis

The GBP/USD pair broke out during the course of the week, breaking above the top of the hammer from the previous week it was sitting on top of the 1.70 level. Because of this, we really like this market for long positions at this point in time, and believe that ultimately we should continue to go much higher. In fact, we believe that this market goes to the 1.75 level given enough time, and that pullbacks going forward should continue to offer “value” as the British pound continues to strengthen based upon the fact that the British economy seems to be coming out of recession. This has the British pound looking strong against both currencies anyway, but this is the bellwether if you will, of Howell the British pounds going to do overall. So it really doesn’t matter which British pound-based pair you are trading, you need to pay attention to this particular market.

On the other side of the Atlantic, the Federal Reserve is starting to see signs of the US economy waking up, and that of course is good for “riskier” assets. The British pound is often thought of as such, although we see that as a bit of a farce. Nonetheless, we know that correlation is that good economic news in general tends to push this pair higher, so why fight it?

We believe that this market will probably go higher than the 1.75 level given enough time, because quite frankly the 1.70 area is more significant on the longer-term chart. However, we recognize that area does in fact have some significance, so more than likely we have just entered a “buy and hold” type of move but recognize that there will be challenges above. Markets do not move in one direction forever, but this is in fact one that should continue to be very positive for a very long time in our opinion. If you are not trading this particular pair, again, pay attention to this market simply to see whether or not you can buy the British pound against other currencies.

EUR/USD forecast for the week of July 7, 2014, Technical Analysis

The EUR/USD pair tried to rally during the course of the week, but as you can see failed at the 1.37 handle. The resulting candle is a shooting star, but it’s hardly a decent sell signal, as there is significant support down at the 1.35 handle. With this, we believe that ultimately this market continues to chop around sideways, and therefore we have no interest in a longer-term trade at this point in time as the market has essentially been taken over by the scalpers. It is not until we break out of this area that we feel comfortable with a longer-term position.

Forex - Weekly outlook: July 7 - 11

The dollar ended the week higher against a basket of major currencies on Friday, one day after a stronger-than-expected U.S. jobs report for June revived speculation over when the Federal Reserve may start to raise interest rates.

The Labor Department reported that that U.S. economy added 288,000 jobs last month, well above expectations for jobs growth of 212,000. The previous month’s figure was revised up to a gain of 224,000 from a previously reported increase of 217,000.

The unemployment rate ticked down to 6.1% from 6.3% in May, the lowest in almost six years. The data was released a day early, ahead of the Independence Day holiday on Friday.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.31 late Friday, recovering from the two-month lows of 79.84 reached earlier in the week.

USD/JPY settled at 102.05, off Thursday’s high of 102.25, but still 0.62% higher for the week. EUR/USD ended Friday’s session at 1.3594, down 0.35% for the week.

The euro came under pressure after the European Central Bank reiterated that it could use "unconventional measures" to combat persistently low levels of inflation in the euro area.

The ECB left all rates on hold on Thursday, in a widely anticipated decision, after cutting rates to record lows in June.

The single currency was also lower against the yen on Friday, with EUR/JPY down 0.24% to 138.74, off Thursday’s one-month highs of 139.26.

The pound stayed close to six-year highs against the dollar, with GBP/USD at 1.7159 late Friday, as expectations that the Bank of England will raise rates before the end of the year continued to underpin demand for sterling.

Elsewhere, the Australian dollar pushed higher against the greenback on Friday after falling to its lowest level in more than two weeks on Thursday. AUD/USD was at 0.9364 late Friday, paring the week’s losses to 0.52%.

The Aussie fell sharply on Thursday after Reserve Bank Governor Glenn Stevens said the currency was overvalued and added that the central bank had “ammunition” to push interest rates even lower if necessary.

In the week ahead, investors will be focusing on Wednesdays’ minutes of the Federal Reserve’s June meeting, with few other major U.S. economic reports on the calendar. Meanwhile, Australia and Canada are to publish their latest jobs reports and the Bank of England is to hold its monthly rate setting meeting.

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

Monday, July 7

• The Swiss National Bank is to publish data on its foreign currency reserves. This data is closely scrutinized for indications of the size of the bank’s operations in currency markets.
• Canada is to publish data on building starts and the Ivey PMI.

Tuesday, July 8

• Both Australia and New Zealand are to publish private sector data on business confidence, while Japan is to release a report on the current account.
• In the euro zone, Germany is to publish data on the trade balance, the difference in value between imports and exports.
• Switzerland is to produce reports on consumer price inflation and retail sales.
• Elsewhere in Europe, the U.K. is to release data on manufacturing and industrial production.

Wednesday, July 9

• Australia is to produce a report on consumer sentiment.
• China is to release official data on consumer and producer price inflation.
• Canada is to publish data on housing starts.
• Later Wednesday, the Federal Reserve is to publish the minutes of its June meeting.

Thursday, July 10

• New Zealand is to release private sector data on manufacturing activity.
• Japan is to publish core machinery orders and tertiary industry activity.
• Australia is to release data on the change in the number of people employed and the unemployment rate, and a private sector report on inflation expectations.
• In the euro zone, France is to publish a report on industrial production, while the ECB is to publish its monthly bulletin.
• The U.K. is to release data on the trade balance, while the Bank of England is also to announce its benchmark interest rate, following its monthly rate review.
• Later Thursday, the U.S. is to release the weekly government report on initial jobless claims.

Friday, July 11

• Australia is to publish data on home loans.
• Canada is to round up the week with data on the change in the number of people employed and the unemployment rate.