Weekly Outlook: 2014, July 27 - August 03

S&P 500 forecast for the week of July 28, 2014, Technical Analysis

The S&P 500 went back and forth during the course of the week as you can see, really not settling much. The neutral candle tells us that we are still running in the significant resistance at the 2000 handle, which we see as a gateway to going much higher. That being the case, we are more than willing to buy this market on a break out above the 2000 level, or pullbacks all the way to the 1900 level. That being the case, we are essentially “buy only” at this point in time.

Dow Jones 30 forecast for the week of June 28, 2014, Technical Analysis

The Dow Jones 30 fell during the course of the week, but continues to grind sideways as the market is trying to break out above the 17,150 level, and seeing quite a bit of resistance in the process. We do think that ultimately this market goes higher, but there will probably be quite a bit of back and forth in the process. Above the 17,150 level, we are buyers for the longer term, with no real interest in selling at this point in time as the market has been in such a nice uptrend.

Silver forecast for the week of July 28, 2014, Technical Analysis

Silver markets tried to fall during the course of the week, and although we did produce a red candle it has to be said that the range was in exactly impressive. On top of that, there is the $20.00 level below, which of course is very supportive. A supportive candle in that general area has us buying, and if not we feel that the market will go back down towards the $19 level, where we should see more buying pressure. That being said, we are on the sidelines at the moment.

USD/JPY forecast for the week of July 28, 2014, Technical Analysis

The USD/JPY pair bounced during the week, to continue the consolidation that we have seen for some time. With that, we believe that the marketplace should continue to bounce around between the 101 and 103 levels, and as a result we don’t really have much of a play as far as long-term traders are concerned. With that, we believe that it is not until we break above the 103 level that we can start buying for the longer term. As far selling is concerned, we have to break down below the 100 level before we would consider that.

USD/CAD forecast for the week of July 28, 2014, Technical Analysis

The USD/CAD pair initially fell during the course of the week, but as you can see we broke above the 1.08 handle finally. Will we find interesting about this market right now is the fact that we have not only gone higher, but we have in fact broken above a round number that has served as support previously, and perhaps even more telling broken the top of the shooting star from the previous week. Both of those are very positive sign, so therefore we feel that the market is ready to continue to move higher after we have recently bounced off of the uptrend line you see on the chart attached.

The next target should be the 1.10 handle, so we are very bullish and recognize a pullback should continue to be buying opportunities. It may take a while to get to that area, but quite frankly we feel that it is probably the most likely move. In fact, we feel that this market will not only go to the 1.10 level, but the 1.13 level given enough time.

As far selling is concerned, it’s going to be impossible until we break down below the aforementioned uptrend line, and more importantly the 1.06 level which is the horizontal support just below that area. What we find interesting is that even while the oil markets are somewhat firm, the Canadian dollar is getting absolutely beaten and pummeled against several currencies, not just the US dollar. This seems to be more of an anti-Canada move than anything else, so why fight it?

I’m very bearish against the Canadian dollar at the moment, and the US dollar of course is the natural beneficiary in this particular situation as the Canadian exports 85% of their goods to the United States. Because of this, we believe the money will continue to flow south at the border, and that the US dollar should continue to go much higher. Pullbacks will continue to be buying opportunities in a market that has been very bullish for several months, perhaps finally bouncing from the recent pullback.

NZD/USD forecast for the week of July 28, 2014, Technical Analysis

The NZD/USD pair fell hard during the course of the week, closing towards the very low of the range. This of course tells us that the market should continue to fall, but we see a significant amount of support in the neighborhood of the 0.85 level. Because of this, we could see that the market will bring in buyers in that region, so we are not willing to sell quite yet. In fact, we are waiting for some type of supportive candle in order to go long. If we get down below the 0.84 level, we would be sellers at that point out.

EUR/USD forecast for the week of July 28, 2014, Technical Analysis

The EUR/USD pair fell during the course of the week, clearing the 1.35 level. It now appears that the selling momentum is picking up, and heading down towards the 1.33 level. The 1.33 level as you can see is marked on the chart as support, and we feel that the buyers could step back into the marketplace at that area. Nonetheless, it does appear that in the meantime we are going to continue falling, and a break below the 1.33 level would be very bearish. Because of this, we don’t have any interest in buying.

Forex - Weekly outlook: July 28 - August 1

The euro fell to eight month lows against the dollar on Friday as weaker than expected German economic data underlined concerns over the diverging monetary policy path between the European Central Bank and other central banks.

EUR/USD was down 0.25% to 1.3429 at the close, reaching the lowest level since November. For the week, the pair lost 0.74%.

The drop in the euro came after a report showed that Germany’s Ifo business climate index dropped to 108.0 in July, missing estimates for a reading of 109.4. It was the third consecutive monthly decline.

The data added concerns over the outlook for the euro zone’s largest economy. The euro has come under pressure since the ECB cut rates to record lows on June 5, in a bid to stave off the risk of deflation and shore up growth in the region.

Sentiment on the single currency was also hit by concerns that tougher sanctions on Russia would have a negative impact on the outlook for growth in the currency bloc, which has close trade ties with Moscow.

EUR/JPY was down 0.23% to 136.75 late Friday, not far from the five month lows of 136.35 reached in the previous session.

Elsewhere, the dollar was steady close to three week highs against the yen, with USD/JPY inching up 0.02% to 101.82 late Friday. Against the Swiss franc the dollar rose to five month highs, with USD/CHF up 0.24% to 0.9047.

The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.25% to 81.15 late Friday.

Elsewhere, the greenback rose to more than one month highs against the Canadian dollar on Friday, with USD/CAD advancing 0.64% to 1.0811. The commodity linked Australian and New Zealand dollars were also weaker, with AUD/USD down 0.24% to 0.9394 and NZD/USD down 0.22% to 0.8553.

The greenback was boosted by better than expected data on U.S. durable goods orders for June.

The Commerce Department reported a rise of 0.7% in orders of long lasting goods such as machinery and electronic products, compared to forecasts of 0.5%.

In the week ahead, investors will be focusing on Wednesday’s revised reading on U.S. second quarter growth, while Friday’s nonfarm payrolls report will also be in focus. Wednesday’s Fed statement will also be closely watched for any indications that the central bank is moving closer to raising rates.

Monday, July 28

• The U.S. is to release data on pending home sales.

Tuesday, July 29

• Japan is to publish data on household spending and retail sales.
• The U.K. is to release data on net lending.
• Later Tuesday, the U.S. is to publish reports on house price inflation and consumer confidence.

Wednesday, July 30

• New Zealand is to produce data on building consents.
• Japan is to publish a preliminary report on industrial production.
• In the euro zone, Germany is to release preliminary data on consumer price inflation, while Spain is to publish flash estimates on consumer inflation and second quarter economic growth.
• Switzerland is to publish its KOF economic barometer.
• The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to publish revised data on second quarter growth.
• Canada is to release a report on raw material price inflation.
• Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement.

Thursday, July 31

• Australia is to release data on building approvals and import prices.
• Japan is to release data on average cash earnings.
• The U.K. is to produce private sector data on house price inflation.
• The euro zone is to release preliminary data on consumer inflation and unemployment, while Germany is to publish data on retail sales and unemployment.
• Canada is to publish its monthly report on gross domestic product.
• The U.S. is to release the weekly report on initial jobless claims, as well as data on manufacturing activity in the Chicago area.

Friday, August 1

• China is to release official data on manufacturing activity, as well as the revised reading of the HSBC manufacturing index.
• Australia is to publish data on producer price inflation.
• Bank of Japan Governor Haruhiko Kuroda is to speak at an event in Tokyo; his comments will be closely watched.
• Markets in Switzerland will remain closed for a national holiday.
• The U.K. is to release data on manufacturing activity.
• The U.S. is to round up the week with what will be closely watched government data on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management is to release data on manufacturing activity.

AUD/USD weekly outlook: July 28 - August 1

The Australian dollar declined against its U.S. counterpart on Friday, as stronger than expected data on U.S. durable goods orders underlined the view that the Federal Reserve will hike interest rates sooner than expected.

AUD/USD hit a daily low of 0.9393 on Friday, before subsequently consolidating at 0.9395 by close of trade, down 0.24% for the day but 0.03% higher for the week.

The pair is likely to find support at 0.9379, the low from July 23 and resistance at 0.9469, the high from July 24.

The Commerce Department said that U.S. durable goods orders rose 0.7% in June, beating expectations for a 0.5% gain.

Core durable goods orders, which are stripped of transportation items, grew 0.8% in June, beating expectations for a 0.6% gain.

The upbeat data came a day after the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending July 19 declined by 19,000 to hit an eight-year low of 284,000.

Meanwhile, in Australia, official data released Wednesday showed that consumer price inflation rose 0.5% in the second quarter, after an increase of 0.6% in the three months to April. Analysts had expected CPI to rise 0.6% in the last quarter.

On a yearly basis, Australia CPI rose to 3.0% in the last quarter, from 2.9%, compared to expectations for an increase to 3.1%.

On Tuesday, Reserve Bank of Australia Governor Glenn Stevens said he is content with the current monetary policy setting and stands ready to do more if needed.

The Aussie had come under broad selling pressure earlier in the month, when Mr. Stevens warned investors that they were underestimating the risk of a significant fall in the currency.

Data from the Commodities Futures Trading Commission released Friday showed that speculators decreased their bullish bets on the Australian dollar in the week ending July 22.

Net longs totaled 38,793 contracts, down from net longs of 39,743 in the preceding week.

In the week ahead, investors will be focusing on Wednesday’s preliminary reading on U.S. second quarter growth, while Friday’s nonfarm payrolls report will also be in focus.

Wednesday’s Fed statement will also be closely watched for any indications that the central bank is moving closer to raising rates.

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

Monday, July 28

• The U.S. is to release data on pending home sales.

Tuesday, July 29

• The U.S. is to publish reports on house price inflation and consumer confidence.

Wednesday, July 30

• The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to publish revised data on second quarter growth.
• Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement.

Thursday, July 31

• Australia is to release data on building approvals and import prices.
• The U.S. is to release the weekly report on initial jobless claims, as well as data on manufacturing activity in the Chicago area.

Friday, August 1

• Australia is to publish data on producer price inflation.
• The U.S. is to round up the week with what will be closely watched government data on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management is to release data on manufacturing activity.

EUR/USD weekly outlook: July 28 - August 1

The euro fell to eight month lows against the stronger dollar on Friday and was close to multi-month lows against the yen and the pound as concerns over the divergence in monetary policy between the European Central Bank and other central banks pressured the single currency lower.

EUR/USD was down 0.25% to 1.3429 at the close, reaching the lowest level since November. For the week, the pair lost 0.74%.

The pair is likely to find support at around 1.3400 and resistance at 1.3475.

The drop in the euro came after a report showed that Germany’s Ifo business climate index dropped to 108.0 in July, missing estimates for a reading of 109.4. It was the third consecutive monthly decline.

The data added concerns over the outlook for the euro zone’s largest economy. The euro has come under pressure since the ECB cut rates to record lows on June 5, in a bid to stave off the risk of deflation and shore up growth in the region.

Sentiment on the single currency was also hit by concerns that tougher sanctions on Russia would have a negative impact on the outlook for growth in the currency bloc, which has close trade ties with Moscow.

The greenback was boosted as better than expected data on durable goods orders for June added to signs that the U.S. economy is improving.

The Commerce Department reported a rise of 0.7% in orders of long lasting goods such as machinery and electronic products, compared to forecasts of 0.5%. Durable goods orders fell by 1.0% in May.

Demand for the dollar has been underpinned since Federal Reserve Chair Janet Yellen indicated earlier this month that U.S. interest rates could rise sooner if the recovery in the labor market continues.

Elsewhere Friday, EUR/JPY was down 0.23% to 136.75 late Friday, not far from the five month lows of 136.35 reached in the previous session.
EUR/GBP slid 0.18% to 0.7910, not far from Wednesday’s 22-month low of 0.7873.

In the week ahead investors will be focusing on U.S. data on second-quarter gross domestic product and an interest rate decision by the Federal Reserve on Wednesday, while Friday’s nonfarm payrolls report for July will also be closely watched.

The euro zone is to release preliminary data on consumer prices on Thursday.

Monday, July 28

• The U.S. is to release data on pending home sales.

Tuesday, July 29

• The U.S. is to publish reports on house price inflation and consumer confidence.

Wednesday, July 30

• In the euro zone, Germany is to release preliminary data on consumer price inflation, while Spain is to publish flash estimates on consumer inflation and second quarter economic growth.
• The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The U.S. is also to publish revised data on second quarter growth.
• Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement.

Thursday, July 31

• The euro zone is to release preliminary data on consumer inflation and unemployment, while Germany is to publish data on retail sales and unemployment.
• The U.S. is to release the weekly report on initial jobless claims, as well as data on manufacturing activity in the Chicago area.

Friday, August 1

• The U.S. is to round up the week with what will be closely watched government data on nonfarm payrolls and the unemployment rate, while the Institute of Supply Management is to release data on manufacturing activity.