Weekly Outlook: 2014, August 31 - September 07

Silver forecast for the week of September 1, 2014, Technical Analysis

The silver markets as you can see tried to rally during the course of the week, but found far too much in the way of resistance at the $20.00 handle. We ended up forming a shooting star which of course is interesting, as it is a very negative sign. We believe that the shooting star signifies that the market is ready to fall and test the $19.00 handle again. This is been an area of significant support, so it will be interesting see what happens next.

With that being said, it’s almost impossible to ignore the fact that we could be trying to form a descending triangle. This would be a massive one, and what has caught our attention is that a break below the bottom of this triangle measures for a move to roughly $13.00. Why that’s important is that on the longer-term charts, that is an area where you would anticipate seeing support. Because of this, we feel that the market could very well be getting ready to break down. If it does, this could be a very ugly move as far as silver is concerned.

On the other hand, we could get a supportive candle at the $19.00 level, and that of course would have us buying as we believe the market would then turn around and head back towards the $22.00 level, or the top of the most recent consolidation area. Because of this, we feel that the market is probably one that you need to let do its thing first, at least before placing any type of longer-term trade with a significant amount of money. That being said though, if we do get the aforementioned break down, we are not only short of this market, but we are aggressively so and probably would short the market every time it bounce, based upon the fact that there is such a significant downtrend in effect. Because of this, we are going to be patient and wait for the market to tell us what to do, not the other way around.

Gold forecast for the week of September 1, 2014, Technical Analysis

The gold markets tried to rally most of the week, but as you can see the $1300 level offered a bit too much in the way of resistance. With that, we believe that the market continues to look soft the end sideways, so we have no real interest in buying here. We don’t necessarily want to sell either, because we can make a serious case for support at the $1250 handle. With that, we are essentially staying on the sidelines as far as longer-term trades are concerned, as there is no real direction.

EURUSD forecast for the week of September 1, 2014, Technical Analysis

The EUR/USD pair tried to rally during the course of the week, but as you can see ended up falling significantly. We closed slightly above the 1.31 handle, and it appears of the market is in fact going to head to the 1.30 level given enough time. We also think that the real support is down at the 1.28 level, so without a doubt we are very bearish of this market. We have no scenario in which we buy quite yet, and look at every rally as a potential selling opportunity.

Forex - Weekly outlook: September 1 - 5

The dollar ended the week close to one year highs against the euro on Friday as largely upbeat U.S. data indicated that the economic recovery is on track, while soft euro zone inflation data and concerns over the Ukraine crisis pressured the single currency lower.

EUR/USD ended Friday’s session down 0.38% to 1.3132, the lowest level since early September. For the week, the pair was down 0.49%.

The dollar was boosted after data showed that U.S. consumer sentiment rebounded in August, with the final reading of the University of Michigan’s consumer confidence index rising to 82.5 from 81.8 in June.

The data offset another report showing that U.S. consumer spending unexpectedly fell 0.1% in July.

The single currency remained under pressure after official data earlier on Friday showed that the annual rate of inflation in the euro area slowed to a five year low of 0.3% in August from 0.4% in July. The European Central Bank targets an inflation rate of close to but just under 2%.

The weak data added to pressure on the ECB to implement fresh measures to shore up the faltering recovery in the euro area.

The euro edged lower against the yen, with EUR/JPY dipping 0.04% to 136.66 late Friday. The pair ended the week with losses of 0.61%.

Elsewhere, the yen was weaker against the dollar, with USD/JPY up 0.34% to 104.07 late Friday, paring the week’s losses to 0.12%. Demand for the safe haven yen was boosted earlier in the week amid concerns over the conflict between Russia and Ukraine.

The dollar rose to an all-time high against the Russian rouble on Friday, with USD/RUB hitting 37.20, before easing back to 37.04 in late trade following claims that Russian troops had entered the conflict in eastern Ukraine.

The pound edged higher against the dollar on Friday, with GBP/USD posting a weekly gain of 0.3% as expectations for a rate hike by the Bank of England continued to underpin demand for sterling.

The Canadian dollar ended Friday’s session lower against the greenback despite the release of stronger-than-expected domestic data on second quarter gross domestic product.

USD/CAD touched one-month lows of 1.0811 after official data showed that the Canadian economy expanded by an annualized 3.1% in the second quarter, ahead of expectations for 2.7%. The pair later pulled back to 1.0875.

In the week ahead, trading volumes are likely to remain light on Monday, with U.S. markets closed for the Labor Day holiday. Investors will be focusing on Thursday’s outcome of the ECB’s monthly monetary policy meeting, as well as Friday’s closely watched U.S. nonfarm payrolls report.

Monetary policy announcements by central banks in Australia, Japan, Canada and the U.K. will also be awaited.

Monday, September 1

• Japan is to release data on capital spending.
• China is to publish official data on manufacturing activity and release revised data on the HSBC manufacturing index.
• The U.K. is to publish data on manufacturing activity, as well as a report on net lending.
• Markets in the U.S. and Canada are to remain closed for the Labor Day holiday.

Tuesday, September 2

• Australia is to produce data on building approvals and the current account.
• The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
• In the euro zone, Spain is to release data on the change in the number of people employed.
• The U.K. is to publish a report on construction sector activity.
• Later Tuesday, the Institute of Supply Management is to publish a report on U.S. manufacturing activity.

Wednesday, September 3

• China is to release official data on service sector activity, as well as a HSBC report on the service sector.
• Australia is to publish a report on gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, RBA Governor Glenn Stevens is to speak; his comments will be closely watched.
• The U.K. is to release what will be a closely watched report on service sector growth.
• The euro zone is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
• The Bank of Canada 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 U.S. is to publish data on factory orders.

Thursday, September 4

• Australia is to publish reports on retail sales and the trade balance, the difference in value between imports and exports.
• The Bank of Japan is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
• Germany is to release data on factory orders.
• The Bank of England is to announce its benchmark interest rate.
• Later in the day, the European Central Bank is to announce its benchmark interest rate. The announcement is to be followed by a press conference with President Mario Draghi.
• Both the U.S. and Canada are to release reports on their respective trade balances. The U.S. is also to release the ADP report on private sector job creation and the weekly report on initial jobless claims.
• Later Thursday, the ISM is to publish a report on U.S. service sector activity.

Friday, September 5

• In the euro zone, Germany is to release data on industrial production.
• 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 the change in the number of people employed and the unemployment rate. Canada is also to publish the Ivey PMI.
• The U.S. is to round up the week with the closely watched government report on nonfarm payrolls and the unemployment rate.

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