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Dollar on the rise across the board as the rise in Retail Sales brings tapering even closer, will the Fed pull the trigger next week?
MORNING BRIEF
Dollar was in the forefront yesterday with the US currency strengthening against all the other major currency pairs as the Retail Sales report printed out positive. The figures came out at 0.7% versus the 0.6% rise eyed and this gave investors the signal to start loading up their Dollar positions ahead of next week’s FOMC meeting. The consensus is that with this last piece if data coming out positive for the US economy the Fed might finally have what they need to go ahead with their tapering plans. The rise in Retail Sales might not have been as big as everyone hopped but it still is another positive sign of recovery in the US and even though the Jobless Claims rose a bit investors bought Dollars across the board. The Euro failed to print a yearly high stalling its rise ahead of the 1.3825 mark and the Pound extended its losses down to 1.6320. With no other important news expected this week we believe that the current demand for Dollars will continue today possibly driving the other majors lower. The FOMC meeting’s decision is due next Wednesday and no important US-related news will be released until then. In other news, ECB President Draghi described the economic recovery in the Euro-zone as ‘weak’ and repeated that the ECB stands ready to act if necessary and his dovish comments only added pressure to the Euro that stands at the edge for a reversal lower.
Empty Calendar makes for a smooth last day of the week
With all important reports already released our Economic Calendar today seems empty of any significant events. Only 3rd tier reports are scheduled for today and even though there is a number of them to come we are confident that the market will not react to any of them. Investors have in their hands the important figures they needed to assess how likely is the chance that the Fed goes ahead with its stimulus reduction agenda next week and it seems that the general consensus is that they actually might go ahead with it. As a consequence we believe that the day ahead of us will hold moderate re-positioning of Dollar portfolios towards the increased chance of tapering which will mean that Dollar will continue gaining ground against the other major currencies.
Economic Calendar
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Time |
Currency |
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Importance |
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NO IMPORTANT EVENTS SCHEDULED FOR TODAY |
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TECHNICAL ANALYSIS & LEVELS
EUR/USD
The Euro fell yesterday as it failed to climb above the 1.3800 mark and is now challenging our stops. It seems that the apparent Dollar strength has finally caught up with the European currency that has been showing amazing resilience during the recent sessions. Our stops stand just below the 1.3740 support and if they get breached then we will be closed out on our long trade but at the same time we’d like to jump into a short trade there and target the 1.3700 and 1.3640 marks with a stop placed above the 1.3800 peak. If Dollar picks up momentum today then we’d like to capitalize on that and this short trade will offer us that exact opportunity.
GBP/USD
The Pound continues to decline as investors as adding up to their Dollar positions ahead of the FOMC meeting next week. We’d like to try and ride the trend downwards if the recent 1.6320 low gets broken and if this happens then we’ll enter short there, target the 1.6300 and 1.6260 marks and place our stops just above the 1.6360 high. This is a quick trade to try and get some pips out of the current downtrend.
FTSE 100
The FTSE 100 continued its decline below the 6,465 points level and closed at the 6,430 price tag. We’d like to jump right back into the downtrend but the instrument appears once again to be heavily oversold. We’d like a pullback higher towards the 6,465 resistance level in order to get a new chance to follow the trend lower but at this time we hesitate to offer a suggestion as the UK index is at extreme levels. We will remain patient and try to catch a trade with the FTSE when next week starts.
Gold
Gold was destroyed yesterday with the yellow metal falling to $1,225 once again after failing to print a new high. Now the commodity is once again in no-man’s land and makes it hard for us to issue a suggestion. We think that as the FOMC meeting draws near Gold’s volatility will increase again making it harder to predict its wild swings. For today we’ll stand on the sidelines as yesterday’s drop seems to be exhausted and the lack of any retracement leaves us with no choice but to wait and see what’s next for the yellow metal.
The above charts have been created using FXCM’s Trading Station platform.
STOCK MARKET FOCUS
[Restricted Content] Plc.
The Alpesh Patel Momentum/Value filter has indicated [Restricted Content] Plc as our stock of the day.
Company Information: [Restricted Content]
Created using Sharescope Pro
[Restricted Content] Plc has been rated an 8 out 10 in our Momentum/Value rating and gets an A Grade rating on our Bullish Momentum meter. The P/E ratio is relatively low suggesting that the stock might be underpriced, Earnings are up year on year suggesting good growth and the ratio of the price earnings is low supporting the growth potential. From a technical standpoint, the MACD indicator has been pointing upwards on the weekly chart above pointing towards higher levels. The recommended holding period for a stock of this type is 2-3 months.
Important Information
The filters and settings in the Special Edition of the Sharescope software use Alpesh Patel’s proprietary criteria to generate suggestions of securities worthy of further investigation. They DO NOT CONSTITUTE INVESTMENT ADVICE.
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