Week Ahead 40

Equities
SP500 retreated from record high and settled in the middle of a narrow range around the previous high.

Nasdaq still could not make new high but outperformed the SP500 this week. The higher 4h lows suggest a potential breakout.

European stocks were sold off Friday on the Italian budget proposal. It makes the technical picture weaker that the EU50 index did not retest the late August high. 

Bonds
US yields made new highs. German 2y spread at a new low that should put more pressure on Euro.

Commodities
Oil is up, Brent broke out. 

Gold and Silver
It seemed Friday morning that gold is about to break down the 1183 support but it bounced back sharply in the afternoon.

Silver at the same time broke 14.50 resistance. It looks it could push up further next week.

FX
DX broke out from the consolidation range on Thursday as yield differentials started to prevail. 

Euro bounced back from the 0.1575 level late Friday, but it easily could test the 0.1525 stronger support next week.

Cable broke and retested the 1.3050 support. The next strong support is at 1.2800.

USD/JPY is approaching the January level but the 115 is the very strong resistance.

CAD could strengthen further on positive trade news as it did on Friday, but be aware of buying the rumors selling the news.

NOK continued the nice trend, the next major support for EUR/NOK is at 9.40.

Week Ahead 34

Next week will be busy with news and important data releases. FOMC meeting minutes, resumption of US China trade talks, Jackson Hole just to mention a few. 

USD Index finished the week with a strong bearish bar closing at a S/T resistance at 96.00. Should that level fail MAs offer support otherwise the market could retest the strong support around 95.20.

Equities
SP500 closed the gap on Friday finishing the week on a bullish note. Moving averages offer now support and the early Augusts high is the resistance before the all time high. 

Nasdaq Index respected the longer term trendline and bounced back from 7300. The lower highs on short timeframe are a bit of concern now.

DAX bounced back from strong support and needs much more to change the bearish picture.

Bonds
Declining US yields and flattening yield curve might not be a good sing for equities. The 2y could not bounce back as the US indices did on Friday.

Commodities

US Oil broke down from the 67-00-70.50 channel. The 200d SMA and the early June lows offer a strong support now.

Copper is off the L/T support at 2.50. Positive trade talks news could lift it even further.

Gold
Gold is fully driven by USD rather the prevailing risk on/off mood. It broke the 1200 level on Monday and reversed sharply on Thursday. 

FX
EUR broke the 14.30 S/T resistance but needs follow through. GBP is at the 1.2750 S/T resistance. Both AUD and NZD had a nice follow through after breaking S/T resistance. CAD moved sharply after the strong CPI reading and now is at a S/T support. CNH also broke support on the resumption of trade talks. 

USD consolidates

US-China trade talks should be behind.

Minor USD correction in the morning

There is minor USD bounce back after the nice run again during the Asian session. I look for price action at S/R or even before given the strength of the trend.

EUR exhibits potential reversal pattern

Meanwhile SP500 is bouncing back from the same support which is in a broader context became very important.

GBP AND AUD are at multiple S/T bottoms.

CAD similar to EUR

CAD: still some signs of weakness

Summary

"In contrast to the United States, Canada’s economy continues to operate with material excess capacity." 

"Bank of Canada Governor Stephen Poloz says another interest rate cut remains in play as the country’s economy braces to take a “material” hit from a much more protectionist United States under Donald Trump."

Central Bank and rates

Economic Activity

GDP was catching up recently due to recovery of oil prices. 

 The last few readings of Ivey PMI showed some weakness.

Inflation

Inflation is increasing but still lagging the US figure. 

Labor Market

Unemployment rate is between 6.5% and 7.0%  for some two years now. It is well above the pre-crisis level.

Consumer

Retail sales are trending up.