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.

USD is the winner of the Trade War so far

Majors are falling off the cliff this morning. EUR/USD cleared a massive stop area.

Only JPY can maintain some strength as this is viewed as a risk off sentiment.

This could spread to equities. ES and NQ futures are in the read now.

Week Ahead 27

Equities
Trade war worries put some pressure on equities especially in Europe. SP500 could make a higher high but still well off from  its highest level. Now it is facing with various resistances such as MAs and levels. 

NQ week before last could set a record level but now retreated bellow the resistance it had broken. The 50DMA did't seem to be a strong support in the past so buying the dip looks better at around 6600 DMA value.

DAX formed a double top and broke the support at 12550 and it is again bellow now the 200 DMA. The strong support is the 11735 April low.

Bonds 
The US 2Y yield is forming a double top whereas the 10Y reversed way bellow the 3.13% high resulting in the further flattening the curve that is not a good sign for equities.

The 10Y-2Y spreads are consolidating except for the AUD and NZD that are near or bellow lows.

Commodities

The Agri complex looks to be the main victim of trade war worries as they make new lows led by fall in grain prices. 

Base metals might retest the 2017 July levels as they broke the December support level.

Copper is at at critical level. Should that break we might see the 2017 levels again that would be a bad sign for equities.

Oil is still in a strong uptrend making new high.

Gold
Gold is in a strong downtrend nearing the December low strong resistance.

FX

DX is consolidating after braking the November high level.

Some major pairs are at or near strong support level.

USD/JPY still within a range and still bullish despite the risk-off mood that prevails otherwise.

USD/CAD made new high but reversed sharply after BOC's Poloz speech.

The big trade was the Yuan weakening that is going to face some resistance soon.

USD shows some sign of life

As DX is around a major support level USD exhibits strong intraday reversal. Gold drops 1.10 from the high:

EUR/USD looks as if can't break the 1.2100 and is about to make a bearish engulfing on the 4h chart:

Both AUD and NZD retrace:

JPY broke the 108.00 level but might just finish the week with a daily pinbar:

The UUP doesn't really support the false breakout assumption, it looks more like a retest of the previous support.

Anyway, the false breakout trade offers a good probability vs. potential gain relationship. 

NZD: Dovish RBNZ, weak Inflation, but relatively good data otherwise

Summary
In general the data from NZ is still not bad, though there seems to be a slightly recoiled. The inflation is  below the US and EU average. All this underpins RBNZ more dovish stance.

Central Bank and rates
RBNZ made clear that it intends to keep rates at the historical low 1.75% level in 2017. Governor Wheeler complained that the Kiwi was overvalued and the global risks arising mainly from protectionism led by USA remain.

In line with the RBNZ comments the 2Y yield is breaking out from the January range to the downside.

Economic Activity
GDP readings are at the upper side of the range, though exhibit downticks in the last two quarters.

ANZ Business Confidence is turning back fro the two years peak and is forming a slight downtrend, but the re readings are still not so bad.

Inflation
The last quarterly reading of 0.40% is at the top of the range of the last three years. It seems that we would need a breakout from this range to turn RBNA to more hawkish. The last for quarter annualized level of 1.60% is way bellow the US and EU levels.

Labor Market
Unemployment rate last reading ticked up slightly, though the downtrend seems to be intact.

Consumer
Retail sales in the last two were not particularly good.

On the other hand credit card spending show some level of consumer confidence.