The focus this week, will be on the other side of the pond, where the US will announce interest rates on Wednesday evening.
US interest rates are expected (with a 98% probability) to stay the same at 0.5%.
By the end of the week, Japan is likely to hit the spotlight, when it produces economic data and policy statements in the early hours of Friday morning. Both of these events, in the US and Japan, could add some spice to the trading week.
The US Dollar Index pushed onto record highs, before settling down in the latter part of last week. The mild bullishness could continue into this week.
The strength of the commodity currencies (CAD,AUD, NZD) was tailing off by the end of last week, which could continue, if commodity prices head further south or there are warning signs from China, who publish key data the following week.
GBP, after bouncing back nearly 6% from Brexit lows, was again weakening and heading south once more, but in a less dramatic fashion! The EUR remains stagnant.
In Emerging Markets, with US Dollar strength, Commodities and the MSCI Equity Index weakening, most currencies were settling back to a more neutral relationship with the US Dollar. There were a few exceptions that may continue into this week: Turkish Lira, because of the current political problems they face and the Mexican Peso, which is highly correlated to the US economy.
When we’re at blue sky moments, it is hard to gauge whether financial assets will push on higher, but the S&P500 and US Indices still look mildly bullish.
The FTSE 100 gains, after breaking out from the 6300 zone, are now stalling around the 6700 area.
In the Far East, the Hang Seng is possibly becoming over bought, as it approaches a key Fibonacci zone around 22000. The Nikkei 225, despite a recent bullish rebound, could possibly revert back to its longer term downtrend.
Precious metals still look strong, with a lot of buying in place that is supporting their current levels. WTI is gaining price support around $44 and the Grain complex is mostly focused on the weather and Chinese demand conditions.
If you would like to learn more about the financial markets and how you can use this information to make the most from your money, please do get in touch.
Information provided by Stephen Hoad, BA Hons, MSc, MSTA – full time trader, technical analyst and one of the UK’s leading trader trainers. He currently lectures for the Society of Technical Analysts.