Trading Week Ahead: 6th-10th January 2020
Key Events This Week
EUR French Flash Services PMI, German Flash Manufacturing PMI, German Flash Services PMI
GBP Flash Manufacturing PMI, Flash Services PMI
USD ISM Non-Manufacturing PMI
AUD Building Approvals
USD ADP Non-Farm Employment Change
AUD Trade Balance
EUR ECB Monetary Policy Meeting Accounts
CAD BOC Gov Poloz Speaks
AUD Retail Sales
CAD Employment Change and Unemployment Rate
USD Employment data, Average Hourly Earnings
USD Non-Farm Employment Change and Unemployment Rate
Middle East Tensions Boost Oil
Last Friday saw a U.S. led airstrike that killed Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia. The news led to a spike in oil that saw it break the September 19 high. Price surged 4.39% in two hours before pulling back some gains. Looking forward, how will these new developments affect this week’s trading window? Will we see another flash and fade as we saw last September after the Saudi attack? Or will this set up a new break out that continues the current trend with possible extensions to $66 or beyond? Certainly, something to keep an eye on.
What we do see clearly on the current daily chart is a bull channel that has been running since October, if price can maintain the current trend and get past the current supply area that has been holding buyers back, there’s a probable chance momentum could see a retest of the 66-67 area. A fall to close above 63 would start to point at strong seller numbers on the short term.
USD Strikes Back
By the end of last week, we saw a shift back to the USD with the GBP, EUR and AUD all falling on the last two days of the week. Have we started to see new corrections? The AUD and EUR remain just off new multi-month highs. The GBPUSD has set up a good looking lower high after failing to reach December’s highs in its end of year rally. While price remains below its December 31st high, we continue to view seller pressure, as price broke its fast trend with the latest high finding resistance at that old trendline. For now, based on the pattern, the GBPUSD is of most interest going forward.
From Wednesday, USD news picks up with the ISM Non-Manufacturing PMI and finishes with this year’s first US employment data. USD bulls will be looking for stronger data. Much better than expected jobs data should continue to see rates hold, with popular opinion indicating that the FED will maintain the current direction until after the US presidential election.