Trading Week Ahead: 20th-24th April 2020
Key Events and Data Releases This Week
AUD RBA Gov Lowe Speaks
EUR French Flash Services PMI, German Flash Manufacturing PMI, Flash Manufacturing PMI, Flash Services PMI
USD Unemployment Claims
USD Flash Manufacturing PMI
GBP Retail Sales
EUR German ifo Business Climate
(Times adapted to AEST timezone)
Stock indexes continued their recoveries last week, with the Nasdaq the star performer of the week, adding 6.09% by Friday’s close, and taking its monthly gain to 25.74%. Are we seeing the bulls pull an under the radar move? This wasn’t as one-sided with currencies, as risk lost ground to USD and Japanese Yen as further uncertainty continued to creep into market sentiment as the week progressed. The Aussie Dollar gained to USD but lost ground to the Yen, while the British Pound saw a similar performance and the Euro lost ground to both safe havens. Sellers were a lot more commanding on the Yen side, which saw the EURJPY finish 1.33% lower for the week.
Oil continued its reach lower for a second week, failing to find buyer demand despite a production deal finally being brokered, which resulted in price ending the week over 11% lower. Analysts seem to suggest that the COVID-19 outbreak could erase ten years of demand from the market. Gold also had an extremely mixed trading week, with the precious metal at one stage trading above 1746, before both a stronger USD. Signs that countries are starting to see turning points in their COVID-19 outbreaks, unsettled buyers. Price climbed 4.34% before it pulled back by 3.79%. I am also not discounting some solid profit taking at highs.
Datawise, Australia’s employment figures surprised many as unemployment failed to drop as much as expected and U.S. unemployment claims also came in lower than estimates.
This week focus remains on U.S. indexes, and mainly the Nasdaq. Are we seeing a new bull run? A major U.S. money manager has suggested that the March low may be the bottom. We’ve seen one higher low so far in this trend, but we’ll be looking out for what the next pullback will tell us. Looking at the Daily chart, we can see price has started to stall at the last February and March resistance point, and if we did see a strong pullback develop 7810 is a level we would like to see come in as support, as that’s the current 50% retracement point of the current rally.
As for the Euro, we saw a sluggish week from EUR to JPY and USD. The EURJPY continues to hold on for dear life from 116.85 on the daily chart, and with this week’s flash data expected to come in weaker, the question is how much weaker it may be, or perhaps we will see a surprise as we saw last week with the U.S. unemployment claims? Technically, price continues to hold, and this could set up a confirmed HL or double bottom support hold if we see a positive influence. If data disappoints, we could also see a new possible test of low’s not seen since 2017.