After five days of strong gains in the stock markets that were boosted by receding worries of a Greek default, eyes will likely turn closer to home next week to read the tea leaves of key U.S. economic data including June employment and retail sales reports. On Friday, the Dow Jones Industrial Average capped a run of winning sessions to settle at 12,582.77, a gain of 5.4% on the week. The Nasdaq Composite ended at 2,816.03, up 6.2%, while the S&P 500 rose 5.6%.
Even in the holiday-shortened week ahead, there will be plenty of data for investors to digest. The most important dump will probably be Friday’s June employment report but there will also be May factory orders on Tuesday, along with the June ADP payroll survey and monthly retail sales on Thursday. U.S. equity markets are closed Monday for federal Independence Day holiday. Current market expectations are for ADP’s survey to show an 110,000 rise in private nonfarm payrolls for June, while the unemployment rate is expected to remain steady at 9.1%.
With risk appetite returning to markets in full force this week, significant gains in equities coupled with the end of the dollar diluting Fed easing policies are likely to see gold remain on the defensive. This week witnessed gold fall 1.17% on the back of the 2.36% drop seen the previous week. The yellow metal now approaches key support at the 100-day moving average at $1475. If that level fails, we could see gold falling to $1430 in matter of days.
Today’s Important Economic Announcements (GMT)
7:15 AM CHF Retail Sales y/y
8:30 AM GBP Construction PMI
12:30 AM CAD RMPI m/m
10:00 PM NZD NZIER Business Confidence
11:30 PM AUD AIG Service Index
Forex & Commodities Technical Analysis
Crude Oil
Oil futures snapped a three-day winning run Friday as investors booked some profits and weak manufacturing data in the U.K. and China trumped a surprise manufacturing increase in the U.S.
Crude for August delivery declined 48 cents to settle at $94.94 a barrel on the New York Mercantile Exchange. It had earlier traded as low as $93.45 a barrel, hit by worrying manufacturing data in China and in the U.K. The U.S. manufacturing index came to the rescue, however, stoking hopes of more demand for oil. We believe price will continue to hover around the $95 level.
Stop Loss: 95.64
Take Profit: 94.26
Gold
Following up on our passage in the fundamental analysis above, the price of gold has been declining in recent weeks. With central banks like the ECB now gearing up to raise interest rates in an attempt to combat higher food and energy costs, the long gold anti-inflationary play will begin to lose its lustre as sluggish wage growth and higher rates give rise to deflationary concerns. As appetite continues to pick up, gold becomes less of an attractive asset for traders seeking to maximize exposure to higher yielding investments. Our target is set at 1,486.
Stop Loss: 1,499
Take Profit: 1,486
NZD/USD
This week’s rally in risk saw the New Zealand dollar surge more than 2% on the back of broad-based declines in the greenback as traders sought exposure to higher yielding growth-linked assets. Despite weaker than expected trade balance figures early in the week, the kiwi continued to ride the wave of risk appetite that swept over markets after Greece successfully passed the austerity measures needed to secure the next tranche of EU/IMF funds. That being said, we are still pessimistic about the economic outlook which means the Kiwi is likely to head south.
Stop Loss: 0.8316
Take Profit: 0.8243
Published by www.SolidityBrokers.com
