Strap In, It's Gonna Be A Bumpy Ride...
This week there are quite a few events that have the capacity to move markets:
U.K Parliament will vote on Brexit “Plan B”, the pundits are not giving very high odds that the bill will pass.
U.S. consumer confidence: Should give us an idea of consumers are feeling given all of the uncertainty.
FOMC meeting/press conference. The market will be looking for signals from the Fed regarding if they are done hiking and if they will stop reducing the balance sheet.
U.S. and China are scheduled for two day meetings. The signals from the talks, will affect the equity, bond and FX markets.
Eurozone Confidence surveys.
U.S. 4th quarter GDP estimate: Although old news, will shed light on strength of economy at year end.
China Manufacturing/ Non-manufacturing PMI.
Eurozone Q4 GDP estimate.
U.S. January employment report: Will give market a view on developments in the workforce.
U.S. January ISM Manufacturing report.
There are other data points out this week, but by Friday the market will have gotten an update on how employment, economic growth, consumer and business confidence was at the end of the year and at the start of 2019. All in all this is an important week for investors and traders, and in our view will set the stage for the next moves in the global markets.
EURNOK: Range 9.70 to 9.80. We think NOK holds as long as Norges Bank gets positive data regarding economy and maintains stance of hiking in March. Would trade range with stops 9.68 below, 9.83 above.
NOKSEK: Long in MTP portfolio, testing 1.0650 level. If breaks look for 1.07. Support 1.0570.
EURUSD: Stuck in 1.1550-1.1300 range since November. Trade range until it breaks. Nothing much to recommend at current price of 1.1420.
GBPUSD: Feeling brave looks like a good level to sell at 1.3200. But beware of the news flow, we prefer to watch from the sidelines for now.
Gold: As our readers know we have been anticipating a test and break of the 1,300 level. WSJ Fed article on Friday given credit for weakening the USD and helping gold above the 1,300.
There is strong resistance at 1,308, a close above opens for a test of 1,325 and 1,350. Bulls need trendline to hold, currently at 1,277 level.
Equities: Most major stock markets have been on a nice roll so far in January. Earnings reports have been supportive. Will be interesting to see reactions to this week’s economic/ political developments.
Signals on global GDP growth and sentiment combined with a signals from trade talks and the Fed, mixed together with latest U.S. employment report, will have markets on alert.
Japan, China, U.S. and German key indices show that investors are positive to the current valuations and macro news. Will this be the case Friday afternoon?
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– Mark W