8 May: Trend table outlook for FX, Commodities, Indices

By | May 8, 2018

Stocks are higher on Monday, underpinned by Apple’s sixth straight day of gains and by a surge in oil prices to their highest since 2014. The US$ is mixed and mostly rangebound at the start of the week although it briefly made new trend highs against both the Euro and the Chf. The metals are mildly firmer but the real interest has been in WTI which has broken back above 70.00 pb, and remains there at the end of the session although most of the day’s gains were given up heading into the close. In terms of data, the Euro continued to struggle after some more soft data. The EU Sentix investor confidence dropped to 19.2 in May, down from 19.6 and missed expectation of 21.0. This was the 4th decline in a row and hit the lowest level since February 2017. The Current Situation index dropped 0.2 to 42.8, the lowest since October 2017 while the Expectations Index dropped to -2, the lowest since October 2014.

Asia will kick things off with the Australian Retail Sales (exp +0.2% mm) and the China Trade Balance (exp Imports+22.3%, Exports +32.3%. TB; $24.8 bio). Europe then follows with the German Industrial Production and Current Account , while the Australian Federal Budget will be released at 7.30 pm AET (10.30 am London). There is little to come from the US although oil traders will look to the API Weekly Crude Oil Stock Inventory for guidance.

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The markets look rather mixed today and a cautious approach is required. The US$ still looks quite well underpinned in the medium term although the short term momentum indicators do now hint that we may need to see a correction to allow the charts to unwind the increasingly overbought situation. In that case, allow for a bit of a bounce in the Euro, which would take the other EU pairs with it, but selling into Euro rallies (buying US$ dips) remains the overall plan.

The crosses still look messy so are best avoided. The stock indices remain volatile and currently look as though they may have some more upside left in them although both the S+P and the DJI are approaching strong resistance, at the top end of the large triangle that appears to be forming on the daily charts.

WTI, having broken above 70.00, has retreated from its session highs late in the day, and with the short term momentum indicators now turning lower, we may have seen a near term top. However, with the disruptions to global crude supplies continuing because of weaker production in Venezuela and with expectations that the US will impose new sanctions against Iran, buying dips is still favoured..

*Trade of the day: 5/8/2018 8:21 AM (AET)         

*This is a personal opinion only, based on the look of the table below, and carries no guarantee of success.

Sell EurUsd @ 1.1985. SL @ 1.2035, TP @ 1.1825

Buy US$Chf @ 0.9980. SL @ 0.9890, TP @ 1.0100

Sell NzdUsd @ 0.7050. SL @ 0.7085, TP @ 0.6955

Sell AudUsd @ 0.7550. SL @ 0.7590, TP @ 0.7475