Weekly Review and Outlook 28th March 2016

Mark Nugent2016 H1, March 2016, Trading Plan

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Video below
Review of Last Week – week commencing 21st March
Fundamentals and Sentiment – New Information (Economic Calendar)

Tuesday – RBA Governor Stevens says recent data shows the economy picking up at the turn of the year. UK CPI y/y misses at 0.3% vs expectation of 0.4%. German ZEW Economic Sentiment misses at 4.3 vs expectation of 6.3. Anything above 0 is optimistic.

Wednesday – NZ Trade Balance was excellent at USD339m vs USD75m expectation. US Crude inventories were 9.4m barrels vs expectation of 2.5m barrels.

Thursday – UK Retail Sales came in at -0.4% vs a forecast of -0.7%.

Friday – Final GDP q/q came in at 1.4% vs forecast of 0.9%.

Fundamentals and Sentiment – Market Reaction

The market was risk on all week. Let’s look at the US: the USD index rose for five consecutive days. Oil is down on the week. The S&P500 turned down. US ten year bonds were slightly up on the week (yield). These moves are indicative of a belief that we are in a US interest rate hiking environment and very much risk on.

Trades

Four trades closed last week:

GBP Weakness

GBPUSD short closed on Wednesday night for a gain of 2.49% on risk of 1%.
GBPNZD short closed on Wednesday night for a gain of 0.35% on risk of 0.5%.

JPY Weakness

USDJPY long closed on Thursday night for a gain of 0.61% on risk of 1%.

Oil

USDCAD long closed on Thursday night for a gain of 1.21% on risk of 1%.

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Outlook for This Week – week commencing 28th March
Fundamentals and Sentiment – New Information (Economic Calendar)

Monday – Core PCE
Tuesday – Yellen speaks at the Economic Club of New York.
Wednesday – US ADP Non-Farm Payroll
Thursday – BoE Governor Mark Carney to hold a press conference at the Financial Stability Board Plenary meeting, in Tokyo.
Friday – Manufacturing PMI in China and UK. In the US we see Average Hourly Earnings, NFP, Unemployment Rate and the very important ISM Manufacturing PMI which is forecast to rise above the critical 50 level.

Fundamentals and Sentiment – Financial Media

http://www.bloomberg.com/news/articles/2016-03-27/oil-enthusiasts-stay-out-of-rally-led-by-shrinking-bearish-bets
http://www.bloomberg.com/news/articles/2016-03-24/the-post-crisis-fed-effect-for-stocks-is-fading
http://www.cnbc.com/2016/03/24/oil-is-still-stuck-in-a-bear-market-dennis-gartman.html
http://www.cnbc.com/2016/03/24/the-dollar-is-back-in-the-drivers-seat.html

Themes and Trading Ideas

1. GBP Weakness.

Following on from last week with a focus on selling GBPUSD and GBPNZD.

2. JPY Weakness.

Again, following on from last week. Long on USDJPY on pullbacks or a breakout through the resistance around 114.

3. EUR Weakness.

EURUSD is in the middle of a channel and should be left alone. EURGBP is a candidate for a short.

4. Oil

Again, long on USDCAD on breakout from consolidation.

5. Commodity Weakness.

Short AUDUSD on breakout from triangle.

6. Equity Weakness.

Particularly with S&P500 – consider selling from resistance.

Monday Morning Sentiment

Bank Holidays today across the West. Re-assess risk sentiment on Tuesday morning by looking at equities and bond yields.

Video

Your video is below (the detail on last week’s trading performance starts at 3:05 and this week’s trading plan is detailed at 11:45).

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