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Weekly Market Outlook – 12/06/16

MaxOptions - EUR/USD

Volatility seems intent on coming into the broad markets based on current investor sentiment. Wall Street finished the week with sharp declines and Asia will have to be watched early on Monday for a continuation of the trend. FX has seen fast ranges testing support When investors and traders use the term support When investors and traders use the term support When investors and traders use the term support, or support level, they are often speaking about a p... More , or support level, they are often speaking about a p... More , or support level, they are often speaking about a p... More and resistance When investors and traders use the term resistance When investors and traders use the term resistance When investors and traders use the term resistance, or resistance level, they are often speaking abo... More , or resistance level, they are often speaking abo... More , or resistance level, they are often speaking abo... More levels via the USD The USD The USD is the official currency of the United States of America. It is the largest reserve currency... More is the official currency of the United States of America. It is the largest reserve currency... More when paired with the likes of the EUR The EUR The EUR is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More is the official currency of the European Union. Presently 19 out of the 28 collective  nati... More , GBP The GBP The GBP is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More is the official currency of the United Kingdom. The GBP is a major currency and currently ra... More , JPY The official currency of Japan is the JPY The official currency of Japan is the JPY which is also knows as the Japanese Yen The official currency of Japan is the JPY which is also knows as the Japanese Yen The official currency of Japan is the JPY which is also knows as the Japanese Yen to investors and t... More to investors and t... More to investors and t... More which is also knows as the Japanese Yen to investors and t... More and others. The reasons for this are complex but a few specific fundamentals can be included: Central Bank fatigue, the upcoming Brexit vote and global economic activity. In essence it is becoming clear that financial institutions are now starting to hedge their positions to protect themselves against disruptions in global markets due to fears of possible fallout from any impacts of these three major concerns listed.

Industrial Production numbers will come from China early on Monday. Recent Chinese economic data has continued to show that the slowdown has not been able to be completely stopped. The compelling fact is that China continues to suffer from a lack of strong export orders, plus Chinese consumers tightening their purse strings will be watched. China will also release Retail Sales data.

The CB Leading Index reading will come from the U.K. also on Monday and on Tuesday plenty of inflation In economics the term inflation In economics the term inflation In economics the term inflation refers to price values that are rising on a regular basis in which t... More refers to price values that are rising on a regular basis in which t... More refers to price values that are rising on a regular basis in which t... More data will come from Britain. Both facets of these reports are expected to be lackluster, but investors are not particularly watching economics from the U.K., what they are examining are polling results for the upcoming Brexit vote to be held on the 23rd of June. At this point, the referendum looks too close to call and this is certainly helping the volatility that has been seen with the GBP in recent trading. On Thursday the U.K. will also see Retail Sales figures and get the Official Bank Rate from the Bank of England which will certainly not be changed. However and repeating, it is all about the Brexit at this juncture for the GBP.

Europe will release Industrial Production data on Tuesday and the U.S. will issue Core Retail Sales.  However, it is Wednesday that will be a highlight for investors who are dollar centric as the FOMC Statement comes from the U.S. Federal Reserve The Federal Reserve The Federal Reserve The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy When used by traders and investors monetary policy usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More usually refers to Central Bank policy concerning ... More ... More is the Central Bank of the United States of America and sets the monetary policy... More is the Central Bank of the United States of America and sets the monetary policy... More . Crude Oil Inventories will be published on that day and so will the Empire State Manufacturing Index reading. The Philly Fed The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More Manufacturing Index will be released on Thursday and on Friday housing data will start to come from the States. The Fed The Federal Reserve is the Central Bank of the United States of America and sets the monetary policy... More is not expected to make any moves this week because of bad data from the jobless report in early June.

The Fed finds itself at the head of the Central Bank queue which is receiving massive criticism from a number of high profile investors who have candidly said that Fed policy along with their counterparts has gone astray, among them is Bill Gross. The general consensus among the critics is that Central Banks are leading the investing world into a potential black hole with unknown consequences, because of the low – and prospective of negative interest rates – which already have hurt the yields on government bonds globally and put major stock Indices into a cautious mode.

Financial institutions could be particularly nervous about being caught out if their counterparts act first to re-position themselves in a proactive move to safeguard themselves from bad policy from Central Banks, Brexit fears and a continued slump in international economic activity. In other words, if folks are getting out of positions when the getting is good it could leave others exposed. Smart money becomes like everyone else when the landscape is unknown. It is an opportunity for traders to ride trends and take advantage of short-term waves in the marketplace that can last an hour or a couple of days until the tide changes when volatility is a known quantity.

Indices might be vulnerable this coming trading week. The signs seem to be there for potential declines on global bourses as investors gear themselves towards unknown terrains. Certainly the FX markets will see a test of ranges and traders should be on the lookout for reversals as they emerge. Commodities will have to we watched too. Will Crude Oil come under pressure if economic data continues to be poor? Does Gold find takers because people will want to be within its safe haven sphere for a while? It will be an interesting week of trading for all.