This week may well be as volatile as last week. Attention will be focused on the Federal Reserve’s FOMC minutes which are due on Wednesday and the annual Jackson Hole Symposium scheduled to commence on Thursday. Investors will be watching closely trying to analyse the central banks’ views. This year’s symposium theme is “Challenges for Monetary Policy”.
The Week Ahead
Key economic data for the week ahead starts today with the Japanese Trade Balance and the Eurozone Consumer Price Index data which is forecast to stay unchanged at 1.1%. Tuesday looks very quiet in terms of data due and the only point of interest could be the Reserve Bank of Australia’s meeting minutes due overnight. On Wednesday we have the US housing data and FOMC minutes (due at 19.00 BST), in addition to the crude oil inventories, which will be closely watched. On Thursday, the main point of interest is the Eurozone and US manufacturing PMI data for August. The week will finish with all eyes on Jackson Hole.
In terms of the corporate diary, we are starting to see results season wind down. However, two notable companies reporting to the market this week are the UK’s biggest housebuilder, Persimmon, (PSN) on Tuesday and copper miner Antofagasta (ANTO) on Thursday.
Stock markets rallied on Friday finishing close to the intraday highs for the day. US-China trade tensions appeared to ease. US President Donald Trump said that he believes China wants to make a trade deal and the trade war with Beijing will be fairly short. “I think we’re having very good discussions with China. They very much want to make a deal,” Trump told reporters. He said he had a call scheduled soon with Chinese President Xi Jinping, but he did not say when. “I think the longer it goes the stronger we get,” Trump said of the trade war. “I have a feeling it’s going to go fairly short,” he said.
The Dow ended Friday up 307 points, or 1.2%. The S&P 500 rose 40 points, or 1.4%. The Nasdaq 100 index climbed 108 points or 1.45%. Individual stocks: Apple up 2.36%, Nvidia up 7.25%, Microsoft up 2.45% and 3M up 2.97% were among market leaders on Friday that contributed to the rally.
Crude oil volatility could be impacted this week by the US government’s decision to issue a warrant to seize the Grace 1 super tanker, which was initially detained by British forces off the coast of Gibraltar last month. The British intervention was triggered by the suspicion that the Grace 1 was transporting Iranian crude oil to Syria, which is a violation of European sanctions. Also, OPEC published its forecast for global oil demand growth, trimming the expectations for 2019 to 1.1 million barrels per day (BPD), down from 1.14 million BPD citing economic slowdown. OPEC left the demand forecast for 2020 unchanged at 1.14 million BPD.
Crude oil is trending down currently capped by the falling resistance trend line. The key trading level is at 57.30, bears appear in control below that level potentially targeting downside support at 52.00 and 50.50. Alternatively, a confirmed breakout above the current daily resistance at 57.30 and an end of day close higher could trigger a bullish reaction potentially targeting upside resistance at 60.20 and 61.00.
Bitcoin rallied on Friday to close at 10,350. The bullish reaction was triggered by the announcement that Bakkt, a subsidiary of the Intercontinental Exchange, was given the green light from the US Commodity Futures Trading Commission to launch Bitcoin futures next month. The current planned launch date is 23 September. The planned launch is expected to trigger a wave of new investment in bitcoin, particularly from institutional investors.
Bitcoin is supported by the rising trend line at 9,400. Bulls appear in control above that level potentially targeting upside resistance at 11,000 followed by 11,900 and 12,000. Alternatively confirmed loss of the 9,400 key support and an end of day close lower could change the outlook to bearish targeting additional downside support at 9,030 and 8,750.
All data, figures & charts are valid as of August 19th. All trading carries risk. Only risk capital you can afford to lose.
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