Global Markets bounced off this week after a sell off despite the dissapointing economic data after conciliatory comments from Russia helped ease geopolitical concerns. Russian President Vladimir Putin said: "We will do everything in our power so that this conflict is ended as soon as possible, so that the blood can stop flowing in Ukraine."
Eurozone bond yields hit record lows Thursday, and the euro was close to its lowest against the U.S. Dollar for nine months, after data showed Germany's economy shrank in the second quarter. This raised hopes that the European Central Bank will have to take further action to keep the single currency region's economy afloat, such as pumping more money into the system via quantitative easing.
In Russia, a convoy of Russian trucks carrying what Russia says is aid for those in eastern Ukraine, stopped close to the border of Ukraine. This convoy has become the focus of concerns that it could escalate the conflict with Ukraine, if it crosses the border without Kiev's permission.
Total volume of the Gross Domestic Product of Japan fell sharply in the II quarter after the tax rate on consumption was increased. Nevertheless figures appeared to be above the medium economists’ forecasts, as they were expecting for a fall to 7.1%. Shinzo Abe faces a tough decision. According to an earlier presented plan to reduce the national debt, Sales Tax in the next year may be increased up to 10%. However, there is a caveat: an increase is possible only if the economy will show a sustained recovery. Mr. Abe should announce his decision by the end of 2014.
U.S. futures are being closed in the green for a fourth day out of five. Technological Index Nasdaq is the leader. Earlier in May traders used to see a ‘Head&Shoulders’ pattern in this asset, but this pattern broke as soon as a big trend has been resumed. Now we have a very alike situation, when lots of traders speak of a greate 10-15% correction, but we have only seen less then 4%. It’s hard to make decisions in this point as we are in a middle between the bottom of the correction ($92.90) and its peak ($97). Сonsidering the geopolitical instability in the Eastern Ukraine, in Iraq and in Gaza Strip, I see two possible scenarios. The question is: what will we see earlier — either a new historical high, or a new bottom (lower low).
Apple closed near the top and restored all its key moving averages. We had a few tips for such a growth. The first one was when sellers failed to hold up the price below the previous bottom of $94.10 and a reversal candle formed. The second one was when a short-term descending channel was broken the next day. There was a little gap up on July 31 from $97.16-.67 to resistance zone near the top $99.44. Penetration and confident upper closure will open the door to new highs. 8/21 EMA ($95.65-$96.00) — the support above which sellers will feel uncomfortable.
AUD/USD formed a reversal candle on August 8. After testing the bottom this pair built a series of rising peaks — traces of buyers. Pullbacks, retreat from the support levels, breakdown of resistance levels will work best in a given currency pair.
Next week important events calendar: Aug 18 - Aug 22
AUD Monetary Policy Meeting
USD Building Permits
USD Core CPI
AUD RBA Gov Speaks
CAD Wholesale Sales
USD FOMC Meeting Minutes
CNY HSBC Flash Manufacturing PMI
EUR French Flash Manufacturing PMI
EUR German Manufacturing PMI
GBP Retail Sales
USD Existing Home Sales
CAD Core CPI
CAD Retail Sales
USD Fed Chair Yellen Speaks
EUR President Draghi Speaks