Global markets ended last week in the negative territory driven by the global risk-off sentiment. This week will start with several purchasing managers surveys, countries such as Germany, the UK, and the Eurozone. PMI’s are significant as they tend to be reliable leading indicators of growth. A reading above 50 indicates expansion while a sub-50 print indicates contraction in the sector surveyed.
The other main event to watch this week, the annual conference in Jackson Hole. The market participants expect US Federal Reserve will announce the timeline of tapering of its bond-buying programme at this event.
On the earnings front, the companies due to release their results will be the PC makers HP and DELL will be among those reporting earnings this week.
The precious metal ended slightly lower last week. Meanwhile, the safe-haven metal found strong buyers after the flash crash supported by weak economic data from the United States and China. For this week, the main drivers for the metal remain the US dollar and bond yields movement, and the Jackson Hole Symposium.
Last week the gold price traded in a range of $1774 to $1795. In case of a bearish breakout below $1772 then the new downside levels to watch $1764 and $1755. On the other side, a break above $1800 will open $1815 and $1825.
The US dollar remained in demand last week as the coronavirus epidemic and political tensions continue to encourage safe-haven demand. The index against a basket of currencies hit a nine-month high, having risen 1.5% so far this month. The US dollar is likely to see high volatility this week as US GDP and durable goods orders numbers will be posted.
If the bullish momentum continues then the next upside level is to watch 93.75 and 94.00. On the downside, any meaningful pullback now seems to find some support near the 93.10 zones, below which the slide could further get extended towards the 92.80 regions.
Euro managed to regain some recent losses last week and closed above 1.17 on Friday. The currency pair has been moving lower since June, largely due to a broad strengthening in the US dollar.
Technically the overall momentum remained bearish throughout the last week. If the price continues to fall, the next important support area is 1.1650 and 1.1630/10. On the upper side, the immediate resistance at 1.1800 previous high above that of 1.1850 the trend line resistance.
Dow Jones managed to regain some recent losses last week and closed above 35,000 on Friday. However, I think this is a temporary pullback and sellers will re-emerge if the Index failed to hold above 35,400.
This week, the first resistance is located around 35,400, a break above this level will confirm a possible move to 35,600/50. On the downside, if the Index loses the 35,000 handle, we expect a move toward 34,750.