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Navigating Turbulence in Market Sentiment and Economic Indicators

Moody's downgrade of the U.S. credit rating outlook prompts marginal declines in Sunday night's U.S. stock futures. Dow Jones Industrial Average futures dip by 0.1%, and S&P 500 and Nasdaq-100 futures both shed 0.2%. Moody's attributes the downgrade to "very large" fiscal deficits and political gridlock, highlighting the importance of effective fiscal policies.

How are financial markets responding to Moody's recent U.S. credit rating outlook downgrade, and what factors are shaping investor sentiment in the face of evolving economic indicators?

Read below what our desk thinks, and the important levels to watch this week.

This market brief is an overview of the week ahead and some of the events we see as being important to the markets.

Please be aware that our views may change throughout the course of the week, and we do not publish updates of such changes. For up-to-the-minute market analysis see our live trading room.

INDICES

AUSTRALASIA

ASX – 6955 (+169 or +2.49%)

After two busy weeks of market news, the ASX has closed up 2%.

VOLATILITY ALERTS:

Tue 10:30 – AUD Consumer Confidence

Thur 11:30 – AUD Unemployment Rate

For a move higher, we would like to see the ASX close above 6955. Should this occur, a move above 6991 should be expected, and if momentum is strong, we cannot rule out moves to 7093 and 7112.
Failure to close above 6955 means a potential move into 6917. 6854 is the next support level down if 6775 doesn’t hold. If downside momentum is really strong then we could see another leg down into 6717.

EUROPE

DAX (30) – 15241 (+568 or +3.87%)

The DAX has shown an impressive rebound from its lows.

VOLATILITY ALERTS:

Mon 17:30 – EUR ECB Speech

Tue 21:00 – EUR Unemployment Change

Fri 21:00 – EUR CPI

For the DAX to move higher, we would like to see it close above 15241. Should this occur, then 15396 is the next level ahead. If upside momentum is strong, then 15600 and 15791 cannot be ruled out. 

To the downside, should we not see it hold above 15241, we will look for a move into support at 15087. A strong break and close below this handle and 14974 is the next level down. If downside pressure mounts, then 14672 cannot be ruled out.

US

S&P 500 – 4403 (+266 or +6.43%)

The SPX500 has seen a multi day uptrend.

VOLATILITY ALERTS:

Wed 00:30 – USD CPI

Wed 00:30 – USD Inflation Rate

Thur 00:30 – USD Retail Sales

Fri 00:30 – USD Initial Jobless Claims

For a move higher, we would like to see the S&P hold above 4395. Should this occur, we will look for a move through 4480. And if momentum is strong, we cannot rule out moves to 4518 and 4614.

If we cannot hold above 4395, we could see this market move down into 4339 A break of this level, however, may result in a quick move down to 4245. And if momentum to the downside remains strong, we may see a fast move back down to 4118.

FOREX

AUD/USD – 0.63617 (+6 or +0.09%)

After touching the upper resistance levels, AUDUSD has seen a sharp decline 

VOLATILITY ALERTS:

Tue 10:30 – AUD Consumer Confidence

Thur 11:30 – AUD Unemployment Rate

Wed 00:30 – USD CPI

Wed 00:30 – USD Inflation Rate

Thur 00:30 – USD Retail Sales

Fri 00:30 – USD Initial Jobless Claims

For a move higher this week, we would like to see it hold above 0.6361. We will then be targeting a move through 0.6377. If we see a strong break and close above this level, then we can’t rule out a move to 0.6426. Should momentum to the upside be really strong, then 0.6457could be targeted.
If this market cannot hold above 0.6355 we could see a move down to 0.6327. A strong break of this level may result in a move into 0.6274 however, any weakness below this level could see a sharp drop into 0.6214.

EUR/USD – 1.0687 (+126 or +1.19%)

After a strong downtrend the EURUUSD is moving in an upward range.

VOLATILITY ALERTS:

Mon 17:30 – EUR ECB Speech

Tue 21:00 – EUR Unemployment Change

Fri 21:00 – EUR CPI

Wed 00:30 – USD CPI

Wed 00:30 – USD Inflation Rate

Thur 00:30 – USD Retail Sales

Fri 00:30 – USD Initial Jobless Claims

For a move higher, we would like to see the Euro close above 1.0687. Should this occur, we should see a move above 1.0754. A break of this level could see this market rally further to 1.0773 and 1.0805.

If the EURO cannot close above 1.0687, we will see a move into 1.0634. A strong break of this level may result in a move into 1.0579, however, any weakness below this level could see a move into 1.0517.

GBP/USD – 1.2232 (+81 or +0.67%)

GBPUSD saw a big move during the news, and has returned to its mean.

VOLATILITY ALERTS:

Tue 18:00 – GBP Unemployment Rate

Fri 18:00 – GBP Retail Sales

Wed 00:30 – USD CPI

Wed 00:30 – USD Inflation Rate

Thur 00:30 – USD Retail Sales

Fri 00:30 – USD Initial Jobless Claims

For a move to the upside, we would like to see Cable hold above 1.2231 before a break higher into 1.2346. If this market can see a strong close above this level, we may then see a strong pushback into 1.2433. If upside momentum is really strong, then a move back into 1.2485 can’t be ruled out.

Should we fail to hold above 1.2176, we will look for a move down to 1.2129. A break below this level, however, could see Cable further depreciate to 1.2035 by the week’s end. And if momentum is very weak, we cannot rule out a move to 1.2000.

USD/JPY – 151.69 (+206 or +1.38%)

On a multi day uptrend, will USDJPY break the highs?

VOLATILITY ALERTS:

Wed 10:50 – JPY GDP Growth Rate

Thur 10:50 – JPY Balance of Trade

Wed 00:30 – USD CPI

Wed 00:30 – USD Inflation Rate

Thur 00:30 – USD Retail Sales

Fri 00:30 – USD Initial Jobless Claims

For a move to the upside, we must now see this market close above 151.69. Should this occur, we will look for a move into 151.89, and if the upside momentum is strong, we could see a move higher into 152.43 and potentially 153.02.

If we cannot close above 151.69, we could see a move back to test 150.13 before a pause to the downside. A break below this level may result in a sharp move lower into 148.06, and any further breaks to the downside may see a bigger move into 147.59.

COMMODITIES

GOLD – 1934 (-68 or -3.4%)

After a big bounce Gold is down 3% from its highs.

For a move higher, we need to see this market close above 1934. Should this occur we could see a move into 1944; and any break of this level could see a stronger move into 1981. If momentum is strong, then 1988 cannot be ruled out.

If Gold cannot close above 1934, we can see a move down to 1926 A break below this level could see a move lower into 1892 and if momentum is very strong to the downside, we could see a move to 1882.

CRYPTOS

BITCOIN – 36971 (+6555 or +21.55%)

Bitcoin has seen an explosive move, outperforming majority of markets.

For a move higher, we must now see this market close above 38000. Should this occur, we could see a move into 39000 before retesting 40000. If the upside momentum is really strong, then we can’t rule out 41000.

Failure to close above 37000 could see a move into 36000. If selling pressure takes control, then we could see a move down to 35000. A close below this level and 30000 can’t be ruled out.

DISCLAIMER

The views represented on this website do not contain (and should not be construed as containing) financial advice, recommendations, opinions in relation to acquiring, hold or disposing of a financial product of any kind, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Trade View accepts no responsibility for any use that may be made of these comments for any consequences that result. No representation or warranty is given as to the accuracy or completeness of the above information. Consequently any person acting on it does so entirely at his or her own risk. The research does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.