There are some key moves seen on financial markets in the past couple of weeks as the general outlook on market sentiment has undergone a seismic shift. We look at the impact that has been seen across forex markets, equities, commodities and bonds. The big question is thoguh, will the moves continue higher or is there some room for profit taking this week?

1. Weekly Outlook
Monday 21st November by Richard Perry, Market Analyst
Forex and CFDs are high risk leveraged products that can result in losses greater than your initial deposit and you should
therefore only speculate with money you can afford to lose. FX and CFD trading are not suitable for everyone. Please
ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such
transactions. You should first carefully consider your investment objectives, level of experience, and risk appetite and only
invest funds you are prepared to lose entirely. For our full risk warning, please go to the end of this report.
WHEN: Wed 23rd November at 1900GMT
LAST: n/a
FORECAST: N/A
Impact: After Janet Yellen’s testimony and the raft of
Fed speakers last week, it will be interesting to see the
leanings in the FOMC meeting minutes. The market is
now absolutely priced in for a December rate hike,
however attention will now turn to hints over the
prospective speed of the tightening and that will be the
focus of the analysis of the minutes. The problem is
that the FOMC meeting was prior to the surprise Trump
victory so this may reduce the impact, however the
dollar and Treasury yields now seems to be taking
direction from anything that has hawkish implications.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 22nd Nov 15:00 Eurozone Consumer Confidence -7.8 -8.0
Tue 22nd Nov 15:00 US Existing Home Sales 5.42m 5.47m
Wed 23rd Nov 09:00 Eurozone Flash Manufacturing PMIs 53.2 53.5
Wed 23rd Nov 13:30 US Durable Goods Orders (MoM ex transport) +0.2% +0.2%
Wed 23rd Nov 14:45 US Flash Manufacturing PMIs 53.4 53.2
Wed 23rd Nov 15:30 US EIA Crude Oil Inventories +5.3m
Wed 23rd Nov 19:00 US FOMC meeting minutes
Thu 24th Nov 09:00 Eurozone German Ifo Business Climate 110.6 110.5
Thu 24th Nov 23:30 Japan CPI (Oct) -0.4% -0.5%
Fri 25th Nov 14:45 US Flash Services PMI 54.8 54.8
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1N.B. Please note all times are BST (GMT+1), data source Reuters
Macro Commentary
A fundamental shift in market sentiment was brought about following the victory of Donald Trump in the US
Presidential Election. On the potential for growth and inflation driven by fiscal spending of perhaps $1 trillion (can
he really deliver on such huge levels of spending?) Treasury yields and the US dollar have soared. The dollar has
soared to its highest level since 2003 as the market has re-priced for a sharper set of rate hikes by the Federal
Reserve. Fed officials are talking about asset bubbles and even the historically dovish Janet Yellen is concerned
over the delay to rate hikes leading to the economy potentially overshooting. There is a significant re-pricing
underway and it could continue to the end of the year. There will inevitably be bumps along the road, nothing ever
goes in a straight line. The technical charts suggest that whilst momentum is strong for the dollar, it is stretched and
this could give rise to a near term technical correction this week. Looking away from the dollar though there are a
couple of big volatility events for the Eurozone on the horizon, with the Italian referendum (4th Dec) and the
December ECB meeting (8th Dec). Will Italy be the next location for the populist movement to strike? If so, would
markets begin to seriously question the stability of the Eurozone once more, ahead of further crucial elections in
The Netherlands, France and Germany in 2017. This could perpetuate recent euro underperformance.
Must Watch for: FOMC Meeting Minutes
US yield curve (versus Japanese Govt Bond yield curve)
Yield differentials continue to drive pairs like USD/JPY

2. Weekly Outlook
Monday 21st November by Richard Perry, Market Analyst
Foreign Exchange
When markets move towards extreme levels, the decision making process becomes difficult for traders. Do you
continue to chase the dollar higher or wait for the corrective move but risk losing out of further gains? This is the
question that many traders will be asking themselves this week when considering how to play the huge runs on
EUR/USD and USD/JPY. Of the two, in the near term, I feel that Dollar/Yen has more room to run towards the
band of resistance 111.45/111.90, rather than EUR/USD having room to fall back to $1.0456/$1.0538. If the
Bank of Japan sticks with its unlimited bond purchases, at a time in which the US yield curve continues to
steepen, then the interest rate differentials will continue to drive USD/JPY higher. However, as yet there has
been no specific signal from the ECB that it is looking to extend the QE program. Perhaps we will have to wait
for the ECB meeting on 8th December. Perhaps there will be more room though in sterling shorts in the wake of
Friday’s sell-off. Sterling has been relatively well insulated from the dollar strength since Trump’s victory.
Sterling is basically flat against the dollar, whilst the euro has lost over 3% and the yen is almost 5% weaker.
Perhaps traders have looked at the near term downside potential and seen that sterling is ripe for the picking.
Technically, Cable confirming below $1.2330 is a key near term breakdown.
WATCH FOR: The lack of key economic data this week could mean lower volatility across the majors
however the dollar traders will be looking at the Fed minutes and Treasury yield moves.
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FX Outlook
USD/JPY
Watch for: The market remains bullish but is
increasingly stretched
Outlook: Do you continue to chase Dollar/Yen
higher? The breakout above 107.50 completed a
long term base pattern that implies 750 pips of
recovery to 115 in the coming months. However
there has not yet been a pullback correction of
the original breakout. Whilst not always being
seen in their entirety, it is extremely rare to have
a one way move towards a target. The RSI is
extended around 80 and whilst there could be a
test of the next resistance band 111.45/111.90,
the probability is that a near term corrective
move is increasingly likely now. There is support
now between 107.50/108.50 which would be a
far more comfortable buy zone for
medium/longer term long positions.
EUR/USD
Watch for: The prospect of a near term
technical rally this week is high
Outlook: Posting 10 consecutive sessions in
negative territory is a record run for the euro.
However momentum is increasingly oversold
and the prospect of a near term technical rally is
growing. The long term outlook is extremely
bearish for a test of the key 2015 lows at
$1.0538 and then $1.0456, however a snap-
back rally is a very real possibility now. There is
though significant overhead supply starting at
$1.0710 with $1.0800 and $1.0850 also key
areas of resistance. I a expecting a near term
rally into this band of resistance which would
then help to renew downside potential. I think
that chasing the euro lower and selling down
here on a medium/longer term basis is risky.

3. Weekly Outlook
Monday 21st November by Richard Perry, Market Analyst
Equity Markets
The flight out of global bond markets should have been finding a home in the equity markets. However,
although there has been an appreciable improvement in the outlook on equity markets, they still seem to have
the shackles on and remain stuck in their ranges that have been in place for the past few months. The S&P 500
is the market best placed to breakout of its range to the upside above 2193, in a move that would follow the
Dow Jones Industrial Average to all time highs. This breakout is now close but would still probably need
Treasury yields to continue strongly higher, which may still find some initial profit-taking. However, will
European markets be able to follow suit? The DAX has rallied on several occasions towards 10,800 however
seems to flounder every time it closes in on the key resistance, with profit-takers happy to maintain the range.
Once again, it seems as though it requires a continued steepening of global bond yield curves to help drive this
risk-on breakout. However, it is the FTSE 100 (which is very much a global index with over 70% of revenues
generated overseas) which has me concerned for the longevity of equity gains. The FTSE 100 has been
dragged down by recent weakness on oil price, and outperformance of sterling. The FTSE 100 is very much at
risk of forming a four month top pattern (completes below support at 6612). For this support to hold up it would
need sterling underperform to resume (initial signs of this on Friday need to continue), in addition to support for
the oil price once more. The UK Chancellor’s Autumn Statement this week could contain some incentives.
WATCH FOR: The movement on US Treasury yields will still be key however Fed minutes will also be of
interest. UK equities will likely react to the Autumn Statement on Wednesday.
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3
DAX Xetra
Watch for: A break of the near term range will
drive the medium term outlook
Outlook: Time and time again in the past four
months, attempts to breakout above 10,800
have been rebuffed and this is a major concern.
The RSI fails at 60 and the Stochastics roll over.
This is exactly what seems to be happening
again. A near term breach of 10,575 would imply
225 ticks of downside and back towards the
middle of the 10,175/10,827 range, with a
consistent pivot around 10,450 to be the likely
retreat destination. However, the longer this
range 10,580/10,800 continues, the potential for
a breakout will grow. The bulls would target
11,420 on a breakout but the technicals point
towards a continuation of the range.
FTSE 100
Watch for: A huge top pattern completed on a
break below the support band 6612/6676
Outlook: The underperformance of the FTSE
100 is a real concern for the bulls and the
gradual building of what could now be a four
month top pattern could be completed if the
selling pressure ramps up again this week. The
key reaction low from July at 6612 is the big
support that needs to hold. The longer term
deterioration in the momentum indicators
suggests that the pressure is mounting, with the
MACD lines negatively configured and the RSI
struggling below 50. Losing support at 6710 this
week would be an early warning sign. The
overhead supply around 6955 is prohibitive to
rallies.
Index Outlook

4. Weekly Outlook
Monday 21st November by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
Renewed strength in Treasury yields and the US dollar have hit commodities. With the dollar surging higher the
instruments priced in dollars will suffer. In addition to the risk-off outlook, the precious metals are under
pressure, with gold and silver closing in on key supports. The biggest concern is the May 2016 low at $1200 on
gold, which would be a crucial outlook changing support. The gold price is coming under pressure from any
hawkish hints from the Fed that are pushing real interest rates positive again (i.e. bad for gold). Oil has also
under pressure from the stronger dollar, however there will increasingly be a different focus for oil traders as we
approach the OPEC meeting on 30th November. This will mean that the price will be increasingly susceptible to
newsflow from OPEC members over the potential to implement the previous agreement on production cuts.
The yield curve control that the Bank of Japan is engaging means that as of last Thursday the bank is offering
to buy unlimited bonds. This could mean that the JGB curve remains fairly sticky and if US yields continue to
rise there will be more room for the yield differentials to drive gains on Dollar/Yen. The bond buying program of
the ECB will also now come under scrutiny with Mario Draghi insisting that an accommodative monetary policy
remains appropriate. Expectation will grow for the ECB to announce an extension of its bond buying program in
the December ECB meeting.
WATCH FOR: Volatility to continue to drive market sentiment, with FOMC minutes eyed for Treasuries
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Gold
Watch for: The importance of the support at
$1200 is crucial this week
Outlook: Since the fall below the key support at
$1300 the longer term bulls have relinquished
control of the outlook. However the recent
weakness now means that the support from the
May 2016 low at $1200 is coming under scrutiny.
This level of support is absolutely crucial to now
prevent the outlook turning longer turn negative
again. It would be confirmation that the bears are
in control and that further downside towards
$1130/$1140 could be the minimum expected.
The bearish configuration to the momentum
indicators suggests that rallies will also be sold
into. The resistance at $1241 is increasingly key.
Markets Outlook
Brent Crude oil
Watch for: $45/$46 could become a medium to
longer term pivot band in a trading range
Outlook: Now the primary recovery uptrend has
been broken the concern will be that rallies are
just seen as a chance to sell. The previous
breakdown below $45.10 support will also be an
issue and could still have a legacy as the market
is trading below all the moving averages. The
resistance of last week’s reaction high at $47.60
needs to be breached on a consistent basis to
improve the outlook. It could though now be that
oil is forming more of a sideways trading range
pattern between $41.50/$53.70 and that old key
levels $45/$46 are becoming a longer term pivot
area. This would be consistent with the
increasingly neutral moving averages and
momentum configuration.

5. Weekly Outlook
Monday 21st November by Richard Perry, Market Analyst
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5
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only invest in FX, Bullion and/or CFD trading with funds you are prepared to lose entirely. Therefore, only your excess
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