Markets continue to react to key events with last week's meeting of the Federal Reserve still impacting on traders' outlook of US Treasuries and the dollar, and with a number of FOMC members speaking in the coming days, this is likely to remain an important driver. We look at how events are impacting on the outlook for forex, equities and commodities this week.

1. Weekly Outlook
Monday 20th March 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: Thu 23rd March at 0930GMT
LAST: +2.6%
FORECAST: +3.2%
Impact: The consumer remains a hugely important to
the UK economy deriving around 65% of GDP, so the
post-Brexit boost to spending from the sterling
weakness has been extremely supportive for economic
growth which was expected to slowdown. However now
as input costs have spiked higher, inflation is beginning
to filter through and this is playing into the slowing UK
retail sales. Although forecast to improve to +3.2% (ex
fuel) from +2.6%, the last two months have significantly
missed estimates. Sterling crosses and Gilts will be
very sensitive to the data.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 21st Mar 00:30 Australia RBA monetary policy meeting minutes
Tue 21st Mar 09:30 UK CPI (headline & core) +2.1% & +1.7% +1.8% & +1.6%
Wed 22nd Mar 14:30 US EIA Crude Oil Inventories (million barrels) -0.2m
Wed 22nd Mar 20:00 New Zealand RBNZ monetary policy +1.75% +1.75%
Thu 23rd Mar 09:30 UK Retail Sales (YoY ex-fuel) +3.2% +2.6%
Thu 23rd Mar 12:45 US Fed chair Janet Yellen speaking
Thu 23rd Mar 14:00 US New Home Sales 566,000 555,000
Fri 24th Mar 09:00 Eurozone Flash Composite PMI 55.8 56.0
Fri 24th Mar 12:30 US Durable Goods Orders (MoM core) +0.5% -0.2%
Fri 24th Mar 13:45 US Flash Manufacturing & Services PMIs 54.8 & 54.3 54.3 & 53.9
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1N.B. Please note all times are GMT, data source Reuters
Macro Commentary
With so many recent key fundamental developments it’s a good idea to try and gain some perspective. Firstly, a
dovish hike from the Fed is hitting the dollar. Despite adding a third 25bps rise, the Fed disappointed the market as
it barely touched its economic projections and dot plots. I believe that this is near term dollar corrective, but will
leave room for the next dollar bull run. The lack of any real upgrade to growth numbers means that Trump’s fiscal
expansion is still not factored into growth forecasts. Regional Fed surveys are expanding strongly, whilst the
corporate tax cut is also yet to be accounted for. This may drive the dollar lower near term but lead to buying the
near to medium term dip. However, there are question marks over the prospect of EUR/USD hitting parity after the
Dutch election reflected a rejection of populism with liberalism coming out to vote in size. The implications for the
French election are loose, but should still mean the struggle for Le Pen to win in the second round could be greater
than previously thought. This should help to underpin the euro in the coming months. The politics of Brexit remain
as complicated as ever with the EU threatening no trade talks until the Brexit bill has been finalised. Although
Theresa May can now trigger Article 50 (now likely late March), the Scottish Nationalists have thrown another
spanner in the works by threatening another independence referendum. Sterling upside remains limited.
Must Watch for: UK Retail Sales (YoY ex fuel)
UK retail sales have een falling recently which
reflects the post Brexit data is now deteriorating

2. Weekly Outlook
Monday 20th March by Richard Perry, Market Analyst
Foreign Exchange
The dollar is under pressure from the dovish FOMC rate hike. The Dollar Index has dropped below the support
of the higher lows from late February and traction in the bull run has been lost. There is room for this to run
back towards 99.2 which would be around another per cent or so within the key long term uptrend but ultimately
I continue to see this as a correction the will provide another medium to longer term buying opportunity. The
more hawkish than expected ECB and, following the Dutch election, the improved prospects to hold back the
tide of populism in Europe should now help to underpin the euro. The EUR/USD pair has been trading in a 500
pip range $1.0340/$1.0830 for much of the past four months but there is a key overhead barrier around $1.0850
that is likely to limit the gains in the coming days. For the Japanese yen, the dovish stance of Kuroda at the
latest BoJ meeting stating that even if inflation were to pick up towards 1% it would not necessarily drive a
chance to monetary policy. This should help to prevent yen strength from breaking USD/JPY below the 111.60
key low. The Bank of England’s Kristin Forbes voting for a 25bps hike has pulled sterling higher, but again
Brexit remains a drag and should help to cap upside. The Reserve Bank of New Zealand is expected to remain
dovish this week after the disappointing Q4 GDP and downward revision to Q3 has pulled growth below trend.
WATCH FOR: Yellen is worth watching on Wednesday but is unlikely to say too much we did not
already know. UK Retail Sales will impact sterling, with the RBNZ driving Kiwi volatility.
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FX Outlook
GBP/USD
Watch for: The range continues but another
lower high below $1.2570 remains likely.
Outlook:. The market has rallied from the
$1.2105 low and the near term recovery
continues. However, there is still a mild
corrective bias within the medium term trading
range which would suggest that once the rally
begins to find resistance, the sellers will move to
take profits again and sell the market lower. The
February high at $1.2570 is key resistance but
watch the momentum indicators, with the RSI
consistently failing around 60 in recent months.
A close above the $1.2580 resistance would
change this outlook.
EUR/USD
Watch for: A large head and shoulder base
pattern completes above $1.0872.
Outlook: The improvement in the pair on the
back of a more hawkish than expected ECB and
more dovish than expected FOMC continues.
The technical improvement above $1.0710 now
means that the key resistance band
$1.0800/$1.0850 is now in sight. This would be
key in that a push through the resistance would
complete a large multi-month base pattern. This
would confirm on a move above the December
high at $1.0872. However there is also the big
11 month downtrend that will provide resistance
so there are sizeable technical barriers lurking
above the current price. The support is building
around $1.0600 with $1.0500 being key.

3. Weekly Outlook
Monday 20th March by Richard Perry, Market Analyst
Equity Markets
Equity markets consolidated in front of the Fed, but are now still looking for direction. A fear that the Fed would
announce an acceleration in tightening monetary policy has though been averted should set the bulls up for
renewed gains once more. A tighter monetary would drive Treasury yields higher, but the 10 year yield pushed
towards 3.0% would become prohibitive to stock market positivity, especially for a market that trades on a
dividend yield of around 2.0%. The spluttering false start in the wake of the Fed suggests that the bulls are
ready to go but still need something more. That extra something would come in the form of Donald Trump and
his fiscal expansion of tax cuts (especially corporation tax) and spending plans (tax credits and encouragement
of repatriation of overseas earnings). However until that happens, there could be a struggle to hold on to
sustained upside. The cyclically adjusted price earnings of the S&P 500 remain extremely high at over 26 times,
however Trump’s corporate tax cut would dramatically change the market’s prospective valuation. Where Wall
Street leads, though, Europe will still tend to follow. The initial breakouts on the DAX and FTSE are still not
confirmed, however the configuration of long term trend analysis remains strong. There is still room for a
corrective move within the long term trends however short, medium and longer term sequences of higher lows
suggest that the bulls are still in control across the time horizons on FTSE 100, DAX and CAC. Levels to keep
an eye on this week are 7354 initially on FTSE (and 7264 key), with 11,893 on DAX and 4930 on the CAC.
WATCH FOR: A relatively quiet week of economic data to move markets, but the negative correlation
trade of sterling and FTSE remains in play. The DAX remains the volatility play
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DAX Xetra
Watch for: The bulls retain control whilst
bolstered above the 11,893 breakout support
Outlook: Higher lows and higher highs continue
despite the DAX consistently threatening the 4
month uptrend over the past week, the bulls are
still hanging on. However, whilst trading above
the 11,893 breakout there will still be a sense of
positivity on the DAX. Momentum indicators
retain a positive configuration however the RSI
has been struggling in the high 60s in recent
weeks, whilst the MACD lines suggest that a
catalyst will be needed to boost momentum.
Despite this, corrections continue to be bought
into and a move back above last week’s high at
12,156 re-opens the 12,390 all-time high.
FTSE 100
Watch for: Momentum indicators suggest limited
immediate upside and a possible week of
consolidation
Outlook: Trend channels are intact on both the
longer term chart (since June 2016, whose
uptrend is currently around 7170) and on the
near to medium term outlook (since late January
with the uptrend supportive around 7300 this
week). Holding above the old breakout at 7354
will be the first factor this week, but with the RSI
around 70 this could be limiting to the upside in
the coming days. As yet there is little real sign of
traction on the MACD lines and this could
suggest a week of consolidation ahead. The key
support is the higher reaction low at 7263.
Index Outlook

4. Weekly Outlook
Monday 20th March by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
Gold and silver have been helped higher by the dovish lean in the Fed rate hike last week. But can this move
continue? It may be difficult for gold with the election in The Netherlands showing that the threat of populism
has suffered a setback. This means that the bid from the safe haven trade that comes from political turmoil
been curbed slightly and may reduced demand for gold in the coming weeks. The dollar will become the greater
driver once more and seeing as I believe this dollar correction will only be short term, the upside potential on
gold could become limited around $1240 which is also an old key area of overhead supply. Growing oil
inventories have been a big drag on oil prices in recent weeks and pulled WTI below $50, which could now
become a ceiling. Saudi Arabia are now suggesting that the OPEC production agreement could be extended for
the second half of 2017, but with the market now more interested in US shale this could have limited impact.
The US 2 year yield has pulled back to test the old key breakout at 1.300% and this could become a key lime in
the sand now. Generally though global yields have tended to be underpinned by the prospect of the huge
Trump stimulus program. Politics in the Eurozone looks a little less of a concern after the Ditch election and this
should help to limit the yield spread of periphery over core Eurozone yields. France over German 10 year
breaking below 60bps would be a key near term indicator and drive a risk rally.
WATCH FOR: Dollar will continue to drive gold, with oil inventories are a key indicator for oil.
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Gold
Watch for: The resistance between $1230 &
$1244 could limit the near term gains
Outlook: The outlook has improved on a move
above $1220 which has been a medium term
pivot, but the market has become increasingly
choppy over the past couple of months. Near
term momentum has turned higher again as the
market has rallied, and the 23.6% Fibonacci
retracement of the $1122/$1264 rally will be a
key gauge this week at $1230. However, there is
an old long term pivot around $1240/$1244
which will also come into play soon so it will be
interesting to see if the bulls can sustain the
impetus this week. The market could begin to
trade in a range again.
Markets Outlook
Brent Crude oil
Watch for: The rally is struggling under the old
key support, now resistance at $53.00
Outlook: The breakdown below the key range
low of $53.00 changed the outlook a couple of
weeks ago. You will often see technical rallies to
test previous breakdown levels however, it
seems now as though the rally is struggling
around $52.65. The range breakdown below
$53.00 implies a downside target of $5.35
towards $47.65, so the support at $50.25 is likely
to come under further pressure in the coming
weeks. Momentum indicators suggest a a
negative configuration and that this rally is still
likely to be sold into for what could be a new
lower range. The $50 level will once more be key
though.

5. Weekly Outlook
Monday 20th March by Richard Perry, Market Analyst
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