The run of dollar strength may come up against some near term profit-taking but the outlook remains strong. The clutch of tier one data throughout this week could shape the near to medium term outlook. We look at the position of forex, equities and commodities for the coming days.

1. Weekly Outlook
Friday 26th April 2019 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.
Key Economic Events
WHEN: Friday 3rd May, 1330BST
LAST: 196,000 / +3.2%
FORECAST: 180,000 / +3.4%
Impact: In the coming months, US economic data is key
to the outlook for Federal Reserve interest rates. The Fed
is data dependent and US data has been holding up
relatively well in recent weeks, even positive on an
absolute basis. Markets are pricing for a prospective rate
cut this year, but if the data continues to come in strong,
there may need to be a re-pricing. Headline payrolls have
been trending lower and are still likely to settle around
160k in due course, but wage growth is strong above 3%
with real wages growing nicely. Continued strength will
help support yields and the dollar outperformance.
Date Time Country Indicator Consensus Last
Mon 29th Apr 1330BST US Core PCE (March) +1.7% +1.8%
Tue 30th Apr 0200BST China PMIs (Manufacturing / Services) 50.7 / 55.0 50.5 / 54.8
Tue 30th Apr 1000BST Eurozone GDP (Q1 flash QQ / YY) +0.3% / +1.1% +0.2% / +1.2%
Wed 1st May 1500BST US ISM Manufacturing 55.0 55.3
Wed 1st May 1900BST US FOMC monetary policy No change 2.25%/2.50% No change 2.25%/2.50%
Thu 2nd May 1200BST UK Bank of England monetary policy No change +0.75% No change +0.75%
Fri 3rd May 0930BST UK Services PMI 50.4 48.9
Fri 3rd May 1000BST Eurozone CPI (April flash headline / core) +1.6% / +1.0% +1.4% / +0.8%
Fri 3rd May 1330BST US Non-farm Payrolls / Average Hourly Earnings 180,000 / +3.4% 196,000 / +3.2%
Fri 3rd May 1500BST US ISM Non-Manufacturing 57.2 56.1
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1N.B. Reuters data where possible. Please note all times are now British Summer Time (GMT+1)
Macro Commentary
The performance of the US economy in Q1 has been a standout to say the least. As the Eurozone has stumbled
with PMIs dropping away, the US economy has smashed it. In recent weeks, there have been hints at data
outperformance of the US gathering traction. Retail Sales, a reduction in the trade deficit and Durable Goods have
all come in strongly ahead of expectation. As a result we have seen the US dollar breaking out. In Q1, traditionally
the weakest quarter, the US grew an annualised 3.2% (at first reading) smashing both consensus expectations and
the Atlanta Fed GDPNow. However, is this to be believed? Inventory stocking contributed +0.65%, whilst a steep
decline in imports (a result of threatened China tariffs) suggest an unrealistically bloated Q1 growth that should
unwind in Q2. Can the US keep up this kind of growth run rate? Already we see the flash PMIs dropping back and
there will be significant focus on this week’s ISM data now. However, the dollar bull breakout came as the Eurozone
relative underperformance has hit. German Ifo data disappointed and suggests the various trade disputes that the
US continues to battle are negatively impacting on the Eurozone. This US economic outperformance is the source
of current US dollar strength. Watch the market response on US interest rate futures. If they begin to price out a
prospective Fed rate cut (currently a Dec 2019 cut is priced c. 60% probability on CMEGroup FedWatch), the dollar
outperformance will continue. As ever, with a data dependent Fed, the data deluge this week could be crucial.
Must Watch for: US Employment Situation (Non-farm Payrolls / Av Hourly Earnings)
US Average Hourly Earnings and inflation data
Average Hourly Earnings remain above inflation metrics. Whilst this
should help to pull inflation higher, it is also a positive for the US
consumer.

2. Weekly Outlook
Friday 26th April 2019 by Richard Perry, Market Analyst
Foreign Exchange
The sustainability of the dollar strength has been one of the key forex stories of the first four months of 2019. A
breakout on the Dollar Index above 97.70 to new 22 month highs is causing ripples across forex majors and
emerging market currencies alike. The drive has been the relative performance of the US economy. Although
the Federal Reserve shifted dovish in March, the knock-on impact across major central banks has been
sizeable. Dollar breaks on EUR/USD (below $1.1175), Cable (below $1.300), USD/CAD above 1.3470 have
been seen. This comes as central banks seem to be falling over themselves to be dovish now. The Bank of
Canada slashed growth expectations from 1.7% to just 1.2% for this year, and dropped its tightening rhetoric
from its guidance; whilst the Bank of Japan has guided for rates to stay at record lows for at least the next 12
months. This should help to cement continued dollar outperformance for the coming weeks. Although the
deluge of tier one data could result in some near tem dollar profit-taking this week, the ongoing data
outperformance amidst apparent capitulation across central banks will help to prop up the dollar. We continue
to anticipate that the game changer would be the US/China trade talks being resolved in due course. This
would help to revitalize a sluggish global economy, helping to increase risk appetite and help unwind some of
the bearish outlooks ex-US. However, that is for later in 2019 (if the trade agreement can finally be resolved).
For now, any technically induced near term dollar weakness should be short-lived.
WATCH FOR: PMIs from China and US impacting sentiment, Nonfarm Payrolls and wage growth key
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2
FX Outlook
GBP/USD
Watch for: Losing the old key floor around
$1.3000 opens $1.2700/$1.2800 but is a
technical rally going to be seen this week?
Outlook: A decisive breach of $1.3000 changed
the outlook and plays the market in an
increasing downtrend which opens the potential
for a move back towards support between
$1.2700/$1.2800. Momentum indicators are
negatively configured with the RSI and MACD
lines at their most bearish for months. However,
a near term technical rally is hinting but this
should be seen as a chance to sell There is
considerable overhead supply around $1.3000
whilst the six week downtrend falls between
$1.3020/1.2965 next week.
EUR/USD
Watch for: A technical rally threatens but there
is resistance between $1.1175/$1.1225
Outlook: Whilst the dollar strength and relative
euro weakness completed a decisive downside
break last week to open $1.1000/$1.1100, the
market is threatening a technical rally. However,
there is little to suggest that any rally will be
sustainable and subsequently any rebound
should be seen as another chance to sell. The
technicals remain negatively configured on a
medium term basis but will go into next week
approaching stretched levels. This suggests
immediate downside potential is limited.
However, overhead supply between $1.1175/
$1.1225 will be a basis of resistance.

3. Weekly Outlook
Friday 26th April 2019 by Richard Perry, Market Analyst
Equity Markets
The stats say that US earnings season is progressing relatively well. Just under half way through S&P 500
earnings, according to FactSet, around 78% of companies are beating earnings estimates (better than the 72%
average of the past five years). Earnings growth is c. +2% at the moment, however, Q1 earnings are still
expected to end with a decline of between -3% to -4%. Also, on the revenue line, the numbers are not as rosy,
with around 53% of companies beating estimates, which is worse than the five year average of 59%. However
the S&P 500 has already run around 25% higher since the December lows around 2346. Driven by a
combination of a dovish surprise from the Fed and more positive rhetoric on US/China trade, the question is how
much is now baked in. Many of the mega-caps are now through the tape and there are still some worries with
regards to forward guidance edging negative. The breakdown of earnings would suggest that the tech
companies are doing well, with all beating earnings estimates. Twitter, Facebook, Microsoft and Amazon were all
positive last week, whilst the Industrial bellwethers (3M and Caterpillar) see more of a struggle ahead, Caterpillar
worries about the forward impact of the trade dispute. S&P 500 earnings growth is expected to be around 2%
this year, and given the market trades c. 17x now, is a huge 25% rally in four months a chance to take profits?
Ongoing dollar strength is a drag, whilst technically the RSI on the S&P 500 is stretched over 70 as all-time highs
are tested. Even if a breakout is seen, there will be significant temptation to take profits around here.
WATCH FOR: Continued focus on US earnings. US/China talks resume on 30th April
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3
DAX Xetra
Watch for: Can the bulls prevent profit taking
from impacting with a near term slip this week?
Outlook: The recovery above 11,865 completed
a decisive recovery through major overhead
supply recently, but the run higher has started to
show signs of stuttering in the past few sessions.
This comes with the RSI most overbought than
at any time since October 2017. The next key
resistance is around 12,460 but immediate
upside potential looks limited and if the bulls
continue to struggle next week, a drop below
12,236 could usher in the profit-takers. The
strong outlook shows that corrections tend to last
just a matter of days before the bulls resume
control. Support 11,850/12,030.
FTSE 100
Watch for: Any weakness into 7300/7370 will be
seen as a chance to buy.
Outlook: A correction within the uptrend channel
is threatening as momentum indicators roll over.
For now, this looks to be just a near term move
and an unwinding move within strong medium
term configuration. The corrective “bear crosses”
on MACD and Stochastics reflect the dip lower,
but the RSI continually bottoms out around 50.
As such this move lower should be the source of
the next opportunity to buy. The breakout
support at 7367 is in focus, whilst a four month
uptrend channel is around 7300 next week. The
market has not dropped below the 55 day
moving average (currently 7266) since January.
Index Outlook

4. Weekly Outlook
Friday 26th April 2019 by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
Gold has ticked higher in the past week. The market has taken on more of a safe haven bias as yields have
dipped and equities have wobbled. This has allowed gold to find support despite driving dollar strength. This
now gives rise to a gold technical rally. The question is whether the move is counter to a 9 week medium term
downtrend (and a rally is therefore a chance to sell), or holding on to renew the 8 month uptrend. Momentum
indicators suggest it is the former and rallies are a chance to sell. This will be the case until $1310 resistance is
breached. The ongoing outperformance of the dollar should restrict any prospect of a sustained gold recovery.
Oil traders are reacting to the news that OPEC could raise production to counter the loss from Iran due to the
US sanctions. The move in the past few days just shows how sensitive the price can be to a change on
narrative over the supply story. Saudi Arabia could easily raise output from current levels, whilst Iraq has also
suggested it could too. With Brent Crude over $70 would this encourage OPEC to tweak is communication
over supplies at the June meeting? The support band $61.80/$63.00 is a gauge to watch now.
US Treasury bond yields have been remarkably pinned down considering the strength of US data recently.
The suggestion is that there has been a swathe of Japanese buyers in the search for yield. It could also reflect
a cautious market, unwilling to chase heady equity markets. Tier one data could be key this week.
WATCH FOR: US/China trade talks resume, a deluge of US tier one data to drive sentiment
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4
Gold
Watch for: A near term technical rally looks to
be another opportunity for the bears next week
Outlook: A near term technical rally has once
more taken hold. However, this is within the
scope of the nine week downtrend and simply
looks to be an unwinding move for the bears to
take advantage of again next week. The
breakdown below the old key support at $1276
may not have been decisive on a long term basis
but was enough to suggest that rallies should be
seen as a chance to sell. Momentum indicators
are medium term negatively configured and if the
RSI tails off again between 50/55 then this would
be just another opportunity. The downtrend is
now below $1300 with the 1300/$1310 long term
pivot band acting as key resistance.
Markets Outlook
Brent Crude oil
Watch for: Corrections within the uptrend
channel remain a chance to buy
Outlook: The corrective move on Friday is likely
to be the source of another chance to buy on
Brent Crude. There have often been near term
corrections within the past four months, but they
have been quickly supported and find the bulls
willing to pull the price higher once more. There
is a good band of support that the bulls will be
eyeing between $70.30/$71.80. The 21 day ma
(at $71.25) is a basis of support. Momentum
indicators are simply unwinding strong medium
term configuration, with the RSI often finding
support returning around 50/55. Resistance may
have been left at $75.60 after the slip late this
week, but expect this to be retested I due
course.

5. Weekly Outlook
Friday 26th April 2019 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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