The document provides a weekly market outlook and commentary. It summarizes that UK assets received a boost from the general election results returning a Conservative majority seen as pro-business. It notes the key question is how long the positive sentiment lasts before questions around a European referendum. It also previews important upcoming economic data releases that could impact markets this week, including US retail sales and inflation reports from the Bank of England.

1. Weekly Outlook
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11th May 2015 by Richard Perry, Market Analyst
Macro Commentary
UK assets have been given a significant shot in the arm as the General Election confounded all expectations of the
pollsters and returned a Conservative majority government. Broadly speaking this was considered to be the best case
scenario for traders and investors with the Tories considered to be the most pro-business, pro-market and pro-wealth
creation. The key question is how long the honeymoon lasts for before questions turn towards the one factor that
markets are unsure of, a European referendum. Moody’s credit rating agency has already waded into the argument
stating that it could negatively impact the UK’s sovereign credit rating, but for now all seems rosy in the garden. The UK
assets could get another boost this week as the Bank of England provides its Quarterly Inflation Report which has become
the announcement from governor Mark Carney that the markets are most interested in. Investors will be keen to see
how the path of the recovery in inflation is supposed to have changed in three months, whilst growth projections will
also be interesting considering the slight dip to Q1 GDP which still looks to be a possible anomaly as the recent PMI data
has been positive. If the feel good factor could role on for sterling this week a break to a 2015 high is a real possibility.
WHEN: Wed, 13th May, 1330BST
LAST: +0.9% MoM
FORECAST: +0.3% MoM
Impact: Last month the retail sales saw the first
month on month improvement in four months,
however the reading missed expectations of +1.1%
and also the Year on Year data showed a
continued deterioration. In the course of the past
year the growth has dropped from around 5% this
time last year to now just above 1% if the 0.3%
monthly expectation is achieved. With the US
consumer around 70% of the economy this is a
problem for the potential of the Federal Reserve
tightening. Another disappointing month would
hit the dollar.
Must watch for: US Retail Sales
Key Economic Releases
Date Time Country Indicator Consensus Last
Mon 11th May 12:00 UK Bank of England monetary policy 0.5% 0.5%
Wed 13th May 06:30 China Industrial Production +6.0% +5.6%
Wed 13th May 09:30 UK Unemployment (average earnings growth) 5.5% (+2.1%) 5.6% (+1.8%)
Wed 13th May 10:00 Eurozone GDP (Q1 flash QoQ) +0.5% +0.3%
Wed 13th May 10:30 UK BoE Quarterly Inflation Report
Wed 13th May 13:30 US Retail Sales (MoM) +0.3% +0.9%
Wed 13th May 15:30 US EIA US Crude Oil Inventories -3.9m
Thu 14th May 15:00 US Producer Prices Index (YoY) -0.8% -0.8%
Fri 15th May 09:00 US Industrial Production (Capacity Utilization) +0.2% (78.4) -0.6% (78.4)
Fri 15th May 13:30 US University of Michigan Sentiment (prelim) 96.0 95.9
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1
US Retail Sales (Month on Month)
N.B. Please note all times are GMT, data source Reuters

2. Weekly Outlook
11th May 2015
by Richard Perry, Market Analyst
Foreign Exchange
There appears to have been a significant move against the US dollar in recent weeks and this has been putting huge
strain on the argument that this correction on the dollar is simply counter to a longer term uptrend. The Dollar Index
looks to be in the process of breaking its key uptrend and the bulls could be losing control. If the euro can hold support at
$1.1065 then the bulls will look to push a test of the resistance band $1.1450/$1.1530; whilst sterling has rallied
significantly and is now within touching distance of a move above key overhead resistance at $1.5550. Looking across
other majors as well, Dollar/Canadian is having a real test of the uptrend support currently c.1.2000, whilst the Swissy has
also made a medium term break. The key question this week is whether these counter trend move against the dollar
continue and maybe break the major trend. A clutch of key US data could be the deciding factor, with Retail Sales and
Michigan Sentiment to drive sentiment. Recent data has not been especially dollar positive, with Non-farm Payrolls the
latest in a line of either uninspiring or just poor data points which continues to push back on expectations of a rate hike.
WATCH FOR: The Bank of England will be driving sterling this week with monetary policy on Monday and
more importantly its Quarterly Inflation Report on Wednesday. Dollar traders will be watching an array of
important data including Retail Sales, Industrial Production and Michigan Sentiment.
EUR/USD
Watch for: Support at $1.1065 is key for the
continuation of the rally to test $1.1450
Outlook: The move above $1.1050
completed a base pattern that implies
$1.1580, whilst a bull flag pattern targets
$1.1700. A slight correction has just taken
the wind out of the sails of the euro rally
near term, but the bulls remain in control
whilst the pair trades above last week’s
reaction low at $1.1065. Momentum
indicators remain bullish with MACD and
Stochastics both in positive configuration
and the RSI also strong. A test of the
resistance band $1.1450/$1.1530 is still on.
GBP/USD
Watch for: Pressure is growing on a test of
the key resistance at $1.5550
Outlook: Cable is now within very realistic
touching distance of the completion of a
large head and shoulders base. The pattern
would complete on a confirmed move above
the 2015 high at $1.5550. The result of the
UK General Election has been very strong for
Sterling and if this continues this week there
could be a significant upside break. The
momentum indicators are looking very
strong and also with further upside
potential. The key support has now been left
at $1.5088.
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FX Outlook
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3. Weekly Outlook
11th May 2015
by Richard Perry, Market Analyst
Indices
The result of the UK General Election has been a huge driving force for the FTSE 100 to end last week. The Conservative
victory gives investors the result they would have wanted. A pro-business party without the desire of the Labour Party for
wide sweeping punitive legislation across a range of sectors. Reaction was instant and it will be interesting to se if this
rebound can continue into new high ground as the 7122 all-time high will once more come into range again. The
European markets were also lifted by the result, but focus will now turn to Greece once more with a €745bn payment
due to the IMF. It will be very interesting to see this week if Friday’s rally on the DAX is once more seen as another
chance to sell. Wall Street was spooked a touch by comments from Janet Yellen last week that valuations were generally
looking quite high. This comes as investors are still looking to come to terms with economic data that has been rather
weak in recent weeks and forward looking corporate expectations that continue to be dogged by the strength of the
dollar. Add in a significant rise in he oil price and also bond yields spiking higher in the past two weeks and this is not a
recipe for stronger equities in the coming days.
WATCH FOR: Traders will still be conscious of the knock-on impact on equities from the pressure on the
bond markets, but also Greece is again key. US Retail Sales will be in focus as the consumer needs to pick
up The outlook for UK inflation and growth in the Bank of England inflation report could drive FTSE.
DAX Xetra
Watch for: The rally on the volatile DAX to
roll over and the top to pull the index lower
Outlook: The top pattern that completed
below 11,620 implies a correction to 10,850.
Despite the sharp rally of the past few days
this top pattern will still intact until a move
above 12,080. To look past the volatility, the
falling 21 day moving average has been
providing a great basis of support during the
bull run and is now a basis of resistance
around 11,780. If the rally begins to run out
of steam again this could once more be seen
as a good chance to take profits.
FTSE 100
Watch for: A test of the all-time high
resistance at 7122
Outlook: Technicals can go out the window
when a significant fundamental event occurs
and this is what the UK General Election has
been. A strongly bullish outcome for
investors has provided FTSE 100 some
rocket fuel at a time at which the run higher
was fizzling out. Momentum indicators
remain bullish as a result of the move and it
looks as though a test of the key April all
time high at 7122 will now be seen. The key
support has been left well back at 6810.
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INDEX Outlook
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4. Weekly Outlook
11th May 2015
by Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
It will be interesting to see whether the slight decline in oil (just as the US oil inventories start to decline, suggesting that
oil production is beginning to slow), continues this week. For now, the bulls are in control an this could just be another
correction within the recovery. The consolidation continues to develope in the precious metals in recent weeks which
has resulted in a breaking down of the negative correlation with the US dollar.
It has been an incredible last couple of weeks in the bond markets. Investors have finally seen through the propping up of
the Eurozone bond markets with an incredible rise in yields. The move has seen the German 10 year Bund yield move
from around zero to peak around 0.8% on Thursday, whilst the French 10 year has spiked from 0.4% to over 1%. The
yields on US 10 year Treasury yields have made a similar path too, which has put added concern through the equity
markets. However it is volatility more than anything that is the concern, as when markets spike it suggests stress. Friday
showed a slight reversal of this recent trend but this could be short lived.
WATCH FOR: With the bulk of the economic data out of the US this week then there could be plenty to
drive expectations of the Federal Reserve tightening which should impact on commodities and Treasuries
Gold
Watch for: The price remains rangebound
between $1170/$1224
Outlook: For several weeks now the gold
price (and silver for that matter) has
remained stuck in a range. Despite
intraday breaches of the old low at $1178
there has never been a close below to
suggest a bearish break. The band comes
in at $1170 towards the highs at $1224,
however technical indicators are neutral
and nothing is yet suggesting any break.
Treading towards the lows of the range
will encourage the bears but as yet we
must wait.
Brent Crude oil
Watch for: A recent correction must hold
on to support between $60/$63
Outlook: Near term corrective technical
signals have resulted in a bout of profit-
taking. Corrective signals on the Stochastics
and MACD have been seen which is putting
near term downside pressure on the price
and a test of the initial support at $63.90 is
underway. However, if the decline continues
this week, this profit-taking may turn into a
much deeper correction. The main bulk of
the support is between $60/$63 and the
bulls would not be happy to see a $50
handle on the price now.
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COMMODITIES & BONDS Outlook
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Weekly Outlook
11th May 2015
by Richard Perry, Market Analyst