In a relatively quiet week of high impact economic news announcements, there are some big picture narratives to keep an eye on.
Brexit talks resume this week and traders will be looking for much more progress than in last month's talks which were seen as 'crucial' but ended up with nothing. EU officials have already complained that trade talks have been going around in circles while UK negotiators say there are still significant differences on many different issues.
European traders may well be more concerned with Friday's French and German Services and Manufacturing PMI figures, which are released in the morning. While the Brexit counter is ticking it's not at 'crunch' time just yet, which means the Euro could be more impacted by what's happening domestically and - in particular - whether or not the EU's leading nations are showing signs of growth after the coronavirus pandemic period.
Oil markets will also be in focus this week as OPEC and other oil-rich nations meet on Wednesday to discuss the state of the oil market and production levels. Oil prices have stagnated in recent weeks after a record amount of volatility from February to July which involved the impact of the coronavirus pandemic and an oil price war between Russia and Saudi Arabia.
Global stock market indices showed some signs of hope early on last week before giving back their gains before the week closed out. While the Nasdaq 100 has been trading at all-time highs for quite some time, the only other index to come close to its all-time high price level is the S&P 500 which just missed it by a few points last week. All eyes may be on whether Congress can reach a deal for the next round of economic stimulus measures.
Did you know that with the MetaTrader 5 trading platform provided by Admiral Markets you can trade on more than 3,000+ financial instruments covering a wide range of asset classes? You can also trade directly from the charts and access a wide range of advanced trading tools. Download the platform for FREE by clicking the banner below:
Source: Forex Calendar from the MetaTrader 5 trading platform provided by Admiral Markets UK Ltd.
Key economic reports and markets to watch
UK Retail Sales and PMI numbers
It's really setting up to be a big week for UK markets with key economic data points throughout the week as well as another round of Brexit talks starting. Here is a list of the key economic data points:
- Wednesday 19 August 7 am BST - Consumer Price Inflation
- Friday 20 August 7 am BST - Retail Sales
- Friday 20 August 9.30 am BST - Manufacturing and Services PMI
While the Bank of England may not yet be worried about Wednesday's inflation figures, any big drops from the forecasted 1.3% could be a cause for concern. If consumers are shunning the high street and forcing businesses to lower prices it could spell trouble for an economy that survives on the health of its buyers.
It's another reason why Friday's retail sales figures are so important. Investors - and the UK government - will want to see consumers are back on the high street now that lockdown restrictions have been eased. It is even more important as the UK government initiated a series of measures to help boost trade for the hospitality industry. When will they start to see a return on their money?
Of course, Brexit talks pose another risk factor for the week. Investors will want to see some progress being made but may already be resounded to the fact nothing major will happen until the last minute. The clues will be in how the price moves over the course of this week.
Source: Admiral Markets MetaTrader 5, GBPUSD, Monthly - Data range: from Nov 1, 2012, to Aug 17, 2020. Please note: Past performance is not a reliable indicator of future results.
The British pound against the US dollar currency pair is currently trading around an interesting area of technical resistance - the top of a descending triangle formation. After some impressive upside since the March lows, the next few months will be crucial on whether price can break through this level and attract more buyers, or whether price rejects the level and attracts more sellers.
The volatility of this week's news announcements could provide some interesting insight into the state of buyers and sellers.
Corporate trading updates and stock indices
In last week's trading, global stock market indices showed signs of a potential rally early on before traders bailed on positions before the week closed out. Currently, only the Nasdaq 100 has been trading at all-time highs as investors have piled into all different types of technology stocks.
The next stock market index which is close to its all-time high price level is the S&P 500 which just missed it by a few points last week. Traders may well be looking for the market to reach its all-time high price level before questioning whether to continue to buy or start taking profits off the table from the rally off March lows.
Traders will be keeping an eye on Congress and whether the Democrats and Republicans can come to an agreement on what the next round of economic stimulus measures should look like. The earnings calendar is quite light this week but there are still a few releases traders may be keeping an eye on. These include:
- Tuesday 18 August: Wal-Mart, Home Depot, BHP Billiton (UK)
- Wednesday 19 August: Target, Lowe's, Agilent Technologies
- Thursday 20 August: Estee Lauder, Antofagasta (UK)
- Friday 21 August: Deere & Co
The daily chart of the S&P 500 stock market index below shows just how close price is to its all-time high of around 3396.00 made just before the coronavirus pandemic towards the end of February.
Source: Admiral Markets MetaTrader 5, SP500, Daily - Data range: from Nov 21, 2019 to Aug 17, 2020. Please note: Past performance is not a reliable indicator of future results. Last five-year performance: 2019 = +29.09%, 2018 = -5.96%, 2017 = +19.08%, 2016 = +8.08%, 2015 = -0.82%, 2014 = +12.32%.
Did you know that you can download the Trading Central Technical Ideas indicator completely FREE by upgrading your MetaTrader 5 trading platform provided by Admiral Markets UK Ltd to the exclusive Admiral Markets Supreme Edition?
This indicator provides you with actionable trading ideas and technical analysis on thousands of different instruments. To get it free, just click on the banner below and download it today:
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:
1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2.Any investment decision is made by each client alone whereas Admiral Markets UK Ltd (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3.With a view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.
4.The Analysis is prepared by an independent analyst Jitan Solanki, Freelance Contributor (hereinafter "Author") based on personal estimations.
5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.
6.Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.