Week Ahead Will there be more Middle East drama

After a turbulent start to 2020 with a sharp escalation in US-Iran tensions, things calmed down from the middle of the week. Oil prices, which had spiked sharply higher, fell even more sharply as investors remembered increasing non-OPEC oil output - and not to forget the willingness from other OPEC members to step up - would more than offset any potential supply disruptions in Iran or Iraq. Gold, silver and yen also gave back some of their gains as demand for safe haven assets fell, which helped to fuel the ongoing rally on Wall Street where the major indices hit fresh record highs.

Going into the weekend, some market participants will be wondering whether more Middle East drama will unfold over the next couple of days, and if so, what might that mean for their open positions. Thus, it is reasonable to expect some profit-taking of risky positions such as stocks later on today - and possibly the opening of few opportunistic long positions in crude oil and gold, in case you-know-what hits the fan again.

If tensions escalate again over the weekend, then expect the markets to again open with big gaps - especially for crude oil and gold. Otherwise, the start of next week could be a continuation of this: risk ON. If that’s the case then expect things like copper and the FTSE 100 to rally, for the reasons we have discussed HERE.

Meanwhile, next week’s data highlights include U.S. CPI and a handful of U.K. macro numbers. Overall, there won’t be too many market-moving macro numbers to look forward to. So, the focus will continue to remain on Middle East tensions, ongoing US-China trade situation and Brexit. Still, some of next week’s data releases should move currencies. So, here are the data highlights for next week:

Monday

A handful of UK economic data including monthly GDP – expected flat; manufacturing production, expected to print -0.3% m/m; construction output, +0.6% expected following a 2.3% drop the month before, and the NIESR’s GDP estimate, among a few other things.

Tuesday

China’s latest trade figures
US CPI – headline expected at 0.2% vs. +0.3% last time, while core is seen at +0.2%, similar to the previous month.

Wednesday

UK CPI – both headline and core expected unchanged at 1.5% and 1.7% y/y respectively
Eurozone industrial production seen at +0.3% expected vs. -0.2% last
Crude oil inventories

Thursday

ECB’s Monetary Policy Meeting Account
US retail sales – headline expected at +0.3% vs. +0.2% last and core seen at +0.5% vs. +0.1% last. In addition to retail sales, there will be a number of other second-tier US macro pointers that will be published on Thursday.

Friday

China’s GDP – expected unchanged at 6.0% q/y; Industrial output is also expected to have remained flat at 6.2%, while retail sales are seen easing to 7.9% y/y growth from 8.0% in the month before.
UK retail sales – expected to print +0.8% m/m vs. -0.6% the month before.
More second-tier US data, including Building Permits, Housing Permits, Industrial Production and Prelim UoM Consumer Sentiment.

Chart to watch: gold

Source: Trading View and FOREX.com.

Our featured chart to watch for the week ahead is that of gold. The yellow metal broke last year’s high and key resistance at $1555/57, and investors will be looking to see what happens next. If the precious metal holds above this area then more gains should be expected, especially in light of Friday’s disappointing US jobs report and ongoing central bank support with interest rates and yields being depressed. However, a clean break back below this level would be bearish in the near-term outlook.

StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Europe Limited, and FOREX.com/ie is a domain operated by StoneX Europe Ltd, a member of StoneX Group Inc. StoneX Europe Ltd, is a Cyprus Investment Firm (CIF) company registered to the Department of Registrar of Companies and Official Receiver with a Registration Number HE409708, and authorized and regulated by the Cyprus Securities & Exchange Commission (CySEC) under license number 400/21. StoneX Europe is a Member of the Investor Compensation Fund (ICF) and has its registered address at Nikokreontos 2, 5th Floor, 1066 Nicosia, Cyprus.

StoneX Europe Limited is registered with the German Federal Financial Supervisory Authority (BaFin). BaFin registration ID: 10160255

FOREX.com is a trademark of StoneX Europe Ltd, a member of StoneX Group Inc.

The statistical data and the awards received refer to the Global FOREX.com brand.

This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy.

Through passporting, StoneX Europe is allowed to provide its services and products on a cross-border basis to the following European Economic Area ("EEA") states: Austria, Bulgaria, Croatia, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden.

Additionally, StoneX Europe Ltd is allowed to provide Investment and Ancillary Services to the following non-EU jurisdiction: Switzerland.

StoneX Europe Ltd products, services and information are not intended for residents other than the ones stated above.

Tied Agent Information: KQ Markets Europe Ltd with Company No. HE427857.
Address: Athalassas 62, Mezzanine, Strovolos, Nicosia Cyprus.
Services Provided: Reception and Transmission of Orders.
Commencement Date: 06/12/2022
Website: KQ Markets - CFD Trading | KQ Markets

We may pay inducements, such as commissions or fees, to affiliates or third-party introducers for referring clients to us. This is in line with regulatory guidelines and fully disclosed where applicable.

StoneX Europe Ltd may make third party material available on this website which may contain information included but not limited to the conditions of financial markets. The material is for information purposes only and does not contain, and should not be construed as containing, investment advice and/or investment recommendation and/or an investment research and/or an offer of or solicitation for any transactions in financial instruments; any decision to enter into a specific transaction shall be made by the client following an assessment by him/her of their situation. StoneX Europe Ltd makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplied. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. We are not under any obligation to update any such material. Any opinion made may be personal to the author and may not reflect the opinion of StoneX Europe Ltd.