Good Morning Traders.....
The market today is poised to take a little breather and digest some of the news that we got towards the back end of last week. On Friday we saw the US, the worlds largest economy really starting to to gain momentum on the back of the extremely positive NFP (Non Foreign Payrolls) of 236,000 beating the analysts expectations of 165,000. However it was interesting to see the market reaction to the good news, as some experts were expecting to see a potential 'End Of QE' sell off, however we did see a slight move to the downside in most US equity markets but the reaction was relatively quiet. We did note last week however, that we are coming to levels where we would expect to see some profit taking, we have come a long way in a relatively short period of time, and everyone seems to be talking about the market correction. As it currently stands all the dips are being seen as a buying opportunity, but I have a feeling that we are beginning to see retail investors enter the frame, and as we all know as soon as this happens, a change in direction is never far away.
In terms of this week we started off the morning with data out of Germany, exports rose 1.4% in January for the second monthly. Overnight China's industrial output had the worst start of the year since 2009, this has not been the first time we have seen Chinese data lag behind the rest of the worlds economies and this remains as a slight cause of worry for investors due to the importance of the Chinese economy. We have seen some commentary out of the BOJ nominee Haruhiko Kuroda overnight showing his continued commitment to buying derivatives if he's confirmed.
In terms trading ideas for the week ahead, I would keep a close eye on the FX market and avoid the equity market. We are yet to see a true market reaction to Fridays news and I would be cautious entering any new long positions as I feel we are near a top. I would keep an eye on GBPUSD as we have seen the breach of the significant 1.50 level and we are now trading below the yearly lows, so I think this pair has some significant downside and I would be selling any rallies below the 1.50 handle. In terms of the EURUSD it doesn't look as though we can get below the 1.29800 and the pair looks to be strongly supported around these levels. In terms of the JPY crosses I think there is significant upside on the cards, although there has been some big swings over the past few days I would have no problem buying and dips and holding them on the back of continued JPY weakness and improving US and European economies.

Any questions follow us @lowkeycapital