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The Week Ahead in the Global Financial Markets

Volatility spiked 16.6% with the energy sector outperforming the broad markets led by crude oil closing the week 8.8% higher followed by heating oil 7.1% and natural gas 5.2%. The correlation we have been noting between the US dollar and commodities tighten sharply last week as the weakness in the US dollar helped propel the commodity currencies higher led by the Canadian dollar closing the week 3.5% higher. Canada is known to be one of the largest producers of oil out of the G 10 group. Although the US has become a major oil producer the greenback is not considered a commodity currency, instead it is viewed more as a safe haven currency. Crude oil futures will be starting the week at the top edge of the range box that began at the beginning of the year while the Canadian dollar broke out of its range by mid week. The euro finished the week in the middle of the range. In the week ahead the euro should be on the spotlight as Greek fears may start to rise which Ihould be good news for euro bears and may also help the Dax rally higher. The Dax  is a blue chip stock market index consisting of the 30 major German companies trading on the Frankfurt Stock Exchange. The cyclical recovery in the Eurozone which is expected to be lengthened in the week’s flash PMI readings are largely offset by the ECB’s asset purchases and the drop in fixed income yields. Most German bunds now have negative interest rate yields.

In the week ahead I will continue to pay close attention to correlations between the major asset classes and rotation flows for an early indication to market direction. Will risk-off dominate the market sentiment? Will the US dollar retrace? Will the benchmarks breakout of the recent range or more consolidation? Join us this week in The Trading Room® TradeLAB and find out how we use correlations to uncover developing set ups with ideal trading opportunities.

Joe Rios 


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10:05 AM              CAD        BOC  Gov. Poloz speaks

12:30 PM              AUD        RBA         Gov. Stevens speaks

9:30 PM                 AUD        monetary policy meeting minutes



5:00 AM                                EUR         German ZEW economic sentiment

8:30 AM                                CAD        wholesale sales



4:30 AM                GBP         MPC official bank rate votes

10:30 AMCL          crude oil inventories

9:45 PMCNY         HSBC flash manufacturing PMI



3:00 AM                EUR        French flash manufacturing PMI

3:30 AM                EUR        German flash manufacturing PMI

4:30 AM                GBP        retail sales

8:30 AM                USD        unemployment claims

9:45 AM                USD        flash manufacturing PMI

10:30 AM NG        natural gas storage



4:00 AM                EUR        German Ifo business climate

8:30 AM                USD        core durable goods orders

10:30 AM              CAD        BOC  Gov. Poloz speaks