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Alcoa start the Q2 earning season off and traders will want to see positive numbers. The stock has had a strong rally and its trend high is strong. The May 21 uptrend is currently being tested, with stochastics indicator heading lower. A closing break of the uptrend could be very interesting for the bears.
Overnight we saw a terrible IVEY PMI report (the index printed 46.9) in Canada, with the stop loss on my long potential trade idea triggered at 95.60. Having looked at long trades in last weeks ‘one to watch’ at 94.90, I move to the sidelines on this idea. I still like short AUD/CAD and look for downside in ‘one to watch’ this week.
The pair found good support at the 38.2% retracement of the rally from 172.37 and has since recovered some ground. At 6:30pm today we get UK industrial production with economists expecting a 3.2% increase no the year in May. The month-on-month read is expected to increase 0.3%, so a good number here should promote sterling upside. At 9:50am we get Japanese balance of payments, with economists expecting an increase in the current account surplus to ¥417 billion. I am sceptical that it this data point will have a significant bearing on sentiment.
The US index continues to hold 17,000, however today’s trading session heralds the official start to the US earning season, with Alcoa reporting after-market. On the data front we get NFIB small business optimism and JOLTS job openings – a data point we know the Fed look at. Traders will also be looking out for the May consumer credit print, which is expected to pull back to $20 billion from $26 billion in April. Much of the credit expansion this year has come from student loans and credit for autos, so it would be positive to see increased use of credit cards. In the latter stages of US trade we hear from Fed members Lacker (2015 voter, hawk) and Kocherlakota, so comments around interest rates will be in focus.