Ranging Not Changing-Dow 10300

Weaker than epxected consumer confidence on Tuesday helped trigger an intial sell off in the Dow to the 10200 region. However, Bernankes statement of keeping rates low "for an extended period" combined with outperformance of US GDP at 5.9% (vs forecast 5.7%), and the general market dynamic, helped the market bounce back.


Quotes (End of week)
Dow 10338
FTSE 5372
EUR/USD 13633
GBP/USD 15238
USD Index 80.36
Crude 7963
Gold 1118

I still feel the underlying conditions are weak. The catalyst for intiating a broader sell off will be a growth in the prevalence of news relating to Government debt issues. The plans surrounding the Greece issue, and also further bearish news relating to Dubai, and other countries in the P.I.G.'s nations are liekly to grab more attention as we pull away from the close of earnings season.

Coming Week:
Major news events in the coming week are Eurozone unemployment rate, CAD GDP, CAD rates decision, CHF GDP, GBP rates decision as well as the all important Non Farm Pay Rolls on Friday.

I think it is likely that Eurozone figures will be as expected or worse, CAD GDP likely to outperform at 4.2% (vs forecast 4%), and rates likely to remain unchanged across the board.
UK GDP calculated up at 0.3% (vs 0.1%), and although this is good news, its weak compared to other G7 nations, and I think its likely that BOE will not close out the possibility of further QE.

Non farm payrolls forecast at 9.7% and -40K losses, I think is likely to be as expected or worse, given that I cannot see any reason for there to be an increase in hiring.

The US dollar index having fallen back to 80.36, and Bernanke maintaing his position of keeping rates low "for an extended period", which I think is likely to be longer than current market forecast of June. However I am still bullish on the dollar (as stimulus induced news such as GDP continues to outperform, and with continuing risk aversion), and would be looking to add to my position on any sell off (in particular on Friday with Non Farms).

I think the DOW has a positive bias dynamic at the moment, and with some strong support at the 10,000 level I would be looking for it to remain within its range of 10400-10200(due to an absence of any major news releases to be on hte upside in my opinion),prior to Thursdays initial jobless claims.

Stratgies:
1)Buy USD Index at 8036, Target 8100, Stop 7990 (prior to Non Farm Payrolls)
However as a LONG Term strategy I would be looking to buy now at 80.36, and adding to my position if possible, in the 79 and 78 region.

2)Sell GBP/USD at 15350/15400

I think the possibility of further QE is likely, and with no real intermediate support for GBPUSD til the 1.38 region I would be looking to sell. However given the dynamic of the market I think a Monday bounce back to the 1.53/1.54 zone is possible, and would be looking to sell the rallies.

3) EUR/USD wait for unemployment rate on Monday
If EUROZONE unemployment rate is significantly worse than expected I would be looking to sell, targeting the 1.34 region. However, what would be the easier play in my opinion, would be if surprsingly it outperformed, and we could see a big shoot up to 1.37/1.38 followed by a quick sell off.
However what would be a more interesting trade would be utilising the correlation of EUR/USD with Oil, and Gold, and given that I think some of the UK miners, particularly Xstrata are due for a bounce on Monday open, I would be looking to go for a combined strategy. However will have to wait for the dynamic of the market on Monday open.