Strong Euro data and surging oil hurt USD and stocks. Preliminary US GDP out on Thursday.
26/05/08
last week’s currency trading review
The Dollar weakened considerably as the economic outlook soured with many companies issuing earnings downgrades and oil hitting $135 per barrel. The Feds minutes released on Wednesday although the most hawkish in almost a year contained downgrades of 2008 US GDP from 1.5% to 1.0%. Leading economic indicators were slightly stronger than expected coming in at 0.1% vs. 0.0%. Core Producer Price Index came in at 0.4% vs. 0.2% expected and Existing home sales beat expectations at 4.89 million vs. 4.85 expected. The Euro Euro closed last week +1.18% at 1.5761 having opened at 1.5575. made strong gains on the back of positive economic data. The German Zew economic sentiment came weaker at -41.4 vs. -37.5 but this was overshadowed by comments from the president of the Zew committee that the ECB will have to hike rates to constrain inflation. Wednesday’s German IFO business climate index came in stronger at 103.5 vs. 102.1 expected allowing the Euro to retest the 1.5800 level. The Euro eased slightly on Friday as Service’s PMI came in surprisingly weak at 50.6 vs. 51.7 expected. The Japanese Yen gained as risk aversion crept in on falling equities with the Dow Jones falling over 500 points last week. The USD/JPY closed at 103.24, after opening the week at 104.05. The GBP received a boost this week on dollar weakness and stronger UK retail sales for April coming in at -0.2% vs. -0.5 forecasted. Revised Q1 GDP was unchanged at 0.4%. The GBP/USD gained 1.14% opening the week at 1.9570 before closing at 1.9796. The AUD continued to be supported on strong gold prices and hawkish RBA minutes from the May 6 meeting. Board members were concerned about the high inflation and discussed the case for further rate rises. The Aussie Dollar ended the week at 0.9594 after opening at 0.9544.
The forex trading week preview
In the States -0.4%) on Wednesday, Preliminary GDP (expected 0.9% q/q) on Thursday and Personal spending (expected 0.2%) and Chicago PMI (expected 48.5) out of Friday. holiday Monday, but heavy data week including the New home sales (expected 522K) and consumer confidence (expected 60.0) on Tuesday, Durable Goods Orders (expected We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone slow start to the week until crucial German and Euro CPI comes out on Thursday. Also out this week M3 money supply and consumer confidence along with Euro zone Unemployment rate. In the UK bank holiday Monday. light data week with only Nationwide house prices, CBI distributive trades realized and consumer confidence out late in the week. We will provide our previews and reviews of these data releases in the daily summary.
In Japan Fridays CPI numbers will be in focus as inflation comes to the forefront of policymakers minds. Retail sales and Industrial production also out this later this week. We will provide our previews and reviews of these data releases in the daily summary.
In Australia Light data week for Australia with focus on industry as Construction work done q/q comes out on Wednesday and Private New Capitial Expenditure q/q comes out on Thursday. We will provide our previews and reviews of these data releases in the daily summary.
Key Pivot levels
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.5504 |
1.5612 |
1.5785 |
1.5814 |
1.5846 |
|
USD/JPY |
101.91 |
102.58 |
103.20 |
1.04.48 |
105.44 |
|
GBP/USD |
1.9614 |
1.9684 |
1.9810 |
1.9870 |
1.9881 |
|
AUD/USD |
0.9511 |
0.9546 |
0.9595 |
0.9655 |
0.9723 |
|
XAU/USD |
901.00 |
915.25 |
926.00 |
935.40 |
953.00 |
· Euro – 1.5785
Initial support at 1.5612 (38.2% retracement 1.5284-1.5814) followed by 1.5504 (May 20 low). Initial resistance is now located at 1.5814 (May 22 high) followed by 1.5846 (76.4% retracement 1.5284-1.5814)
· Yen – 103.20
Initial support is located at 102.58 (May 12 low) followed by 101.91 (38.2% retracement of 95.76-105.71). Initial resistance is now at 104.38 (May 22 high) followed by key 104.48 (May 20 high).
· Pound – 1.9810
Initial support at 1.9684 (May 22 low) followed by 1.9614 (May 21 low). Initial resistance is now at 1.987 (76.4% retracement of 2.00027-1.9363) followed by 1.9881 (50% retracement 2.0398-1.9393).
· Australian Dollar – 0.9595
Initial support a 0.9545 (May 22 low) followed by 0.9511 (May 19 low). Initial resistance is now at 0.9655 (May 21 trend high) followed by 0.9723 (open this week + range last week*0.618).
· Gold – 926
Initial support at 916.7 (May 23 low) followed by 901 (May 19 low). Initial resistance is now at 935.4 (May 22 high) followed by 953.0 (Apr 17 high).
