Market Rebounds off Year Lows
Last week’s currency trading review
The Dollar hit inter-week highs on Tuesday but finished well off these levels as stocks markets staged a major relief rally on Thursday. Economic data out of the US was mixed with April Existing Home Sales jumping to 5.7mn vs. 5.36mn previously but Q1 GDP was revised lower to 3.0% vs. 3.5% forecast. Data however is being overlook with the Eurozone debt crisis squarely in focus. Another downside risk developing is the flare up in North Korean Tensions. The Euro traded near year lows at 1.2160 at the height of the market’s fear before EUR/JPY short covering and improved stock market sentiment helped lift the struggling currency. A major story on Wednesday was that China was reviewing its investment’s in the Eurozone and after this was rebuked by Chinese officials the market staged a remarkable rally on Thursday. The EUR/USD fell -2.39% closing at 1.2272, after opening the week at 1.2565.
The Japanese Yen took advantage of the improving risk sentiment to rally aggressively especially on the crosses. GBP/JPY reclaimed the Y130 level and AUD/JPY rallied over 4%. USD/JPY tested the lower Y89 levels a few times but met fierce support.The USD/JPY gained +1.15% closing at 91.05, after opening at 90.00 previously. The GBP was flat on the week as the new governments aggressive fiscal policy was well received from financial markets and EUR/GBP selling and GBP/JPY buying supported. Q1 GDP was revised higher to 0.3% Q/Q vs. 0.2% initially. TheGBP/USD fell -0.01% closing at 1.4455 after opening at 1.4457. The AUD after falling 6% the week the before the market stabilized and rebounded tracking the move higher in stocks and commodities. On Thursday, US stocks staged the second biggest rally this year and the AUD/USD responded by rallying over 5% on the day. Q1 Capex fell -0.2% vs. +2.4% forecast. The AUD/USD gained 1.75% closing at 0.8472 after opening at 0.8324.
The forex trading week preview
In the States On Tuesday, May ISM Manufacturing forecast at 59 vs. 60.4 previously. On Wednesday, ADP Employment change forecast at 58k vs. 32k previously. On Thursday, Weekly Jobless Claims are forecast at 455k vs. 460k previously. May ISM Non Manufacturing is forecast at 55.7 vs. 55.4 previously. On Friday, May Non Farm Payrolls are forecast at 503k vs. 290k previously. May Unemployment Rate is forecast to remain at 9.8%. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, April Unemployment rate is forecast at 10.0% unchanged. Also Released Swiss GDP forecast at 0.7% Q/Q. On Wednesday, April PPI is forecast at 0.7% vs. 0.6% previously. On Thursday, April EU Retail Sales are forecast at 0.2% vs. 0.1% previously. On Friday, SNB Hildebrand Speaks and Q1 Seasonal Adjusted GDP is forecast at 0.2% Q/Q unchanged from the initial reading. In the UK On Tuesday, Q1 GDP is forecast at 0.3% vs. 0.2% initial. On Thursday, May GFK Consumer Confidence is forecast at -18 vs. -16 previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan no data of note this week. In Australia On Tuesday, April Retail Sales are forecast at 0.5% vs. 0.3% previously. Also on Tuesday, RBA Rate Decision is forecast to remain at 4.5%. On Wednesday, Q1 GDP is 0.6% vs. 0.9% Q/Q. On Thursday, April Trade Balance is forecast at -800mn vs. -2.08mn previously. We will provide our previews and reviews of these data releases in the daily summary.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2135 |
1.2144 |
1.2310 |
1.2587 |
1.2747 |
|
USD/JPY |
89.81 |
90.61 |
91.40 |
91.88 |
92.97 |
|
GBP/USD |
1.4231 |
1.4366 |
1.4470 |
1.4703 |
1.4918 |
|
AUD/USD |
0.8067 |
0.8202 |
0.8490 |
0.8579 |
0.8725 |
|
XAU/USD |
1166.00 |
1185 |
1213 |
1229 |
1250.00 |
|
OIL/USD |
70.00 |
72.50 |
74.30 |
75.00 |
76.00 |
Euro – 1.2310
Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2587 (May 24 high) followed by 1.2747 (May 12 high)
Yen – 91.40
Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).
Pound – 1.4470
Initial support at 1.4231 (Mary 20 low) followed by 1.4111 (March 18 2009 low). Initial resistance is now at 1.4703 (May 14 High) followed by 1.4918 (May 13 low).
Australian Dollar – 0.8490
Initial support at 0.8529 (May 20 high) followed by the 0.7828 ( 2009 low). Initial resistance is now at 0. 8499 (May 18 low) followed by 0.8725 (May 19 high).
Gold – 1213
Initial support at 1166 (May 21 low) followed by 1146 (April 27 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).
Oil – 74.30
Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (March high) followed by 76.00 (Intraday Resistance).
