BoE cut rates, ECB and BoJ maintain current rates. G7 impact to be determined.
11/04/08
last week’s currency trading review
The Dollar softened throughout the week as poor data releases combined with the impending G7 summit saw investors sell off the greenback. The Euro hit all-time highs against the dollar at 1.5912 as the February trade balance widened further than expected and consumer confidence dropped to its lowest level in almost 16 years. The G7 summit held over the weekend expressed concerns over recent currency volatility and voiced the concerns of a weak U.S dollar. This reaction of investors to these comments will be seen over the ensuing days. The Euro strengthened throughout the week against the major currencies, including hitting all-time highs against the dollar on the back of weak U.S data and ECB President Trichet maintaining his hawkish outlook for the Euro Zone which led to the ECB keeping rates on hold at 4.0%. The Euro closed last week at 1.5792 after opening at 1.5718. The Japanese Yen for the large part traded sideways on the back of the BoJ maintaining its rate at 0.5% as expected. However the downgrading of economic outlook saw the yen fall under pressure. By the end of the week, investors returned to risk aversion currencies which saw the yen finish at 101.35. The GBP lost ground through the week following a 25bps rate cut from the BoE to 5.0%. The GBPUSD opened at 1.9924, before closing at 1.9707. The AUD strengthened throughout the week tracking rising commodity prices and weaker U.S data. As expected, the Unemployment Rate rose to 4.1%, up 0.1% from last month, however 15k new jobs were created. The AUDUSD opened at 0.9120 and closed at 0.9316.
The forex trading week preview
In the States volatility is likely to continue throughout the week as the effects of G7 is expected to impact the dollar. Retail Sales is to be released on Monday. CPI data is to be released on Wednesday. Housing Starts are also due out on Wednesday. Profit statements from a number of large investment banks are to be released through the course of the week, including Bear Stearns on Wednesday, which are expected to have ramifications on the dollar. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone the focus will be on CPI data releases from the Euro Zone throughout the week. ECB President Trichet will be speaking in
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KEY WEEKLY PIVOT LEVELS
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.5510 | 1.5669 | 1.5820 | 1.5887 | 1.5914 |
| USD/JPY | 99.36 | 100.03 | 101.10 | 102.28 | 102.84 |
| GBP/USD | 1.9607 | 1.9651 | 1.9730 | 1.9894 | 1.9928 |
| AUD/USD | 0.9177 | 0.9206 | 0.9265 | 0.9348 | 0.9473 |
| XAU/USD | 900.50 | 903.40 | 926.00 | 939.75 | 954.98 |
·Euro – 1.5820
Initial support at 1.5669 (Apr 14 low) followed by 1.5510 (Apr 3 Low). Initial resistance is now located at 1.5887 (Apr 14 high) followed by 1.5914 (April 10 trend).
·Yen – 101.10
Initial support is located at 100.03 (Apr 10 low) followed by 99.36 (50% retracement of the 95.76 to 102.95 advance). Initial resistance is now at 102.28 (Apr 11 high) followed by 102.84 (Apr 10 high).
·Pound – 1.9730
Initial support at 1.9651 (Apr 9 low) followed by 1.9607 (76.4 retracement of 1.9363-2.0398). Initial resistance is now at 1.9894 (Apr 14 high) followed by 1.9928 (Apr 8 high).
·Australian Dollar – 0.9265
Initial support a 0.9206 (Apr 14 low) followed by 0.9177 (Apr 7 low). Initial resistance is now at 0.9348 (Apr 10 high) followed by 0.9473 (Mar 13 high).
·Gold – 926.00
Initial support at 903.40 (Apr 9 low) followed by 900.50 (Apr 4 low). Initial resistance is now at 939.75 (Apr 10 high) followed by 954.98 (Mar 26 high).
