Yen strengthens as Outlook Darkens
Last week’s currency trading review
The Dollar was stronger against most currencies with the exception of the Yen with USD/JPY making a major move to the downside. The DOW fell 2.6% and Oil slid to the $60 level. ISM Non Manufacturing jumped to 47 vs. 44 previously and added to speculation that the confidence was improving. The G8 meeting took place but little new was announced. The demise of ‘green shoots’ rally was a major theme. July US Consumer Confidence also took a dip to 64.6 vs. 70.9 previously. The Euro fell but kept to a very pronounced range from 1.3850 to 1.4150. Reports that central banks were buying below and selling above help keep the range intact. German Industrial Production for May rose 3.7% vs. 0.6% previously. EUR/GBP rose on Pound concerns but gave a lot of the gains on reports that eastern European Countries would need increased IMF Funding. The EUR/USD fell 0.53% closing at 1.3939, after opening the week at 1.3990.
The Japanese Yen was the major mover as USD/JPY broke through major support at 93.50 and fell quickly to 91.80. EUR/JPY crashed to multi month lows under 130 and all crosses fell sharply. Intervention talk has begun with concern about the extreme moves but analysts don’t expect action until 90 Yen level on the USD/JPY. The USD/JPY closed down 3.76% at 92.54 after opening the week at 96.02. The GBP fell heavily on speculation that the Bank of England would expand their Quantitative Easing program at the meeting. The failure to do so allow the pair to recover from sub 1.6000 but the footing is fragile as heavy GBP/JPY selling capped rallies.GBP/USD fell -0.73% closing at 1.6209 after opening at 1.6328. The AUD was the worst hit currency with the recent rally favoring the commodity currency perfectly and many analysts called the move overdone. AUD/JPY fell over 6% during the week and Japanese investors are feeling the pressure and may be forced to capitulate if the move continues. The RBA met and held at 3.0% and the Unemployment rate ticked higher to 5.8% vs. 5.7% originally. The AUD/USD closed down -2.34% at 0.7785 after opening at 0.7967.
The forex trading week preview
In the States On Monday, Monthly budget is forecast at -86Bn vs. +33 Bn previously. Tuesday we see advanced Retail Sales forecast at 0.4% in June. Also released June PPI forecast at 0.8% vs.0.2% m/m. On Wednesday we have June CPI forecast at -1.6% y/y vs. -1.3% previously. Industrial Production is forecast at -0.6% in June m/m. On Thursday, Weekly Jobless claims are forecast to fall -555k vs. -565k previously. Also released Philly Fed forecast at -5 vs. -2.2 previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone ECB Trichet Speaks at IFO seminar on Monday. On Tuesday, May Industrial Production is forecast at 1.3% vs. -1.9% previously. Also released, July German Zew Survey is forecast at -88 vs. -89.7% previously. On Wednesday, June CPI is forecast at -0.1% vs. 0.0% previously. In the UK On Tuesday, June CPI is forecast at 1.8% vs. 2.2% previously. On Wednesday, Claimant Count Change forecast at 42K vs. 39.3K previously. May ILO Unemployment Rate is forecast at 7.4% vs. 7.2% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Wednesday, BOJ Meeting forecast at 0.1% vs. 0.1%. The Monetary Policy Statement is also released and could provide insight into the economy. On Thursday, Tertiary Industry Activity 0.3% vs. 2.2%. We will provide our previews and reviews of these data releases in the daily summary.
In Australia On Friday, Import Prices q/q forecast at -6.0% vs. -2.8% previously. We will provide our previews and reviews of these data releases in the daily summary.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.3749 |
1.3827 |
1.3955 |
1.4071 |
1.4201 |
|
USD/JPY |
90.52 |
91.81 |
92.45 |
94.89 |
95.46 |
|
GBP/USD |
1.5803 |
1.5979 |
1.6190 |
1.6546 |
1.6745 |
|
AUD/USD |
0.7630 |
0.7724 |
0.7800 |
0.8038 |
0.8155 |
|
XAU/USD |
880.00 |
895.00 |
912.00 |
934.00 |
948.00 |
Euro – 1.3955
Initial support at 1.3827 (Jun 22 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4071 (July 1 high) followed by 1.4201 (Jun 1 high)
Yen – 92.45
Initial support is located at 91.81 (Jul 8 low) followed by 90.52 (76.4 retrace 87.13-101.44). Initial resistance is now at 94.89 (Jul 8 high) followed by 95.46 (Jul 7 high).
Pound – 1.6190
Initial support at 1.5979 (23.6% retrace of 1.3503-1.6743) followed by 1.5803 (Jun 8 low). Initial resistance is now at 1.6546 (Jul 1 high) followed by 1.6745 (Jun 30 high).
Australian Dollar – 0.7800
Initial support at 0.7724 (Jul 8 low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.8038 (Jul 7 high) followed by 0.8155 (Jun 30 high).
Gold – 912
Initial support at 895 (May 6 low) followed by 880 (May 1 low). Initial resistance is now at 934 (Jul 3 high) followed by 948 (Jun 26 high).
