Weekly Summary – 13th September 2010

Stocks Continue March higher, Aussie Soars

Last week’s currency trading review

The Dollar had a very mixed week with stock market gains helping risk sensitive currencies to rally against the safe haven USD. Most of the majors however ended lower against the greenback with Euro banking concerns and UK recession fears trumping the stock market lead. Weekly Jobless Claims showed an impressive improvement at 451k vs. 470k. The Euro fell throughout the week on concerns that the European Bank stress tests understated government debt held by the banks and that Irish and German banks may need more government assistance. EUR/JPY hit fresh month lows under Y106 before rallying into the weekend. The EUR/USD gained -1.70% closing at 1.2679, after opening the week at 1.2895.

The Japanese Yen spent the first half of the week strengthening with USD/JPY falling to fresh 15 year lows under Y83.50 before good US data allowed a timid rally into the weekend. Japanese Officials have been giving mixed messages about the recent Yen strength with BOJ Shirakawa stating there are both good and bad effects of a strong Yen. The USD/JPY fell -0.14% closing at 84.16 vs. 85.28 previously. The GBP with sentiment already fragile a mixed week of rallies being sold saw the Pound finish slightly lower although more stable than previously. The BOE held at 0.5% and kept the Asset Purchase Program at 200bn. GBP/JPY is finding resistance at Y130. The GBP/USD fell -062% closing at 1.5355 after opening at 1.5450. The AUD was well supported all week as economic data and risk appetite improvement. The RBA held at 4.5% as expected but employment increased by 30k in September with the Unemployment Rate dropping to 5.1%. China’s strong economic data over the weekend is poised to also help the Aussie lift through this week. The AUD/USD gained +1.07% closing at 0.9263 after opening at 0.9164.

The Forex Trading Week Preview

In the States On Tuesday, August Retail Sales are forecast at 0.3% vs. 0.4% previously. Also, BOC Carney Speaks. ON Wednesday, August Industrial Production is forecast at 0.2% vs. 0.1% previously. On Thursday, Weekly Jobless Claims are forecast at 460k vs. 451k previously. On Friday, August CPI is forecast at 0.1%m/m and Sept UoM Consumer Confidence is seen at 70 vs. 68.9 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone July EU Industrial forecast at 0.2% vs. -0.1%. On Tuesday, German Sept ZEW Survey is forecast at 50 vs. 44.3 previously. On Wednesday, Aug CPI is forecast at 0.9% vs. 1.0% previously. On Thursday, July Trade Balance forecast at -0.7bn vs. -1.6bn previously. In the UK, On Tuesday, August CPI forecast at 0.3% m/m vs. -0.2% m/m. previously. On Wednesday, Jobless Claims in Aug forecast at -5k vs. -3.8k previously. July Unemployment Rate forecast unchanged at 7.8%. Also on Thursday, BOE’s King Speaks.We will provide our previews and reviews of these data releases in the daily summary.

In Japan On Tuesday, July Industrial Production is released, previously at 0.3%. On Thursday, BO Shirakawa speaks. In Australia On Tuesday, July New Zealand Retail Sales forecast at 0.0% vs. 0.9% previously m/m. On Thursday, New Zealand Rate announcement forecast to hold at 3.0%. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.2775

Initial support at 1.2588 (Aug 24 low) followed by 1.2434 (61.8% retrace of 1.1877-1.3334). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3000 (Big figure Resistance)

Yen – 84.25

Initial support is located at 83.35 (Sept 8 low) followed by 81.85 (May 1995 low). Initial resistance is now at 85.23 (Sept 3 high) followed by 86.36 (Aug 13 high).

Pound – 1.5390

Initial support at 1.5297 (Sept 7 low) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5500 (Big Figure) followed by 1.5713 (Aug 12 high).

Australian Dollar – 0.9310

Initial support at 0.9055 (Sept 2 low) followed by the 0.8771 (Aug 25 low). Initial resistance is now at 0.9389 (Apr 12 high) followed by 0.9500 (Round Number).

Gold – 1243

Initial support at 1232 (Aug 31 low) followed by 1210 (Aug 24 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (round number).

Oil – 77.30

Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 78.00 (Intraday Resistance) followed by 80.00 (Intraday Resistance).