Strong Chinese Data Prompts Relief Rally
Last week’s currency trading review
The Dollar was on the backfoot for most of the week as stock markets staged an impressive rebound. Heavily overbought, the USD was ripe for profit taking and the market did so in a broad based fashion. April’s Trade Balance was -40.3bn vs. -40.8bn forecast and US Retail Sales Slumped -1.2% vs. 0.2% forecast for the first negative reading in 8 months. On a Positive note, UoM Consumer Confidence soared to a 2 year high at 75.5 in June. The Euro was bought up quite aggressively on comments from the head of the Chinese pension Fund that the Euro will survive the crisis and that the he was more concerned about their US debt holdings. Also helping sentiment towards the single currency was the improvement in the ECB’s GDP outlook and positive comments from President Trichet after the ECB Rate Meeting where they at 1.0%.The EUR/USD gained +1.19% closing at 1.2119, after opening the week at 1.1967.
The Japanese Yen lost ground against most currencies but stayed in a range against the USD as the two safe haven currencies competed for the weakest performance of the week. AUD/JPY soared in the ‘risk on’ environment up over 3Yen and EUR/JPY also did very well reclaiming the Y110 level after testing support at 108 in recent weeks. Q1 GDP was confirmed at 1.2% Q/Q.The USD/JPY fell -0.29% closing at 91.63, after opening at 91.90 previously. The GBP made small gains but underperformed as heavy EUR/GBP buying on Friday hurt the Pound going into the weekend. The market is paying close attention to the new government’s fiscal outlook and the coming budget will by closely scrutinized.The GBP/USD gained +0.66% closing at 1.4548 after opening at 1.4452. The AUD was the best performing currency in the market as the fundamentals of the commodity based economy continued to outshine the rest of the market and it was only risk aversion keeping the Aussie at lower levels. With the rebound in stocks the market covered shorts quickly testing 0.8500 into the weekend. May Employment change was very strong at 26k vs. 20k forecast and the Unemployment rate dropped to 5.2% vs. 5.4% previously. The AUD/USD gained +3.18% closing at 0.8501 after opening at 0.8231.
The forex trading week preview
In the States On Tuesday, Net Long Term TIC Flows previously at 140.5bn. On Wednesday, May Housing Starts are forecast at 650k vs. 672k previously. Also released, May Industrial Production forecast at 0.9% vs. 0.8% previously. Also Fed Chief Bernanke speaks. On Thursday, Weekly Jobless Claims are forecast at 453k vs. 456k previously. Also released, June Philly Fed forecast at 21 vs. 21.4 previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, German ZEW Survey forecast at 42 vs. 45.8 previously. On Wednesday, May CPI is forecast at 0.8% y/y. On Thursday, ECB Monthly Report Released. In the UK On Tuesday, May CPI is forecast at 3.5% vs. 3.7% previously y/y. On Thursday, May Core Retail Sales forecast at 0.4% vs. 0.1% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Tuesday, BoJ Target Rate is forecast unchanged at 0.1%. On Friday, BoJ Monetary Policy Minutes. In Australia On Tuesday, June RBA Minutes Released. 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 |
1.1881 |
1.2103 |
1.2220 |
1.2327 |
1.2453 |
|
USD/JPY |
90.54 |
91.24 |
91.60 |
92.97 |
93.64 |
|
GBP/USD |
1.4347 |
1.4505 |
1.4740 |
1.4809 |
1.4918 |
|
AUD/USD |
0.8263 |
0.8427 |
0.8590 |
0.8728 |
0.8865 |
|
XAU/USD |
1197.00 |
1211 |
1223 |
1252 |
1261.00 |
|
OIL/USD |
70.00 |
72.50 |
74.80 |
75.00 |
76.00 |
Euro – 1.2220
Initial support at 1.2103 (June 14 low) followed by 1.1881 (June 7 low). Initial resistance is now located at 1.2327 (June 3 high) followed by 1.2453 (May 28 high)
Yen – 91.60
Initial support is located at 91.24 (June 11 low) followed by 90.54 (June 1 low). Initial resistance is now at 92.97 (May 18 high) followed by 93.64 (May 13 high).
Pound – 1.4740
Initial support at 1.4505 (Jun 11 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4809 (June 14 high) followed by 1.4918 (May 12 high).
Australian Dollar – 0.8590
Initial support at 0.8427 (June 11 low) followed by the 0.8263 (June 10 low). Initial resistance is now at 0. 8728 (0.505 retrace of 0.9388 – 0.8068) followed by 0.8865 (May 17 high).
Gold – 1223
Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).
Oil – 74.80
Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).
