21/07/08
last week’s currency trading review
The Dollar had an extremely volatile week as multiple trading themes took hold. Doubts about the government’s ability to backstop GSE’s such as Freddie Mac and Fannie May saw shares touch year lows and the Dollar hit all time lows against the EURO and AUD. The second half of the week was lead by falling Oil, rising stocks and positive US banking reports. This combination proved a major catalyst for reducing fear in the market and renewing risk appetite. On the Data front we had June CPI surging 1.1% m/m the strongest rate since 1982 along with year on year at 5%. PPI also jumped to 9.2% year on year confirming inflation is a major problem for the US economy. Fed chief Bernanke spoke twice before Congress and reiterated his concerns on slowing growth and increasing inflation outlooks. June Retail Sales were weak at 0.1% m/m vs. expectations of 0.5%. The Euro surged to record highs on Tuesday as banking fears gripped the market. US banks reported better than expected 2nd quarter earnings which combined with sliding Oil let the Euro ease substantially into the weeks close. Euro data continue to deteriorate with the German ZEW economic sentiment survey dropping to -63.9 in July vs. forecasts of -55. June HICP was confirmed at 4.0% y/y and German PPI surged to 0.9% m/m and 6.7% y/y. The Euro closed down 0.57% at 1.5847 having opened at 1.5937. The Japanese Yen recovered off multi month highs as equities rebounded and risk aversion subsided. The Bank of Japan left rates at 0.5% but lowered GDP estimates while increasing Inflation forecasts. AUS/JPY and EUR/JPY traded at year highs. The USD/JPY gained 0.64% closing at 106.95, after opening the week at 106.30. The GBP traded to multi month highs at the height of USD weakness above the key 2.00 level for the first time since April. UK data was mixed for the GBP with CPI and PPI both beating expectations at 3.8% and 4.8% y/y respectively but on the downside BRC retail sales were down 0.4% in June and June Claimant count jumped 15.5K, its biggest rise in 15 years. The GBP/USD gained 0.52% closing at 1.9988 after opening at 1.9884. The AUD made new post float highs again this week surging to 0.9850 but was unable to maintain these levels as stocks recovered and Gold came off highs. The RBA minutes from the July meeting were fairly neutral commenting that demand is slowing and that current rates are adequate to control inflation. The AUD/USD closed up 0.39% at 0.9699 after opening at 0.9661.
The forex trading week preview
In the States June Leading Indicators on Monday are expected at -0.1%. Treasury’s Paulson speaks on the US economy Tuesday along with FOMC member Plosser. On Wednesday the Fed’s Beige book is released. Thursday sees Weekly Jobless claims at 379K and June Existing Home Sales expected at 4.94 Million. On Friday June’s Core Durable goods are seen flat at 0.0% after falling -0.9% in May. New Home Sales are expected at 505K in June. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone A host of survey data this week lead by the German IFO Business Climate Index on Thursday expected at 100.2. Also on Thursday we have July Eurozone Manufacturing PMI seen at 48.7 and Services PMI forecast at 48.9. In the UK on Tuesday BoE Governor King speaks on banking reform at the Parliamentary Treasury Committee. On Wednesday we have the BoE minutes from the July Meeting and CBI Industrial Trends forecast at -5. Thursday sees June Retail sales weakening -2.5% from May’s surprise 3.5% jump. Finally Preliminary 2nd quarter GDP is seen down at 0.2% from 0.3% in the previous. We will provide our previews and reviews of these data releases in the daily summary.
In Japan with a holiday on Monday Focus will be on Wednesday Trade Balance seen at 506 billion Yen. Thursday we focus on CPI data for July seen at 1.9%y/y nationally and 1.6% in Tokyo. We will provide our previews and reviews of these data releases in the daily summary.
In Australia Focus will be on Mondays 2nd Quarter PPI seen at 1.6%. UPDATE 2nd Q PPI 1.0%. Wednesday sees the 2nd Quarter CPI at 1.2% Q/Q and 4.3% Y/Y. 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 |
1.5612 |
1.5765 |
1.5845 |
1.5948 |
1.6038 |
|
USD/JPY |
103.78 |
104.76 |
106.85 |
107.09 |
107.76 |
|
GBP/USD |
1.9815 |
1.9907 |
1.9935 |
2.0097 |
2.0157 |
|
AUD/USD |
0.9664 |
0.9675 |
0.9725 |
0.9818 |
0.9849 |
|
XAU/USD |
947.88 |
950.50 |
958.00 |
978.50 |
988.00 |
·Euro – 1.5845
Initial support at 1.5765 (July 11 low) followed by 1.5612 (July 7 low). Initial resistance is now located 1.5948 (July 16 high) at followed by 1.6038 (July 15 High).
·Yen – 106.85
Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.09 (July 17 high) followed by 107.76 (July 7 high).
·Pound – 1.9935
Initial support at 1.9907 (July 18 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).
·Australian Dollar – 0.9725
Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High).
·Gold – 958
Initial support at 950.50 (Jul 18 low) followed by 947.88 (Tread line support). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).
