US recession confirm
02/02/09
last week’s currency trading review
The Dollar continued to be well supported even as the US entered a recession with Q4 GDP dropping -3.8%. Safe Haven Flows continued to support. Other data out included CB Consumer Confidence which dropped to new lows of 37.7 in January and Core Durable Goods falling -3.6% in December. The Euro took another leg lower as market sentiment continued to hurt. George Soros warned about the EURO’s possible demise and the unwinding on the EUR/GBP took another pillar of support. German IFO was a bright spot though with 83 in January surprising to the upside. An intraweek rally proved short lived with market slipping back below 1.3000. The EUR/USD lost -1.2% closing at 1.2811, after opening the week at 1.2960. The Japanese Yen strengthened against most crosses but the USD was able to make gains. With little data out the market took its cue from equities markets. The USD/JPY gained 1.36% closing at 89.95 after opening at 88.73. The GBP staged a major rally after been sold aggressively the week before. The market was oversold and the correction was broad based against all pairs. Nationwide house prices dropped by less than expected falling -1.3% vs. -1.8% forecast. CBI realized sales also beat forecasts at -47 vs. -55 previously. The GBP/USD gained 5.13% closing at 1.4539 after opening at 1.3793. The AUD fell heavily as global recessionary fears and expectations of steep rate cuts hurt the outlook. Q4 CPI dropped -0.3% vs. -0.4% in Q3. The AUD/USD closed down -2.67% at 0.6365 after opening at 0.6535.
The forex trading week preview
In the States On Tuesday we have December Pending Home Sales forecast at 0% vs. a drop of -4%. On Wednesday the January ADP private Employment Report is forecast to show a drop of -530K vs. 693K December. Alongside this the Non Manufacturing ISM is forecast at 39 vs. 41 previously. On Thursday Weekly Jobless claims are forecast at 590K and December Factory Orders are expected to drop -3.6% vs. -4.6% previously. On Friday January Non Farm Payrolls are expected to drop -500K (-524K Dec) and the Unemployment rate is expected to rise to 7.5% (7.2% Dec). We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday December PPI is forecast at -1% vs. -1.9% previously. On Wednesday Eurozone PMI Services are forecast to be confirmed at 42.5 in January. On Thursday German Factory Orders are seen dropping -2% in December vs. -6% previously. Also on Thursday the ECB rate announcement with the market expecting a hold at 2.0%. Finally on Friday, December German Industrial Production seen -2% and Retail sales are Forecast +0.6%. In the UK On Wednesday we have PMI services for Januaryforecast at 40.3 vs. 40.2 previously. On Thursday the BOE is expected to cut rates from 1.5% to 1.0%. On Friday we have manufacturing forecast to drop -1.2% vs. -2.9% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan No major data this week. We will provide our previews and reviews of these data releases in the daily summary.
In Australia the RBA rate announcement on Tuesday the big event with the market expecting a cut of 1% to 3.25%. Also on Tuesday the December Trade Balance forecast at 950m vs. 1450m previously. On Wednesday, December Retail Sales are forecast to increase 1.0% vs. 0.4% 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 |
1.2389 |
1.2549 |
1.2750 |
1.2961 |
1.3179 |
|
USD/JPY |
87.99 |
88.89 |
89.70 |
90.76 |
90.97 |
|
GBP/USD |
1.3931 |
1.4070 |
1.4400 |
1.4416 |
1.4430 |
|
AUD/USD |
0.6077 |
0.6291 |
0.6350 |
0.6524 |
0.6682 |
|
XAU/USD |
852.00 |
874.00 |
917.00 |
930.00 |
949.00 |
·Euro – 1.2750
Initial support at 1.2549 (Dec 4 low) followed by 1.2389 (Nov 13 low). Initial resistance is now located at 1.2961 (Jan 30 high) at followed by 1.3179 (Jan 29 high)
·Yen – 89.70
Initial support is located at 88.89 (Jan 28 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 90.76 (Jan 28 high) followed by 90.97 (Jan 20 high).
·Pound – 1.4400
Initial support at 1.4070 (Jan 29 low) followed by 1.3931 (Jan 27 low). Initial resistance is now at 1.4416 (61.8% retrace 1.4980 to 1.3504) followed by 1.4430 (Jan 20 high).
·Australian Dollar – 0.6350
Initial support at 0.6291 (Dec 5 low) followed by the 0.6077 (Nov 20 low). Initial resistance is now at 0.6524 (Jan 30 high) followed by 0.6682 (Jan 29 high).
·Gold – 917
Initial support at 874 (Jan 29 low) followed by 852 (Jan 22 low). Initial resistance is now at 930 (Jan 29 high) followed by 949 (July 2008 low).
