BOE Expands Quantitative Easing
CURRENCY TRADING SUMMARY – 7th August (00:30GMT)
U.S. Dollar Trading (USD) strengthened as profit taking on the stock markets led to a mild case of risk aversion. GBP losses added to USD strength and caution ahead of non farm payrolls also played into the dollar’s hands. Weekly Jobless Claims at 550K beat expectations of 580k. Crude Oil Closed down $0.03 at $71.94. In US share markets, S& P ended -5 points (-0.5%) at 997, NASDAQ ended -19 points (-1.0%) at 1973 and DOW JONES ended -24 points (-0.2%) at 9256. Looking ahead, July Non Farm Payrolls forecast at -320k vs. -467k previously and Unemployment Rate forecast at 9.6% vs. 9.5% previously.
The Euro (EUR) broke out of the range to the downside with weaker US stocks and a sharp slump in oil weighing (this recovered later in the session). ECB held at 1.0% and Trichet began to focus on inflation which he believed would rise shortly. These neutral to hawkish comments helped support the Euro at the lows. Large Gains on the EUR/GBP also helped. Overall the EUR/USD traded with a low of 1.4356 and a high of 1.4447 before closing at 1.4410. Looking ahead, June Industrial Output forecast at 0.7% vs. 3.7% previously.
The Japanese Yen (JPY) USD/JPY rallied with fresh USD strength with players cautious to buy the Yen ahead of the Non farms tonight. GBP/JPY fell hard with the expansion of the QE program but eventually found support near the 160 Yen level. June Leading Indicators +2.9%. Overall the USDJPY traded with a low of 94.81 and a high of 95.81 before closing the day around 95.40 in the New York session. UPDATE JULY FX RESERVES AT 1022.6BN
The Sterling (GBP) was shunted lower when the BOE increased its QE program by more than even the most dovish commentators expected by 50bn and expanded the type of investments they will buy. Cable slumped to 1.6850 and eventually eased back to 1.6750. The Market is still significantly long, although more good data will be need to recover the losses. Overall the GBP/USD traded with a low of 1.6752 and a high of 1.7031 before closing the day at 1.6780 in the New York session. Looking ahead, July PPI Core output m/m forecast 0.2%.
The Australian Dollar (AUD) shot higher after surprisingly strong July Unemployment data with the rate staying at 5.8% and the Unemployment Change of +32K vs. -20K forecast. The pair was unable to break fresh year highs though and slumped back to support at 0.8400 and then 0.8380 after weak US stocks. Overall the AUD/USD traded with a low of 0.8369 and a high of 0.8461 before closing the US session at 0.8410. Looking ahead, RBA Monetary Statement Released.
Gold (XAU) market found support below $960 before shooting higher as Oil recovered. Overall trading with a low of USD$956 and high of USD$972 before ending the New York session at USD$962 an ounce.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.4207 |
1.4330 |
1.4355 |
1.4447 |
1.4621 |
|
USD/JPY |
93.10 |
94.02 |
95.30 |
95.88 |
96.24 |
|
GBP/USD |
1.6474 |
1.6697 |
1.6765 |
1.7043 |
1.7198 |
|
AUD/USD |
0.8238 |
0.8340 |
0.8380 |
0.8519 |
0.8694 |
|
XAU/USD |
932.00 |
951.00 |
962.00 |
990.00 |
1006.00 |
Euro – 1.4355
Initial support at 1.4330 (AUG 6 low) followed by 1.4207 (AUG 3 low). Initial resistance is now located at 1.4447 (AUG 5 high) followed by 1.4621 (61.8% retrace 1.6038 -1.2330 )
Yen – 95.30
Initial support is located at 94.02 (Jul 29 low) followed by 93.10 (July 22 low). Initial resistance is now at 95.88 (Jul 6 high) followed by 96.24 (July 6 high).
Pound – 1.6765
Initial support at 1.6697 (AUG 3 low) followed by 1.6474 (Jul 31 low). Initial resistance is now at 1.7043 (AUG 5 high) followed by 1.7198 (Oct 20 high).
Australian Dollar – 0.8380
Initial support at 0.8340 (AUG 3 low) followed by the 0.8238 (July 31 low). Initial resistance is now at 0.8519 (Sept 22 high) followed by 0.8694 (Aug 28 low).
Gold – 962
Initial support at 951 (AUG 5 low) followed by 932 (July 31 low). Initial resistance is now at 990 (Jun 3 high) followed by 1006 (Feb 20 high).
