Fed hold rates low for an ‘extended period’ of time
Last week’s currency trading review
The Dollar was on the back foot giving up most the of gains from the week before as risk was turned back ‘on’ after the Federal Reserve kept rates at 0.25% and stated they would keep rates low for an extended period of time. A greater than expected rise in the October Unemployment Rate to 10.2% could not stem the positive sentiment. ISM Manufacturing jumped to 55.7 vs. 52.6 previously. The Euro rebounded off multi week lows at 1.4630 to test 1.4900 on the back of a strong rally in equities and the ECB keeping rates at 1.0% but scaling back liquidity measures in a sign of confidence for the European economy. The EUR/USD gained 0.84% closing at 1.4846, after opening the week at 1.4722.
The Japanese Yen was roughly unchanged against the Dollar but lost ground against most currencies as risk appetite picked up and investors searched for higher yields. GBP/JPY and AUD/JPY were especially well supported. The USD/JPY fell -0.26 % closing at 89.87 after opening the week at 90.10. The GBP gained heavily on Thursday after the BoE kept rates at 0.5% and only increased the Quantitative easing program by 25bn pounds. EUR/GBP continued to fall as the GBP gains outpaced the Euro settling comfortable below the key 0.9000 level. GBP/USD gained 1.01% closing at 1.6611 after opening at 1.6444. The AUD was the major gainer after the RBA increased rates by 0.25% and stocks markets and gold continued to rally aggressively. Also helping on Friday was the RBA monetary Policy statement which raised economic targets. The AUD/USD gained 2.10% at 0.9180 after opening at 0.8987.
The forex trading week preview
In the States Quiet Data week with Veterans day on Wednesday. Weekly Jobless claims are forecast at 510k vs. 512k previously. On Friday, September Trade Balance is forecast at -31.6bn vs. -30.7bn previously. Also released, UoM forecast at 71 vs. 70.6 previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Monday, September German Industrial Production is forecast at 1.2% vs. 1.7%. On Tuesday, German Zew is forecast at 55 vs. 56 previously. On Thursday, September EU Industrial Production is forecast at 0.5% vs. 0.9% previously. On Friday, German GDP is forecast at 0.8% vs. 0.3% previously. EU Q3 GDP is forecast at 0.6% vs. -0.2% previously. In the UK On Tuesday, Trade Balance forecast at -6100mn vs. -6240mn previously. On Wednesday, ILO Unemployment rate forecast at 8.0% vs. 7.9% previously. Also released, BoE Quarterly Inflation Report. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Wednesday, September Machine Orders are forecast at 4.1% vs. 0.5% previously. On Friday, September Industrial Production previously at -18.9%. In Australia On Thursday, October Unemployment is forecast at 5.8% vs. 5.7% previously with a drop of -10k jobs. 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 |
1.4702 |
1.4811 |
1.4870 |
1.4927 |
1.4959 |
|
USD/JPY |
89.20 |
89.62 |
89.85 |
91.32 |
91.62 |
|
GBP/USD |
1.6402 |
1.6467 |
1.6650 |
1.6693 |
1.6742 |
|
AUD/USD |
0.8971 |
0.9026 |
0.9210 |
0.9218 |
0.9329 |
|
XAU/USD |
1080.00 |
1084 |
1098.00 |
1101.00 |
1107.00 |
|
OIL/USD |
75.00 |
76.50 |
77.80 |
78.00 |
80.00 |
Euro – 1.4870
Initial support at 1.4811 (Nov 5 low) followed by 1.4702 (Nov 4 low). Initial resistance is now located at 1.4927 (Oct 27 high) followed by 1.4959 (0.764 retrace of 1.5063-1.4624)
Yen – 89.85
Initial support is located at 89.62 (Nov 6 low) followed by 89.20 (Nov 2 low). Initial resistance is now at 91.32 (Nov 4 high) followed by 91.62 (Oct 29 high).
Pound – 1.6650
Initial support at 1.6467 (Nov 5 low) followed by 1.6402 (Nov 4 low). Initial resistance is now at 1.6693 (Oct 23 high) followed by 1.6742 (Sept 11 high).
Australian Dollar – 0.9210
Initial support at 0.9026 (Nov 5 low) followed by the 0.8971 (Nov 4 low). Initial resistance is now at 0.9218 (Oct 27 high) followed by 0.9329 (Oct 21 high).
Gold – 1098
Initial support at 1084 (Nov 5 low) followed by 1080 (Nov 4 high). Initial resistance is now at 1101 (Nov 6 high ) followed by 1107 (905.10 plus 1.618 of 864.97-990.00).
Oil – 77.80
Initial support at 76.50 (Intraday Support) followed by 75 (key Level). Initial resistance is now at 78 (Intraday resistance) followed by 80 (Key Level).
