Yen in Demand as Risks
Last week’s currency trading review
The Dollar was generally strong even as risk appetite got a boost from strong commodities and rising equities. Bernanke spoke before congress and reiterated that he will be holding rates low for an extended period of time and this helped improve investor sentiment. Economic data was weak with Consumer Confidence slumping to 46 vs. 56 previously. January Housing data disappointed with Existing Home Sales falling -7.2% m/m. The Euro tested 1.3450 support as the markets focus returned to Greece debt concerns. The market was able to bounce well on Friday as rumors spread that Germany may provide loan support for Greek debt. German Unemployment Change beat forecasts at 7k vs. 18 forecast and December Industrial Orders rose +0.8% vs. -1.1% previously. The EUR/USD gained +0.12% closing at 1.3628, after opening the week at 1.3611.
The Japanese Yen reversed all of last weeks gains as the crosses broke key support and the major dropped below Y90. EUR/JPY tested Y120 and is looking very heavy along with GBP/JPY which broke through to 9 month lows at Y135. January Retail Sales gained 2.6% vs. -0.1% y/y. The USD/JPY fell -2.92% closing at 88.91 after opening the week at 91.51. The GBP was the weakest of the major currencies as data underperformed with January Mortgage approvals dipping to 35k vs. 45k previously. BoE Governor King in his inflation report stated that high inflation was not a medium term issue and that QE may remain open. Concern is also being generated by the prospect of a hung parliament after the coming election and that this will create problems in passing critical budget saving reforms. GBP/USD fell -1.55% closing at 1.5235 after opening at 1.5471. The AUD held up well as Gold remained strong and Oil reclaimed $80 a barrel level. Q4 Capex surged 5.5% vs. 1.5% forecast and underpinned the argument for a rate rise in March. The AUD/USD fell -0.35% closing at 0.8955 after opening at 0.8985.
The forex trading week preview
In the States On Tuesday, Bank of Canada Rate Announcement forecast to hold at 0.25%. On Wednesday, February Services ISM is forecast at 51.0 vs. 50.5 previously. FED beige Book Economic report also released. On Thursday, Weekly Jobless Claims are forecast at 475k vs. 496k previously. January Pending Home Sales are forecast at 1.5% vs. 1.0% previously. February Non Farm Payrolls is forecast at -50k vs. -20k previously. February Unemployment rate is forecast at 9.8% vs. 9.7% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, February CPI is forecast at 1.0% y/y. On Wednesday, German Retail Sales are forecast are forecast at -0.7% vs. 0.85 previously. On Thursday, Q4 EU GDP is forecast at 0.1% vs. 0.1% previously. Also, ECB Rate Announcement is forecast unchanged at 1.0%. On Friday, January German Factory Orders is forecast at 1.3% vs. -2.3% m/m. In the UK On Tuesday, February Construction PMI is forecast at 48.8 vs. 48.6 previously. On Wednesday, February PMI services is forecast at 54.9 vs. 54.5 previously. On Thursday, BoE Rate Announcement is forecast unchanged at 0.5% and the BOE Asset Purchase Program is forecast to remain unchanged at 200bn. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Thursday, Q4 CAPEX is forecast at -18.4% vs. -24.85 previously. In Australia On Tuesday, RBA is forecast to Raise Rates 0.25% to 4.0%. On Wednesday, Q4 GDP is forecast at 0.9% vs. 0.2% previously. On Thursday, January Trade Balance is forecast at -1.6bn vs. -2.25bn previously. 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 |
1.3424 |
1.3451 |
1.3605 |
1.3692 |
1.3788 |
|
USD/JPY |
88.56 |
88.75 |
89.15 |
90.36 |
91.29 |
|
GBP/USD |
1.5117 |
1.5153 |
1.5160 |
1.5422 |
1.5477 |
|
AUD/USD |
0.8786 |
0.8801 |
0.8960 |
0.8979 |
0.9071 |
|
XAU/USD |
1078.00 |
1088 |
1116.00 |
1121 |
1131.00 |
|
OIL/USD |
77.00 |
78 |
80.10 |
82.00 |
82.50 |
Euro – 1.3605
Initial support at 1.3451 (Feb 25 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high)
Yen – 89.15
Initial support is located at 88.75 (Feb 26 low) followed by 88.56 (Feb 4 low). Initial resistance is now at 90.36 (Feb 24 high) followed by 91.29 (Feb 23 high).
Pound – 1.5160
Initial support at 1.5153 (Feb 26 low) followed by 1.5117 (May 18 low). Initial resistance is now at 1.5422 (Feb 25 high) followed by 1.5577 (Feb 24 low).
Australian Dollar – 0.8960
Initial support at 0.8801 (Feb 25 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.8979 (Feb 26 high) followed by 0.9071 (Feb 23 high).
Gold – 1116
Initial support at 1088 (Feb 25 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1121 (Feb 23 high) followed by 1131 (Feb 22 high).
Oil – 80.10
Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).
