Big Data Week, Rate Decisions and US Jobs

Last week’s currency trading review

The Dollar the trend away from the USD continued with improving investor confidence leading to demand for higher yielding currencies such as the AUD and NZD. June New Home Sales beat expectations at 330k vs. 317k forecast although US Q2 GDP came in lower at 2.4% vs. 2.5% expected. US Stock markets dipped mid week but were always well supported and ended near month highs. The Euro closed above 1.3000 but underperformed other currencies as the market found resistance near 1.31 and orbited 1.3000 throughout the week. Sentiment continue to improve off lows seen in the Eurozone debt crisis with many analysts now turning to the US Debt issues and upgrading the EUR/USD 6 month targets.The EUR/USD gained +1.10% closing at 1.3050, after opening the week at 1.2906.

The Japanese Yen had a mixed weak losing ground against the risk currencies AUD and GBP but gaining against the beleaguered USD testing multimonth lows under Y86 on Friday. For the USD/JPY downtrend to be threatened it will require a change of US interest rate expectations or changes to Bank of Japan’s current easing measures. The USD/JPY fell -1.16% closing at 86.45 vs. 87.45 previously. The GBP closed above 1.5700 as the uptrend continued and sentiment towards the Pound remained positive. July CBI Sales turned positive jumping to 33 vs. -5 previously. BoE’s King spoke during the week emphasizing the continued need for stimulus. The GBP/USD gained +1.69% closing at 1.5684 after opening at 1.5419. The AUD did well recovering from a dip on Wednesday after CPI came in less than expected at 3.1% vs. 3.4% forecast. The improvement in risk appetite and USD weakness allowed the commodity currency to close above 0.9000 for the first time since May. The AUD/USD gained +0.98% closing at 0.9043 after opening at 0.8954.

The Forex Trading Week Preview

In the States On Monday, July Manufacturing ISM is forecast at 54 vs. 56.2 previously. On Tuesday, June Pending Home Sales are forecast at 3.7% vs. -30% m/m previously. Also released, June Personal Spending is forecast at 0.1% vs. 0.2% previously. On Wednesday, July ISM Services forecast at 53 vs. 53.8 previously. On Thursday, Weekly Jobless Claims are forecast at 455k vs. 457k previously. On Friday, US July Non Farm Payrolls are forecast at -60k vs. -125k previously. The July Unemployment Rate is forecast at 9.6% vs. 9.5% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Monday, July Final Manufacturing is forecast at 56.5. On Tuesday, June PPI is forecast at 3.2% vs. 3.1% previously. On Wednesday, June Retail Sales are forecast at -0.2% vs. 0.2% previously. On Thursday, ECB Rate announcement widely forecast to remain at 1.0% but attention will be on Monthly ECB news conference with President Trichet. Finally on Friday, June Industrial Production is forecast at 1.0% vs. 2.6% previously m/m. In the UK, On Monday, PMI Manufacturing is forecast at 57 vs. 57.5 previously. On Wednesday, July PMI is forecast at 54.7 vs. 54.4 previously. On Thursday, BOE is forecast to hold Interest Rates 0.5%. On Friday, June Industrial Production is forecast at 2.0% vs. 2.6% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan On Friday, June Leading Index is forecast at 98.7 vs. 98.6 previously. In Australia On Tuesday, June Retail Sales are forecast at 0.45 vs. 0.2% previously and June Building Approvals are forecast at 2.0%. Also on Tuesday, RBA Rate Announcement is forecast to hold at 4.5% but with a chance of hike of 0.25%. The RBA statement will also be closely scrutinized. On Thursday, June Trade Balance forecast at 1.8bn vs. 1.645bn previously. Also released, New Zealand Q2 Unemployment is forecast at 6.2% vs. 6.0%. Finally on Friday, July Q2 MPS released form the RBA. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.3060

Initial support at 1.2709 (July 15 low) followed by 1.2480 (July 6 low). Initial resistance is now located at 1.3107 (July 29 high) followed by 1.3416 (April 27 high)

Yen – 86.50

Initial support is located at 85.87 (Nov 30 low) followed by 84.83 (Nov 29 2009 low). Initial resistance is now at 88.12 (July 28 high) followed by 89.16 (July 12 high).

Pound – 1.5700

Initial support at 1.5412 (July 26 low) followed by 1.5125 (July 20 low). Initial resistance is now at 1.5816 (Feb 17 high) followed by 1.6069 (Feb 3 high).

Australian Dollar – 0.9070

Initial support at 0.8896 (July 23 high) followed by the 0.8738 (July 22 high). Initial resistance is now at 0. 9077 (76.4% retrace of 0.9389-0.8067) followed by 0.9389 (April 12 high).

Gold – 1180

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1204 (July 23 high) followed by 1218 (July 13 high).

Oil – 79.10

Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).