General Commentary
Last Week’s Currency Trading Review:
The EUR/USDclosed at 1.3512 on worried about banking in Portugal and the overall economic recovery of the eurozone. Geopolitical events are overshadowing a light economic calendar ahead of the weekend. The shooting down of the Malaysian plane over Ukraine and the Israel’s launch of a ground assault in Gaza dominate the focus. EU foreign ministers will meet Tuesday to discuss the developments in Ukraine. This is all the more reason the failure of EU officials to agree on a foreign commissioner earlier this week as it had intended, is a tragedy. Various media reports claim this is the biggest US-Russian confrontation since the Cold War, but surely the EU should be spearheading the effort. In fact, it seems that the asymmetrical response, as evident throughout the crisis and again with this week’s sanctions, shows clear reluctance to jeopardize commercial ties to support Kiev. This can only serve to embolden Putin.
The AUD/USD ended the week just about even for the week at 0.9386 on strong local data and Chinese GDP. Chinese GDP printed at 7.5% reaching forecasts but disappointing after the government added stimulus and pushed as hard as they could to improve growth. The Australian dollar is flat, proving resilient in the wake of the Malaysia Airlines plane crash in Ukraine.
The June quarter CPI figures will be released on Wednesday. And one benefit of the data being produced on a quarterly (rather than monthly) basis is that significant work can be put into getting the most accurate results. In fact the Bureau of Statistics obtains 100,000 price quotations each quarter across 87 expenditure classes (or groupings of ‘like’ items).
In the March quarter the CPI lifted by 0.6 per cent to stand 2.9 per cent higher over the year. Excluding volatile items, the key ‘underlying’ inflation measures rose by around 0.5-0.6 per cent in the quarter to stand 2.7 per cent higher over the year.
The USD/JPYended the week completely flat at 101.37 while it opened on Monday at 101.36 after the Bank of Japan held rates and policy. The dollar was weaker below ¥101.50 in Tokyo trading on Friday, as risk-averse sentiment strengthened following a Malaysian Airlines jetliner crash in eastern Ukraine that claimed nearly 300 lives the previous day.
The yen attracted safe-haven buying interest after the crash in the region where fighting continues between Ukrainian forces and pro-Russian separatists, taking the dollar as low as ¥101.10 in early Tokyo trading. Malaysian Airlines’ MH17 is suspected to have been shot down by a surface-to-air missile. The risk-averse mood was also fueled by growing uncertainty over the Israeli-Palestinian conflict as Israeli forces began a ground assault in Gaza on Thursday
Technical Commentary
The AUD- 0.9388
Pivot: 0.9410
Support: 0.9325, 0.9290 and 0.9255
Resistance: 0.9410, 0.9455 and 0.9485
The EUR- 1.3530
Pivot: 1.3540
Support: 1.3475, 1.3450 and 1.3430
Resistance: 1.3540, 1.3575 and 1.3620
The GBP- 1.7097
Pivot- 1.7035
Support: 1.7035, 1.7 and 1.6970
Resistance: 1.7115, 1.7150 and 1.7190
The Yen- 101.28
Pivot: 101.60
Support: 101.05, 100.85 and 100.50
Resistance: 101.60, 101.80 and 102.05.
