Australian FOREX Weekly Outlook 20/02/2006

February 20, 2006

20/02/06


last week’s recap

The Dollars performance was mixed against the major currencies last week. The key event was the two day speech to the congress by the new Federal Reserve Chairman Ben Bernanke. Key data releases included net security purchases figures with expectations centered on $US 88 billion, but a disappointing result of $US 56.6 billion which was not enough to cover December’s trade deficit.However, PPI figures came in higher than expected at 0.4% growth for January, the biggest increase in a year. In his first testimony Bernanke reiterated concerns that inflation was still a risk, and growth was expected to remain solid in the near term but the market had expected a more hawkish tone from the chairman. The Euro bounced around during the week more on the backdrop of US data than on internal releases. Q4 real GDP growth did however disappoint a bit on the downside coming in at 0.3 % and December industrial production came in slightly positive at 0.1%. The Japanese yen had a pretty good week against the dollar, being one of the few majors to gain in value. The main force driving the yen at the moment is economic data that continues to confirm a recovering economy. Q4 preliminary GDP data surprised the market on the upside coming in with a growth rate of 1.4 %. The Sterling stole the spotlight last week with traders having plenty to consider in the way of economic releases. The week started with disappointing housing data and a low inflation rate that caused traders to sell in anticipation of lower interest rates. But the BOE later in the week confirmed that inflation is likely to remain in the upper range of their target, in effect causing a rebound in the currency. The Aussie traded sideways all through last week in a range between 0.7345 and 0.7440. The RBA made a concise announcement on Monday confirming the market consensus for interest rates to remain stable at 5.5% in the short term with an upside bias.

The week ahead

The coming week’s theme will continue to be one of inflation watch for both the US and the Eurozone. In the US, the market is looking for an up-tick in inflation for January. However, the annual rate of core inflation should remain stable. In the Eurozone, inflationary pressure along with growing evidence of an upturn in economic activity should confirm a rate hike in March.

In the States an up-tick in US consumer price inflation (Wednesday) in January is expected, boosted by a likely increase in the energy component. The Chicago Fed National Activity Index (Thursday) is likely to have risen for January. After three months of solid gains, durable goods (Friday) orders are expected to have declined. This is partly due to a moderation in aircraft orders. We will provide our previews of these data releases in the daily summary.

In the Eurozone one of the most striking trends in the recent Eurozone business surveys has been the relative out performance of Germany. The IFO business climate index (Thursday) has recently surged to its highest level in almost six years. In February the IFO survey is likely to correct lower. The market will be keen to see if the Belgian leading indicator (Wednesday) can rebound from its fall in January. Italian business confidence (Friday) is forecast to be little changed while Italian consumer price inflation (Wednesday) is forecast to have edged higher. In the UK the key focus will be the release of the most recent minutes from the Bank of England monetary policy meeting (Wednesday). We will provide our previews and reviews of these data releases in the daily summary.

In Japan the only pieces of data for the market to focus on will be on Thursday with the release of Tertiary/All industry indices and the merchandise trade balance. We will provide our previews and reviews of these data releases in the daily summary.


Key Weekly Pivot levels

  • Euro 1.1920

Initial support at 1.1848 (Feb 16 low) followed by 1.1800 (76.4% retracement of 1.1638 to 1.2324). Initial resistance is now located at 1.1976 (Feb 20 high) followed by 1.2027 (Feb 10 high).

  • Yen 118.60

Initial support is located at 118.24 (Feb 21 low) followed by 117.32 (Feb 17 low). Initial resistance is now at 119.01 (Feb 21 high) followed by 119.41(Feb 3 high).

  • Pound – 1.7450

Initial support at 1.7306 (Feb 16 low) followed by 1.7278 (Feb 14 low). Initial resistance is now at 1.7491 (Feb 15 high) followed by 1.7577 (Feb 10 high).

  • Aussie – 0.7385

Initial support at 0.7347 (Feb 17 low) followed by 0.7317 (76.4% retracement of the 0.7233 to 0.7577 climb). Initial resistance at 0.7444 (Feb 15 high) followed by 0.7501 (Feb 6 high).

Back to weekly Archive

join THOUSANDS OF other people
who trade with easymarkets

Two minutes is all it takes.

You're almost there!

Finish your application and start trading today.

DON'T MISS A TRADING OPPORTUNITY

Two minutes is all it takes.