CURRENCY TRADING SUMMARY –22 FEBRUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) strengthened following better than expected Core CPI, indicating inflation was still a key factor, hence the Fed will not look to cut interest rates in the near future. CPI came in at 0.3% higher than the forecasted 0.2%.Furthermore the FOMC minutes of the Jan meeting was made public on Wednesday, which showed that policy makers discussed dropping their inclination to raise interest rates, and then rejected the idea because inflation remained the “predominant concern,”. In US share markets the NASDAQ rose by 5 points whilst the Dow Jones dropped by 48 point. Crude Oil rose by US$1.21 a barrel to $60.06.
- The Euro (EUR) remained steady despite a stronger than expected Current Account coming in at 2.3 bln rather than the forecasted -1 bln. The previous figure however was revised higher at 0.9 bln. Overall the Euro trade within a range of a low 1.3112 and a high of 1.3166 before closing at 1.3141.
- The Japanese Yen (JPY) fell for the fourth straight day against the Dollar and Euro, despite the BoJ deciding to raise its interest rates by 0.25% to 0.5%, the highest level in 10 years. The BoJ decided to raise the call rate following an astounding 8-1 vote. With accompanying statements that any further tightening would be a gradual process, left investors still willing to fund carry trades using the Yen. Governor Fukui stated in his press conference that the yen weakness can be described as a market distortion because it is partly due to the increase in Japanese investment in overseas assets. The JPY traded with a low of 119.71 and a high of 121.20 before closing at 120.87 in the
New York - The Sterling (GBP) dropped following the BoE minutes of the February meeting showing a 7-2 vote in favour of holding interest rates. With economists predicting that another near term rate hike was an unlikely possibility. Overall, the GBP traded within a range of 1.9489 and a high of 1.9590 before closing at 1.9544 in the
New York - The Australian Dollar (AUD) strengthened yesterday following RBA Governor Stevens inaugural speech to parliament, where he indicated that the RBA was “more inclined to a rate hike, than a cut”. Overall, the AUD traded within a range of a low 0.7865 and a high of 0.7915 before closing at 0.7913 in the
New York - Gold (XAU) saw a big move on Wednesday rising by US$22.30 an ounce to US$683.30 on the back of oil rising.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3024 | 1.3093 | 1.3140 | 1.3196 | 1.3298 |
| USD/JPY | 119.53 | 119.70 | 121.00 | 121.37 | 121.44 |
| GBP/USD | 1.9402 | 1.9430 | 1.9535 | 1.9592 | 1.9679 |
| AUD/USD | 0.7824 | 0.7845 | 0.7905 | 0.7940 | 0.7982 |
| XAU/USD | 648.08 | 656.17 | 678.05 | 682.25 | 694.70 |
- Euro 1.3140
Initial support at 1.3093 (Feb 16 low) followed by 1.3024 (Feb 14 low). Initial resistance is now located at 1.3196 (76.4% retracement of 1.3298 to 1.2865 decline) followed by 1.3298 (Jan 2 reaction high).
- Yen 121.00
Initial support is located at 119.70 (Feb 21 low) followed by 119.53 (Feb 20 low). Initial resistance is now at 121.37 (Feb 14 high) followed by 121.44 (76.4% retracement of the 122.20 to 118.98 decline).
- Pound – 1.9535
Initial support at 1.9430 (Feb 19 low) followed by 1.9402 (Feb 13 low). Initial resistance is now at 1.9592 (Feb 21 high) followed by 1.9679 (Feb 15 high)
- Australian Dollar – 0.7905
Initial support at 0.7845 (Feb 19 low) followed by 0.7824 (Feb 15 low). Initial resistance is now at 0.7940 (Jan 23 reaction high) followed by 0.7982 (Jan 3 trend high).
- Gold – 678.05
Initial support at 656.17 (Feb 20 low) followed by 648.08 (Feb 8 low). Initial resistance is now at 682.25 (Feb 21 trend high) followed by 694.70 (May 18 reaction high)
