FOMC cut rates as focus shifts to Fed speeches, Durable Goods and Euro CPI
24/09/07
last week’s currency trading review
The Dollar was highlighted by the Federal Reserve’s decision on Tuesday to cut the borrowing rate by 50 basis points, in an aggressive attempt to stimulate the economy, as interest rates sit at 4.5%. Accompanying the rate cut was further reduction of 50 basis points on the discount rate to other banks. Attributing to a poor week for the greenback, ongoing speculation that the Federal Reserve would look to continue its loosening bias ensured the dollar was sold off across the board. The Euro set multiple record highs breaking through key resistance levels of 1.40. Hawkish comments by the ECB indicating that the tightening cycle may not have finished its course, ensuring that the Euro traded at a record high of 1.4120 on Friday as the currency gained 1.5% throughout the week. The Euro closed last week at 1.4089 having opened at 1.3874. The Japanese markets only highlight for the week came in the BoJ interest rate announcement on Wednesday, in which the central bank surprised little by keeping rates on hold at 0.50%. Surging stock markets also renewed carry trade demand which saw the Japanese yen come under pressure in the latter part of the week. The Japanese Yen closed last week at 115.36 having opened at 115.32. The GBP continued to be weighed upon from the sub-prime crisis concern highlighted by the Bank of England bailing out of Northern Rock. Volatility was c
The forex trading week preview
In the States due to last week’s rate cut and ongoing speculation that the Fed will look to cut rates again this year, plenty of emphasis will be placed on Bernanke speeches (Monday and Thursday) for any indication of future rate policies. In other news, due to the current housing phenomena, markets will scrutinize Existing Home Sales (Tuesday) and New Home sales (Thursday). Other data out of the
In the Eurozone German IFO index is set for release on Tuesday, whilst inflationary data rounds of the week on Friday. In the
In Japan begins its week with the release of the BoJ minutes of the August meeting, before key data takes centre stage with trade Balance on Wednesday, followed by Fridays Industrial Production, Unemployment rate and CPI data. We will provide our previews and reviews of these data releases in the daily summary.
In
KEY WEEKLY PIVOTAL LEVELS
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3927 | 1.3963 | 1.4090 | 1.4120 | 1.4160 |
| USD/JPY | 113.39 | 114.59 | 115.35 | 116.05 | 116.38 |
| GBP/USD | 1.9952 | 2.0081 | 2.0215 | 2.0226 | 2.0366 |
| AUD/USD | 0.8552 | 0.8606 | 0.8680 | 0.8704 | 0.8770 |
| XAU/USD | 720.76 | 726.95 | 729.50 | 739.42 | 740.00 |
·Euro 1.4090
Initial support at 1.3963 (Sep 20 low) followed by 1.3927 (former resistance Sep 13). Initial resistance is now located at 1.4120 (Sep 21 trend high) followed by 1.4160 (Oct 27, 1995 synthetic high).
·Yen 115.35
Initial support is located at 114.59 (Sep 21 low) followed by 113.39 (Sept 11 low). Initial resistance is now at 116.05 (Sep 20 high) followed by 116.38 (Sep 18 high).
- Pound – 2.0215
Initial support at 2.0081 (Sep 21 low) followed by 1.9952 (Sep 19 low). Initial resistance is now at 2.0226 (September 14 high) followed by 2.0366 (Sep 12 reaction high)
- Australian Dollar – 0.8680
Initial support a 0.8606 (Sep 21 low) followed by 0.8552 (Sep 20 low). Initial resistance is now at 0.8704 (Sep 21 high) followed by 0.8770 (July 27 high).
- Gold – 729.50
Initial support at 726.95 (Sep 21 low) followed by 720.76 (Sep 19 low). Initial resistance is now at 739.42 (Sep 21 trend high) followed by 740.00 (Round number resistance)
