G7 Meeting voices concerns over recent currency volatility.
CURRENCY TRADING SUMMARY – 14 APRIL 2008 (00:30GMT)
·U.S. Dollar Trading (USD) strengthened on the back of indications the G7 summit was concerned over recent market volatility, “Since our last meeting, there have been at times sharp fluctuations in major currencies and we are concerned about their possible implications for economic and financial stability.” The G7 statement also suggested that “exchange rates should reflect economic fundamentals,” indicating the G7 is concerned about currency levels. The news coming from G7 is positive for the dollar, whilst it doesn’t indication direct action, it does signal the next move towards coordinated foreign exchange intervention. U.S data news released on Friday had little impact in comparison to the G7 commentary as the Michigan Sentiment report fell 6.3 points to a 26-year low of 63.2 in April. Within this, inflation expectations continue to grow raising concerns over the Fed’s current use of monetary policy to promote financial stability without concern over inflation. In share market news the NASDAQ lost 61.46 points (-2.68%) to 2,290.24, whilst the Dow Jones fell 256.56 points (-2.08%) to 12,325.42 points. Oil prices fell US$0.42 (0.38%) to US$109.72. Looking ahead, Retail Sales figures for the month of March are due out on Tuesday with forecasts predicting a growth of 0.1%, up from -0.6% for the month of February.
·The Euro (EURO) fell against the greenback after commentary released form the G7 indicated foreign exchange concerns were gathering momentum fuelling speculation coordinated intervention may occur at some stage. The Euro traded at a high of 1.5855 prior to dipping to 1.5740, before closing at 1.5832 in
·The Japanese Yen (JPY) dropped against the dollar following the G7 statement supporting the notion to promote U.S currency strength. The USDJPY traded at a high of 102.28, and a low of 100.65, before closing at 100.82. The BoJ minutes from their recent meeting last week is to be released on Monday.
·The Sterling (GBP) continued its recent slide as concerns remain over possible spill-over effects from the deteriorating credit markets in the
·The Australian Dollar (AUD) dropped against the dollar, as investors’ appetite for risk averse currencies grew. The AUDUSD traded at a high of 0.9347 and a low of 0.9275, before closing at 0.9293 in the
·Gold (XAU) prices eased on Friday as a stronger greenback prevented strong investment in the commodity. XAUUSD traded at a high of 932.10 and a low of 918.00.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.5684 | 1.5726 | 1.5725 | 1.5914 | 1.6000 |
| USD/JPY | 99.36 | 100.03 | 101.10 | 102.28 | 102.84 |
| GBP/USD | 1.9607 | 1.9651 | 1.9710 | 1.9843 | 1.9928 |
| AUD/USD | 0.9177 | 0.9243 | 0.9235 | 0.9354 | 0.9473 |
| XAU/USD | 900.50 | 903.40 | 917.90 | 940.60 | 954.98 |
·Euro – 1.5725
Initial support at 1.5726 (Apr 10 low) followed by 1.5684 (Apr 9 Low). Initial resistance is now located at 1.5914 (Apr 10 high) followed by 1.600 (psychological resistance).
·Yen – 101.10
Initial support is located at 100.03 (Apr 10 low) followed by 99.36 (50% retracement of the 95.76 to 102.95 advance). Initial resistance is now at 102.28 (Apr 11 high) followed by 102.84 (Apr 10 high).
·Pound – 1.9710
Initial support at 1.9651 (Apr 9 low) followed by 1.9607 (76.4% retracement of 1.9363-2.0398). Initial resistance is now at 1.9843 (Apr 10 high) followed by 1.9928 (Apr 8 high).
·Australian Dollar – 0.9235
Initial support a 0.9243 (Apr 8 low) followed by 0.9177 (Apr 7 low). Initial resistance is now at 0.9354 (Mar 19 high) followed by 0.9473 (Mar 13 high).
·Gold – 917.90
Initial support at 903.40 (Apr 9 low) followed by 900.50 (Apr 4 low). Initial resistance is now at 940.60 (Mar 31 high) followed by 954.98 (Mar 26 high).
