New World Wednesday as US cuts rates to 0.25%
CURRENCY TRADING SUMMARY – 17th December 2008 (00:30GMT)
·U.S. Dollar Trading (USD) the US Federal Reserve changed its monetary policy overnight slashing the Fed Funds rate by 0.75% to 0.25%. Also accompanying the release was a statement that confirmed the Fed will continue to buy Mortgage backed securities and long term treasuries. The USD came under severe pressure after the announcement while stocks rallied. Other economic data released was also very weak with November CPI dropping -1.7% and November New Housing Starts were down -18.9% m/m. Oil was weak as the market is cautious ahead of the OPEC meeting today. In U.S. share markets, the NASDAQ was up 81.55 points (5.4%) and the Dow Jones was up 359 points (4.20%). Crude Oil closed down $0.90 ending the New York session at $43.60 per barrel. Looking ahead, Q3 Current Account is seen at -178 BN vs. 183 previously. OPEC meeting today.
·The Euro (EUR) soared for the 4th day, breaking above 1.4000 as the US cut rates more aggressively than expected and stocks surged allowing the EUR/JPY to support. EUR/GBP also gained ending above 0.9000 edging out new highs on the day. Economic data released was weak but at expectations with Manufacturing PMI at 34.5 and services PMI at 42. Overall the EUR/USD traded with a low of 1.3631 and a high of 1.4148 before closing the day at 1.4080. Looking ahead,
·The Japanese Yen (JPY) broke lower as the USD/JPY Equities relationship broke down and USD weakness saw the pair under 90. The crosses still performed well though the USD/JPY moves are weighing. With the US now having rates lower than that of Japan the Yield has turn negative weighing on the pair going forward. Overall the USDJPY traded with a low of 88.64 and a high of 90.64 before closing the day around 88.95 in the New York session.
·The Sterling (GBP) tracked the Euro higher breaking above resistance at 1.5500 as the US rate announcement was absorbed. November CPI actually beat expectations remaining at elevated levels of 4.1% vs. 3.9% expected. November Retail Prices fell to 3.0% vs. 4.2% previously. Overall the GDP/USD traded with a low of 1.5206 and a high of 1.5648 before closing the day at 1.5580 in the New York session. Looking ahead, October ILO Unemployment rate is expected at 6.0% and the Claimant Count to rise 45K vs. 36.5K previously. Also released the December Meeting Minutes.
·The Australian Dollar (AUD) took advantage of the weaker USD breaking above 0.6800 and heading towards the psychological level of 70 before running out of steam as AUD/JPY selling capped. Commodities were mixed and this also clouded the up move. RBA minutes yesterday indicated that the steep cuts would be studied for some time before the next meeting in February. Overall the AUD/USD traded with a low of 0.6665 and a high of 0.6986 before closing the US session at 0.6930.
·Gold (XAU) jumped higher as investors fled the Dollar. The $850 has been a key level in the past and traders will be looking for a sustain move above this to call the rally sustainable. Overall trading with a low of USD$830 and high of USD$860 before ending the New York session at USD$857 an ounce.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.3251 |
1.3355 |
1.4050 |
1.4147 |
1.4184 |
|
USD/JPY |
88.07 |
88.53 |
88.95 |
91.86 |
92.88 |
|
GBP/USD |
1.4900 |
1.5204 |
1.5580 |
1.5648 |
1.5703 |
|
AUD/USD |
0.6490 |
0.6666 |
0.6930 |
0.6986 |
0.7015 |
|
XAU/USD |
774.20 |
802.72 |
857.00 |
859.00 |
871.00 |
·Euro – 1.4050
Initial support at 1.3355 (Dec 15 low) followed by 1.3251 (Dec 12 low). Initial resistance is now located at 1.4147 (Dec 16 high) at followed by 1.4184 (0.500 of 1.6038-1.2330)
·Yen – 88.95
Initial support is located at 88.53 (Dec 12 low) followed by 88.07 (Range Projection). Initial resistance is now at 91.98 (Dec 15 high) followed by 92.88 (Dec 11 high).
·Pound – 1.5580
Initial support at 1.5204 (Dec 15 low) followed by 1.4900 (Dec 12 low). Initial resistance is now at 1.5648 (Dec 16 high) followed by 1.5703 (Nov 11 high).
·Australian Dollar – 0.6930
Initial support at 0.6666 (Dec 16 low) followed by the 0.6490 (Dec 12 low). Initial resistance is now at 0.6986 (Dec 10 high) followed by 0.7015 (Nov 4 high).
·Gold – 857
Initial support at 802.72 (Dec 10 low) followed by 774 (Dec 10 low). Initial resistance is now at 859 (Dec 16 high) followed by 871 (Oct 13 high).
