USD starting to gain Traction
Last week’s currency trading review
The Dollar in what could have been a watershed week for the FX markets, the USD gained even as stocks rallied and risk remained ‘on’. Very Strong Economic data on Thursday and Friday saw the USD rally across the board with the Euro and gold the hardest hit. November Retail Sales were 1.3% vs. 0.6% forecast and December Consumer Sentiment jumped to 73.4 vs. 67.4 previously. The Euro held up well until Friday when the downside pressure finally cracked and the pair spiraled to a 1.45 handle for the first time in 3 months. Hurting sentiment in the Single currency was the downgrade of Greece and the negative ratings watch for Spainwhich led to significant disruptions in the bond market. The EUR/USD fell -1.57% closing at 1.4625, after opening the week at 1.4855.
The Japanese Yen strengthened with the crosses under pressure from falls in their respective majors and although the USD/JPY actually fell for the week it ended on a weak note against the USD which rallied hard on Friday as traders increased bets of an early rate rise from the FED. Also adding to Yens losses on Friday was strong Chinese Industrial Production numbers for November. The USD/JPY fell -1.61% closing at 89.09 after opening the week at 90.52. The GBP continued to flounder as speculation of UK’s exposure to the middle east sent Pound buyers to the sidelines. GBP/JPY was the worst hit falling 3%. The BoE met and held rates at 0.5% whilst also keeping the asset purchase program steady at 200bn. GBP/USD fell -1.32% closing at 1.6257 after opening at 1.6472. The AUD was slightly lower on the week but found strength in buoyant stocks and very strong jobs data. The November Unemployment Rate fell to 5.7% vs. 5.9% forecast and Employment change was +31k vs. +5k previously. The AUD/USD fell -0.22% closing at 0.9125 after opening at 0.9145.
The forex trading week preview
In the States On Tuesday, November Industrial Production forecast at 0.5% vs. 0.1% previously. Also released, October TICS Flows forecast at 49.1 vs. 40.7 Bn previously. On Wednesday, Nov CPI forecast at 0.4% vs. 0.3% previously. Nov Housing starts are forecast at 575k vs. 529k previously. Also on Wednesday, FOMC rate decision forecast unchanged at 0.25%. On Thursday, Weekly Jobless Claims are forecast at 466k vs. 474k previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, German December ZEW Survey forecast at 50 vs. 51.8 previously. On Wednesday, December Manufacturing PMI forecast at 51.4 vs. 51.2. Also released, November CPI forecast at 0.6% vs. -0.1% previously y/y. On Friday, German IFO forecast at 94.2 vs. 93.9 previously. In the UK On Tuesday, November CPI forecast at 1.7% vs. 1.5% previously y/y. On Thursday, November Retail Sales are forecast at 0.4% vs. 0.4% previously. On Friday, BoE releases it Financial Stability Report. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Friday, BOJ rate announcement forecast to remain at 0.1%. In Australia On Wednesday, Q3 GDP is forecast at 0.4% vs. 0.6% previously Q/Q. Also on Wednesday, RBA Battellino Speaks. We will provide our previews and reviews of these data releases in the daily summary.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.4481 |
1.4586 |
1.4635 |
1.4782 |
1.4905 |
|
USD/JPY |
87.37 |
88.20 |
88.85 |
89.81 |
90.46 |
|
GBP/USD |
1.6126 |
1.6168 |
1.6225 |
1.6375 |
1.6516 |
|
AUD/USD |
0.8947 |
0.9016 |
0.9100 |
0.9322 |
0.9406 |
|
XAU/USD |
1101.00 |
1109 |
1118.00 |
1147.00 |
1169.00 |
|
OIL/USD |
68.50 |
69.00 |
69.40 |
70.00 |
72.50 |
Euro – 1.4635
Initial support at 1.4586 (Dec 11 low) followed by 1.4481 (Oct 2 low). Initial resistance is now located at 1.4768 (Dec 9 high) followed by 1.4905 (Dec 7 high)
Yen – 88.85
Initial support is located at 88.20 (Dec 11 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 89.81 (Dec 11 high) followed by 90.46 (Dec 7 High).
Pound – 1.6225
Initial support at 1.6168 (Dec 9 low) followed by 1.6126 (Sept 30 low). Initial resistance is now at 1.6375 (Dec 10 high ) followed by 1.6516 (Dec 7 high).
Australian Dollar – 0.9100
Initial support at 0.9016 (Dec 9 low) followed by the 0.8947 (Nov 27 low). Initial resistance is now at 0.9322 (Dec 3 high) followed by 0.9406 (Nov 16 high).
Gold – 1118
Initial support at 1109 (Dec 11 low) followed by 1101 (Nov 13 low). Initial resistance is now at 1147 (Dec 9 high) followed by 1169 (Dec 08 high) .
Oil – 69.40
Initial support at 69.00 (Major level) followed by 68.50 (Intraday support). Initial resistance is now at 70.00 (Key Psychological Level) followed by 72.50 (intraday resistance).
