US Surprise Market with Discount Rate hike
Last week’s currency trading review
The Dollar it was another difficult trading week as surprises shocked the market and sentiment waxed and waned. Stock markets were positive in the end however and this allowed risk sensitive trades to do well. The FOMC meeting minutes spoke of the an exit strategy that will allow the FED to first mop up excess liquidity. This was backed up on Friday by a surprise move by the FED to raise the discount rate to 0.75% which helped the USD to remain firm against most currencies. The Euro ended the week unchanged as the market underwent Greece fatigue and the downside was contained. Euro buyers were helped as Oil rallied and risk appetite improved. Economic data was surprisingly strong with February German Zew Dropping to 45 vs. 42 forecast and February EU Manufacturing PMI at 54 vs. 52.8 forecast. The EUR/USD fell -0.12% closing at 1.3615, after opening the week at 1.3631.
The Japanese Yen was a big mover on the week as crosses rallied from a combination of improving risk appetite and short covering. USD/JPY popped higher on Friday as the market reacted to the surprise FED move by increasing US interest rate hike expectations. The USD/JPY gained +1.67 % closing at 91.50 after opening the week at 89.97. The GBP had are hard weak with economic data disappointing on multiple occasions. UK unemployment unexpectedly jumped 24k vs. -15k forecast. January Retail Sales slumped -1.8% vs. 0.3% previously. GBP/USD fell -1.47% closing at 1.5471 after opening at 1.5699. The AUD continued to rally as commodities surged led by crude oil regaining the $80 level. Adding to the previous weeks gains, AUD/JPY was also a big mover being the best performing currency up over +2.87%. The AUD/USD gained +1.24% closing at 0.8986 after opening at 0.8875.
The forex trading week preview
In the States December CS House Prices forecast at -3.1% vs. -5.3%. Feb Consumer Confidence is forecast at 55 vs. 55.9 previously. On Wednesday, January New Home Sales are forecast at 3.8% vs. -7.6% m/m. Also Bernanke speaks before House Panel. On Thursday, January Durable Goods Orders are forecast at 1.5% vs. 1.0% previously. Weekly Jobless claims are forecast at 460k vs. 473k previously. On Friday, Q4 revised GDP is forecast unchanged at 5.7%. Also released Chicago PMI is forecast at 59 vs. 61.5 previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, February German IFO is forecast at 96.2 vs. 95.8 previously. On Wednesday, German Q4 forecast unchanged at 0.0%. On Thursday, German February Unemployment is forecast at 8.2% vs. 8.2% previously. On Friday, EU CPI is forecast at 1.0% vs 1.1%. In the UK On Friday, Q4 revised GDP is forecast at 0.2% vs. 0.1% initially. Also released, Feb Consumer Confidence forecast at -17 vs. -17 previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Tuesday, Jan CPI is forecast at -1.4% vs. -1.7% previously y/y. Also released, Industrial Production is forecast at 1.05 vs. 1.9% previously. In Australia little data this week with RBA Deputy Governor Battellino speaking on Tuesday. 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 |
1.3400 |
1.3424 |
1.3640 |
1.3788 |
1.3839 |
|
USD/JPY |
90.13 |
90.57 |
91.65 |
92.11 |
93.20 |
|
GBP/USD |
1.5117 |
1.5273 |
1.5485 |
1.5500 |
1.5861 |
|
AUD/USD |
0.8786 |
0.8849 |
0.9010 |
0.9037 |
0.9093 |
|
XAU/USD |
1078.00 |
1098 |
1125.00 |
1127 |
1141.00 |
|
OIL/USD |
78.00 |
80.00 |
80.20 |
81.50 |
82.50 |
Euro – 1.3640
Initial support at 1.3424 (May 18 low) followed by 1.3400 (Big figure). Initial resistance is now located at 1.3788 (Feb 17 high) followed by 1.3839 (Feb 9 high)
Yen – 91.65
Initial support is located at 90.57 (Feb 18 low) followed by 90.13 (Feb 17 low). Initial resistance is now at 92.11 (Feb 18 high) followed by 93.2 (intraday resistance).
Pound – 1.5485
Initial support at 1.5273 (0.5 of 1.3503-1.7043) followed by 1.5117 (May 18 low). Initial resistance is now at 1.5500 (Intraday resistance high) followed by 1.5861 (Feb 1 low).
Australian Dollar – 0.9010
Initial support at 0.8849 (Feb 15 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.9037 (Feb 17 high) followed by 0.9093 (Jan 25 high).
Gold – 1125
Initial support at 1098 (Feb 18 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1127 (Feb 17 high) followed by 1141 (Jan 20 high).
Oil – 80.20
Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 81.50 (Intraday Resistance) followed by 82.50 (Intraday Resistance).
