Volatility hits markets amidst Greek Bailout plans
Last week’s currency trading review
The Dollar was overall stronger against its two largest pairs in the Yen and the Euro and to a lesser extent against risk currencies as market volatility spiked late in the week thanks to Greek bailout fears and contagion worries in the EU. US ISM Manufacturing improved to 60.4 from 59.6 and Non-farm payrolls posted the second month in a row of 200k+ gain. The Euro was sold again aggressively throughout the week as traders began questioning the efficacy of any proposed rescue package. The Euro fell towards 1.2520 after market turmoil late in the week which saw the DJIA fall 998.5pts before recovering due in part it seems to erroneous trades.The EUR/USD lost 4.4% closing at 1.2759, after opening the week at 1.3340.
The Japanese Yen initially strengthened before being sold off after Thursday’s market turmoil. EUR/JPY was another big underperformer as markets squared positions and bought back Japanese Yen.The USD/JPY lost 2.5% closing at 91.56, after opening at 93.91 previously and having tested towards 88 yen. The GBP also succumbed to selling pressure as UK elections suggested a hung parliament lessening the chances of speedy fiscal policies to revive economy. BoE interest rate meeting was moved forward to the 10th of May. GBP/USD shed 3.26% closing at 1.48 after opening at 1.5314. The AUD was buoyed initially by hike in interest rates to 4.5%, but markets interpreted the following statement as a signal for a possible pause. Retail Sales failed to impress also coming at 0.3% compared to a 0.8% forecast. The AUD/USD gave up 3.63% closing at 0.8895 after opening at 0.9230.
The forex trading week preview
In the States On Thursday, May jobless claims are forecast at 439k vs. 444k previously. On Friday, advanced retail sales for April are expected to come in at 0.2% compared to 1.90% previous. Also on Friday, Univ. of Michigan confidence numbers are due and are expected to show an increase from 72.2 previous to 73.5. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Wednesday, Q1 Eurozone GDP is forecast at 0.2% vs. 0.0% previously. Market focus will be on any further commentary with regards to Greek bailout packages. In the UK On Wednesday, BoE quarterly inflation report is due as well as Trade balance on Friday where the expectation is for a deficit of 2450mln compared to 2061mln deficit previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Wednesday, trade balance is due. In Australia On Thursday, RBA assistant Governor Lowe will speak and April unemployment is due and is forecast at 5.3% vs. 5.3% previously. We will provide our previews and reviews of these data releases in the daily summary.
Euro – 1.2718
Initial support at 1.2529 (May 7 reaction low) followed by 1.2457 (March 4, 2009 low). Initial resistance is now located at 1.3115 (Apr 28 low) followed by 1.3214 (May 4 high)
Yen – 92.70
Initial support is located at 88.26 (May 7 low) followed by 88.14 (Mar 4 low). Initial resistance is now at 94.19 (May 6 high) followed by 94.99 (May 5 High).
Pound – 1.4795
Initial support at 1.4477 (May 7 low) followed by 1.4398 (April 22, 2009 low). Initial resistance is now at 1.5148 (May 6 high) followed by 1.5265 (May 4 high).
Australian Dollar – 0.8985
Initial support at 0.8716 (May 6 low) followed by the 0.8579 (Feb 2 low). Initial resistance is now at 0.9275 (May 4 high) followed by 0.9325 (Apr 30 high).
Gold – 1203
Initial support at 1157.86 (May 5 low) followed by 1146.45 (Apr 27 low). Initial resistance is now at 1213.48 (May 7 high) followed by 1226.44 (Dec 3 high).
Oil – 76.55
Initial support at 75.8 (Intraday Support) followed by 74.51 (May 7 low). Initial resistance is now at 78.51 (May 7 high) followed by 80.39 (May 6 high).
