USD WEAK AHEAD OF US INTEREST RATE MEETING

Last week’s currency trading review

The Dollar remained under heavy selling pressure with Friday’s weak Jobs Data accelerating the selloff. July Nonfarm Payrolls missed at -131k vs. -65k forecast. Stock markets where able to brush off the negativity however as talk emerged of possible further easing measures from the FED to help the US recovery continue. The Euro traded above the medium term bull targets of 1.3300 on Friday and the outlook is continuing to improve with solid economic data from the Eurozone and improving investor confidence. The ECB held at 1.0% as expected. The EUR/USD gained +1.72% closing at 1.3278, after opening the week at 1.3050.

The Japanese Yen strengthened further to test the key Y85 level on Friday but when this held firm the pair was able to stabilize. EUR/JPY and AUD/JPY grinded higher but the major’s losses capped gains. The USD/JPY fell -1.13% closing at 85.48 vs. 86.45 previously. The GBP tested 1.6000 on Friday but failed to breach the option protected level. The Pound rally over the last month is reaching overbought levels and without further good economic news may struggle to continue. EUR/GBP is orbiting the 0.8300 level as traders wait for further direction. The BOE held at 0.5% as expected. The GBP/USD gained +1.61% closing at 1.5940 after opening at 1.5684. The AUD pushed higher with Oil and Gold and stocks breaking above 0.9180 resistance. The RBA held at 4.5% but did note that wage pressures were growing and the labor market tightening. The AUD/USD gained +1.49% closing at 0.9180 after opening at 0.9043.

The Forex Trading Week Preview

In the States On Tuesday, FOMC Rate Meeting forecast at 0.25%. On Wednesday, June Trade Balance is forecast at -42bn vs. -43.3bn previously. On Thursday, Weekly Jobless Claims are forecast at 465k vs. 479k previously. On Friday, July Retail Sales are forecast at 0.5% vs. -0.5% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Thursday, June Industrial Production previously at 1.0%. On Friday, German Q2 GDP is forecast at 1.3% Q/Q whilst EU Q2 GDP is forecast at 0.7% Q/Q. In the UK, On Tuesday June Trade Balance is forecast at -7.6bn vs. -8bn previously. On Wednesday, July Claimant Count is forecast at -18k vs. -20k previously. Also Released, June Unemployment Rate is forecast unchanged at 7.8%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan The BOJ decision is due on Tuesday and June Industrial Production on Thursday previously at 17%y/y. In Australia On Wednesday, August Consumer Confidence previously at 11.1%. On Thursday,July Unemployment Rate is forecast at 5.1% with an employment change of +20k. Also on Thursday, Q2 New Zealand Retail Sales are forecast at 0.3% vs. 0.2% previously. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.3280

Initial support at 1.2981 (July 30 low) followed by 1.2737 (July 22 low). Initial resistance is now located at 1.3416 (April 27 high) followed by 1.3692 (April 12 high)

Yen – 85.40

Initial support is located at 84.83 (Nov 29 2009 low) followed by 83.50 (Nov 29 2009 low). Initial resistance is now at 86.66 (August 3 high) followed by 88.12 (July 28 high).

Pound – 1.5970

Initial support at 1.5692 (August 2 low) followed by 1.5400 (July 26 low). Initial resistance is now at 1.6069 (Feb 3 high) followed by 1.6276 (Jan 28 high).

Australian Dollar – 0.9170

Initial support at 0.9033 (Aug 2 high) followed by the 0.8896 (July 22 high). Initial resistance is now at 0. 9273 (May 4 low) followed by 0.9389 (April 12 high).

Gold – 1204

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1211 (Aug 6 high) followed by 1218 (July 13 high).

Oil – 81.00

Initial support at 80.0 (Intraday Support) followed by 79.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 85.00 (Intraday Resistance).