US Economic Data Stabilizing, Dollar strengthening. ECB and BoE interest rates in focus.
CURRENCY TRADING SUMMARY – 5th June 2008 (00:30GMT)
·U.S. Dollar Trading (USD) held recent strong gains on the back of improving US economic data. With the lack of downside surprises in recent data releases some market commentators are beginning to reevaluate the severity of the US Economic downturn. The ADP employment report came in +40K vs. -30K forecast although it must be said that recent ADP numbers have been significantly higher then Nonfarm Payrolls set to be released this Friday. Such a large gain above expectations in the ADP though has significantly reduced the chances of a downside shock in Fridays report. Also released 1st quarter Nonfarm Productivity came in stronger at 2.6% vs. 2.5% expected and the May ISM Service’s composite in at 51.7 vs 51.0 forecasted, impressively above the 50 expansionary level. The US share markets were still weighed down by banking concerns, the NASDAQ was up 22.66 (0.91%) and the Dow Jones was down 12.37 points (-0.1%). Crude Oil closed down $2.01 ending the New York session at $122.30 per barrel. Looking ahead, weekly jobless claims out today expected in at 374K continuing the recent uptrend.
·The Euro (EURO) traded lower on souring sentiment caused by weakening economic data. April retail sales came in much lower at -0.6% vs. 0.2% expected. Strong US data and a fall in Crude Oil prices also weighed. Overall the EUR/USD traded with a low of 1.5418 and a high of 1.5485 before closing the day at 1.5433 in the New York session. Looking ahead, focus turns to the ECB interest rate decision that is widely believed to be held at 4.00% and the press conference afterwards held by President Trichet.
·The Japanese Yen (JPY) held a tight range as positive US news was contained by lackluster equities. Movement in the crosses were mixed, driven by the majors. Overall the USDJPY traded with a low of 104.54 and a high of 105.38 before closing the day around 105.23 in the New York session.
·The Sterling (GBP) tested new lows as the May Services PMI came in contractionary for the first time in 4 years at 49.8. Overall the GBP/USD traded with a low of 1.9528 and a high of 1.9638 before closing the day at 1.9547 in the New York session. Looking ahead, UK’s Monetary Policy Committee Interest rate statement is scheduled for release widely expected to keep rates at 5.00%.
·The Australian Dollar (AUD) received a major boost on the back of strong GDP figures which came in at 0.6% much higher then the forecasted 0.3% showing the resilience of the Australian economy. After revisiting .9600 levels, USD strength and gold weakness weighed into the days close. AUD/JPY was well bid holding comfortably above the 100 level. Overall the AUDUSD traded with a low of 0.9488 and a high of 0.9629 before closing the day at 0.9571 in the New York session. Looking ahead, April’s Trade Balance forecasted at -1.7B.
·Gold (XAU) edged lower as dollar strength capped rallies and inflation fighting rhetoric weighed. Overall trading with a low of $876.58 and high of $886.63 ending the New York session at $878 an ounce.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.5367 |
1.5410 |
1.5440 |
1.5628 |
1.5669 |
|
USD/JPY |
102.74 |
103.88 |
105.30 |
105.57 |
105.88 |
|
GBP/USD |
1.9454 |
1.9527 |
1.9535 |
1.9637 |
1.9741 |
|
AUD/USD |
0.9430 |
0.9480 |
0.9570 |
0.9630 |
0.9639 |
|
XAU/USD |
860.50 |
871.25 |
877.00 |
897.30 |
909.85 |
·Euro – 1.5440
Initial support at 1.5410 (76.4% retracement of 1.5284 to 1.5818) followed by 1.5367 (May 12 low). Initial resistance is now located 1.5628 (Jun 3 High) at followed by 1.5669 (May 29 high).
·Yen – 105.30
Initial support is located at 103.88 (June 3 low) followed by 102.74 (May 22 low). Initial resistance is now at 105.57 (June 3 high) followed by 105.88 (May 29 high).
·Pound – 1.9535
Initial support at 1.9597 (Jun 2 low) followed by 1.9454 (May 19 low). Initial resistance is now at 1.9637 (June 4 high) followed by 1.9741 (Jun 3 high)
·Australian Dollar – 0.9570
Initial support at .9488 (Jun 4 low) followed by 0.943 (61.8% retracement 0.9291 to 0.9655). Initial resistance is now at 0.9633 (Jun 4 high) followed by 0.9639 (May 29 high).
·Gold – 877
Initial support at 871.25 (May 30 low) followed by 860.5 (May 14 low). Initial resistance is now at 897.3 (Jun 2 high) followed by 909.85 (May 28 high).
