Bank of English slashes Interest rates by 1.50%
CURRENCY TRADING SUMMARY – 7th November 2008 (00:30GMT)
·U.S. Dollar Trading (USD) in another very volatile day on the markets the USD was helped to week highs against multiple currencies on both safe haven flows and falling commodity prices. The ECB, SNB and BOE all cuts rates helping to close the gap between the US and other economies interest rates. Only the Yen outperformed the USD as stocks plummeted of a bevy of poor retail results. In the U.S. share markets, the NASDAQ was down 72.94 points (-4.34%) and the Dow Jones was down 443.50 points (-4.85%). Crude Oil closed down $4.53 ending the New York session at $60.77 per barrel. Looking ahead, October Unemployment is to rise to 6.3% vs. 6.1% previously with a drop of 200K jobs. Also released Pending Home Sales are expected to fall -3% in September.
·The Euro (EUR) traded in a wide range but was under pressure from both heavy EUR/JPY selling and expectation of Interest rate cuts. The ECB delivered a 0.5% cut but this was poorly received from the market since earlier the Bank of England cut by 1.50%. German Industrial Orders fell a shocking -8% in September vs. -2% expected. Overall the EUR/USD traded with a low of 1.2678 and a high of 1.2930 before closing the day at 1.2720 in the New York session. Looking ahead, German Trade Balance is expected at 13.7 Bln vs. 13.1 Bln previously.
·The Japanese Yen (JPY) gained heavily against all currencies as risk aversion spiked and stock losses mounted. With the Nikkei down over 6% the mood was set in Asia and although the crosses were buoyant expecting rate cuts from the Eurozone, stocks failed to rebound and Yen gains mounted. USD/JPY was stubbornly resilient as market players are very wary in BoJ/MoF rate checking to stem sharp downside moves. Overall the USDJPY traded with a low of 97.40 and a high of 98.67 before closing the day around 97.70 in the New York session.
·The Sterling (GBP) the currency of the day after the Bank of England shocked markets by cutting rates by a stunning 1.5% sending rates to 3%. This puts interest rates at 50 year lows in England and the market initially bought up the Pound in response to this proactive step to attack the credit crisis. Ongoing stock weakness overwhelmed this rally though and the GBP finished sharply lower. Overall the GDP/USD traded with a low of 1.5562 and a high of 1.6039 before closing the day at 1.5620 in the New York session.
·The Australian Dollar (AUD) was well supported during the European session after falling to heavily in Asia but these gains were not held as Oil fell over 5% and stocks in the US fell sharply. On a brighter note October Unemployment Change was surprisingly strong at +34K vs. -10K. The Unemployment rate was unchanged at 4.3%. Overall the AUD/USD traded with a low of 0.6650 and a high of 0.6901 before closing the US session at 0.6660.
·Gold (XAU) stepped lower as USD strength overwhelmed safe haven flows and investors sold the precious metal to free up cash. One of Gold’s biggest strengths comes from its inflation hedging qualities. With Oil falling $80 a barrel from highs and demand slumping around the world, inflation expectations are seen falling and this is hurting gold sentiment. Overall trading with a low of USD$730 and high of USD$760 before ending the New York session at USD$732 an ounce.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2329 |
1.2526 |
1.2680 |
1.3116 |
1.3299 |
|
USD/JPY |
96.08 |
96.36 |
97.50 |
99.92 |
100.57 |
|
GBP/USD |
1.5269 |
1.5566 |
1.5580 |
1.6197 |
1.6264 |
|
AUD/USD |
0.6551 |
0.6603 |
0.6640 |
0.7065 |
0.7239 |
|
XAU/USD |
707.50 |
718.25 |
732.00 |
777.50 |
803.30 |
·Euro – 1.2680
Initial support at 1.2526 (Nov 4 low) followed by 1.2329 (Oct 28 low). Initial resistance is now located at 1.3116 (76.4% retrace 1.3298 to 1.2526) at followed by 1.3299 (38.2% retrace 1.4867 to 1.2329 and Oct 30 high).
·Yen – 97.50
Initial support is located at 96.36 (Oct 31 low) followed by 96.08 (Oct 29 low). Initial resistance is now at 99.92 (Nov 5 high) followed by 100.57 (Oct 22 high).
·Pound – 1.5580
Initial support at 1.5566 (Nov 6 low) followed by 1.5269 (Oct 24 low). Initial resistance is now at 1.6167 (Nov 5) followed by 1.6264 (61.8% retrace 1.6672 to 1.5604).
·Australian Dollar – 0.6640
Initial support at 0.6603 (Nov 3 low) followed by the 0.6551 (Oct 31 low). Initial resistance is now at 0.7065 (Oct 20 high) followed by 0.7239 (Oct 14 high).
·Gold – 732
Initial support at 718 (61.8% retrace 777.90-682.41) followed by 707 (Oct 27 low). Initial resistance is now at 777.5 (Oct 30 high) followed by 803.65 (Oct 21 Level).
