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CURRENCY TRADING SUMMARY – 13th May (00:30GMT)
U.S. Dollar Trading (USD) played into the hands of risk on/risk off throughout Wednesday trade, before gaining in late Europe which continued on into the US sessions of trade as the market views the Federal Reserve is likely to increase rates ahead of the ECB and BoE. On the data front, Trade deficit widened to $82.7 billion in April, more than double initial forecasts. US Share markets gained on Wednesday with the Dow Jones up 149 points (1.4%), the S& P 500 up 1.4% and the NASDAQ also higher by 50 points (2.1%). In data ahead, Weekly Jobless claims are forecasted to be seen at 440K slightly less than the previous 444K, whilst Fed Chairman Bernanke is scheduled to speak, investors looking for any indication on future rate policy.
The Euro (EUR) had rallied in early European session of trading as equity markets pushed higher on the back of comments by Spain Prime Minister Jose Zapatero who had announced plans to cut the nation’s deficit, boosting investor sentiment. On the data front German GDP had grown by 0.2% for Q1 (Forecast: 0.0%) spilling over to EU GDP also gaining by 0.2% (Forecast: 0.1%). Industrial Production also rose for the month by 1.3% versus forecast of 1.1%. The EURUSD traded with a high of 1.2735 before falling to a low of 1.2620. Bank Holiday for Switzerland, France and Germany on Thursday.
The Japanese Yen (JPY) subdued data ensured the Japanese Yen took direction from other markets and currencies. The USDJPY traded with a low of 92.55 and a high of 93.25.
The Sterling (GBP) was encouraged by jobs data with Unemployment falling from 4.8% to 4.7%, however BoE inflation report indicated that the start of policy normalisation still appears to be a while yet, with the statement edging towards a dovish view. The GBPUSD traded with a high of 1.5044 before falling to a low of 1.4820. UK Trade balance scheduled for release on Thursday with forecast of a deficit of 6.5 billion.
The Australian Dollar (AUD) was pressured slightly in the Asian session as Home loans fell by 3.4% for the month of March, indicating that recent RBA rate tightening may be having the desired effect. The AUD traded with a low of 0.8895 and a high of 0.8975. Update: Unemployment jumps to 5.4% for April (Previous 5.3%), Employment also rises by 33.7K jobs.
Oil & Gold (XAU) XAU traded at an all time high once again on Wednesday as it continues to find demand amongst safe haven investors amidst global uncertainty. XAU traded at an all time high of 1248.50 an ounce. Crude oil eased on Wednesday as inventories showed a rise in 1.9 million barrels in the past week. Crude fell by US$0.72 a barrel to US$75.65
Euro – 1.2640
Initial support at 1.2457 (Mar 4 low) followed by 1.2330 (October 28 2008 low). Initial resistance is now located at 1.3115 (Apr 28 low) followed by 1.3214 (May 4 high)
Yen – 93.25
Initial support is located at 88.26 (May 6 low) followed by 88.14 (April 28 low). Initial resistance is now at94.19 (May 6 high) followed by 94.99 (May 5 high).
Pound – 1.4850
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 – 0.8970
Initial support at 0.8716 (Mar 6 low) followed by the 0.8579 (0.618 of 0.8578 – 0.9389). Initial resistance is now at 0.9275 (Mar 4 high) followed by 0.9325 (Apr 30 high).
Gold – 1235.70
Initial support at 1166 (Apr 30 low) followed by 1146 (Apr 27 low). Initial resistance is now at 1248.50 (May 12 high, Record High) followed by 1250 (Psychological Round number).
Oil – 75.50
Initial support at 75.56 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 80.00 (March high) followed by 82.50 (Intraday Resistance). |
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XAU keeps on Soaring!
CURRENCY TRADING SUMMARY – 13th May (00:30GMT)
U.S. Dollar Trading (USD) played into the hands of risk on/risk off throughout Wednesday trade, before gaining in late Europe which continued on into the US sessions of trade as the market views the Federal Reserve is likely to increase rates ahead of the ECB and BoE. On the data front, Trade deficit widened to $82.7 billion in April, more than double initial forecasts. US Share markets gained on Wednesday with the Dow Jones up 149 points (1.4%), the S& P 500 up 1.4% and the NASDAQ also higher by 50 points (2.1%). In data ahead, Weekly Jobless claims are forecasted to be seen at 440K slightly less than the previous 444K, whilst Fed Chairman Bernanke is scheduled to speak, investors looking for any indication on future rate policy.
The Euro (EUR) had rallied in early European session of trading as equity markets pushed higher on the back of comments by Spain Prime Minister Jose Zapatero who had announced plans to cut the nation’s deficit, boosting investor sentiment. On the data front German GDP had grown by 0.2% for Q1 (Forecast: 0.0%) spilling over to EU GDP also gaining by 0.2% (Forecast: 0.1%). Industrial Production also rose for the month by 1.3% versus forecast of 1.1%. The EURUSD traded with a high of 1.2735 before falling to a low of 1.2620. Bank Holiday for Switzerland, France and Germany on Thursday.
The Japanese Yen (JPY) subdued data ensured the Japanese Yen took direction from other markets and currencies. The USDJPY traded with a low of 92.55 and a high of 93.25.
The Sterling (GBP) was encouraged by jobs data with Unemployment falling from 4.8% to 4.7%, however BoE inflation report indicated that the start of policy normalisation still appears to be a while yet, with the statement edging towards a dovish view. The GBPUSD traded with a high of 1.5044 before falling to a low of 1.4820. UK Trade balance scheduled for release on Thursday with forecast of a deficit of 6.5 billion.
The Australian Dollar (AUD) was pressured slightly in the Asian session as Home loans fell by 3.4% for the month of March, indicating that recent RBA rate tightening may be having the desired effect. The AUD traded with a low of 0.8895 and a high of 0.8975. Update: Unemployment jumps to 5.4% for April (Previous 5.3%), Employment also rises by 33.7K jobs.
Oil & Gold (XAU) XAU traded at an all time high once again on Wednesday as it continues to find demand amongst safe haven investors amidst global uncertainty. XAU traded at an all time high of 1248.50 an ounce. Crude oil eased on Wednesday as inventories showed a rise in 1.9 million barrels in the past week. Crude fell by US$0.72 a barrel to US$75.65
Euro – 1.2640
Initial support at 1.2457 (Mar 4 low) followed by 1.2330 (October 28 2008 low). Initial resistance is now located at 1.3115 (Apr 28 low) followed by 1.3214 (May 4 high)
Yen – 93.25
Initial support is located at 88.26 (May 6 low) followed by 88.14 (April 28 low). Initial resistance is now at94.19 (May 6 high) followed by 94.99 (May 5 high).
Pound – 1.4850
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 – 0.8970
Initial support at 0.8716 (Mar 6 low) followed by the 0.8579 (0.618 of 0.8578 – 0.9389). Initial resistance is now at 0.9275 (Mar 4 high) followed by 0.9325 (Apr 30 high).
Gold – 1235.70
Initial support at 1166 (Apr 30 low) followed by 1146 (Apr 27 low). Initial resistance is now at 1248.50 (May 12 high, Record High) followed by 1250 (Psychological Round number).
Oil – 75.50
Initial support at 75.56 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 80.00 (March high) followed by 82.50 (Intraday Resistance).
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.
TECHNICAL COMMENTARY
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)
