TARP Plan Send Markets Soaring
CURRENCY TRADING SUMMARY – 24th March 2009 (00:30GMT)
·U.S. Dollar Trading (USD) the Dow Jones surged on the back of new TARP plans to remove toxic assets off the balance sheets of banks and create private public partnerships to hold the assets. Also helping the extremely buoyant mood was a surprising jump in February Existing homes sales of 5.1%. US stocks finished over 6% higher in the 5th biggest daily gain on record. Crude Oil closed up $1.73 ending the New York session at $53.80 per barrel. In US share markets, the Nasdaq was up 98 points or 6.76% whilst the Dow Jones gained 497 points or 6.84%. Looking ahead, January House Prices previously at -8.7% y/y.
·The Euro (EUR) was mixed as profit taking hampered further gains and the market asked questions about the next move the ECB will make. Both cutting rates or QE from the ECB will lead to Euro weakness and may cap gains on the back of this equity rally. Overall the EUR/USD traded with a low of 1.3487 and a high of 1.3735 before closing the day at 1.3620. Looking ahead, March Services PMI is forecast at 39 vs. 39.2 previously. January Current Account also released previously at -7.3%.
·The Japanese Yen (JPY) came under severe pressure as stocks staged major rallies around the world. USD weakness kept USD/JPY under pressure initially but +5% gains overwhelmed and the pair ended above 97. AUD/JPY and GBP/JPY all traded at year highs. The relationship with equities is showing tentative signs of returning. Overall the USDJPY traded with a low of 95.66 and a high of 97.34 before closing the day around 97.30 in the New York session. Looking ahead, February Trade Balance is forecast at -10.9 vs. -952.6.
·The Sterling (GBP) was very well supported as GBP/JPY buying and EUR/GBP selling helped the cable to test 1.4600. Key resistance at 1.4660 is forming and will provide the next key trigger for topside moves. Above this a possible test of 1.500 looms. Overall the GBP/USD traded with a low of 1.4452 and a high of 1.4647 before closing the day at 1.4580 in the New York session. Looking ahead, CPI (FEB) forecast at 0.3% vs. -0.7% previously. Retail Sales (Feb) also released forecast at -0.2% vs. -1.3% previously.
·The Australian Dollar (AUD) was one of the main gainers overnight as improved risk sentiment saw the pair surge above the Key 0.7000 level. AUD/JPY traded above 68 to set New Year highs. Base metals also rallied and this underpinned the commodity currency further. Overall the AUD/USD traded with a low of 0.6908 and a high of 0.7058 before closing the US session at 0.7050.
·Gold (XAU) came off the $950 level as decreasing safe haven demand outpaced the weakening USD. Overall trading with a low of USD$956 and high of USD$936 before ending the New York session at USD$939 an ounce.
TECHNICAL COMMENTARY
·Euro – 1.3635
Initial support at 1.3486 (Mar 23 low) followed by 1.3417 (Mar 19 low). Initial resistance is now located at 1.3739 (Mar 19 high) at followed by 1.3799 (Jan 8 high)
·Yen – 97.05
Initial support is located at 95.43 (Mar 23 low) followed by 95.67 (Mar 12 low). Initial resistance is now at 97.34 (61.8% retrace 99.68 to 93.55) followed by 98.23 (76.4% retrace 99.68 to 93.55).
·Pound – 1.4580
Initial support at 1.4395 (Mar 20 low) followed by 1.4160 (Mar 19 low). Initial resistance is now at 1.4663 (Feb 23 reaction high) followed by 1.4986 (Feb 9 high).
·Australian Dollar – 0.7055
Initial support at 0.6852 (Mar 20 low) followed by the 0.6742 (Mar 19 low). Initial resistance is now at 0.7142 (Jan 8 high) followed by 0.7268 (Jan 7 high).
·Gold – 939
Initial support at 926 (Mar 19 low) followed by 883 (Mar 18 low). Initial resistance is now at 978 (Feb 25 high) followed by 1006 (Feb 20 high).
