December Non Farm Payroll’s Shock Market
Last week’s currency trading review
The Dollar came under considerable pressure as risk appetite picked up in the first week of trading for 2010 and economic data did little to inspire fresh buying. November Pending Home Sales dropped -16% vs. +3.9% previously. The FOMC minutes acknowledge the improving unemployment situation but some members were concerned about the effect on the economy from withdrawing stimulus too quickly. The major move came on Friday when the December Employment Change came in much worse than expected at -85k vs. 0k forecast and the Unemployment rate remained at 10.0%. The Euro stayed inside the 1.4250-1.4450 range although finished the week near high’s as the market shrugged off Eurozone concerns to lead the single currency higher against the Greenback. November EU retail Sales were weak at -1.2% vs. 0.0% previously. EUR/GBP managed to find support and edged back to the key 0.9000 level. The EUR/USD gained 0.59% closing at 1.4408, after opening the week at 1.4328.
The Japanese Yen continued to lose ground against the risk currencies as the carry trade came back to life. USD/JPY pulled back slightly as the US jobs numbers came in weak but this was countered from comments by the new Minister of Finance Kan that he would like to see the Yen weaken more towards the Y95 level. AUD/JPY gained to fresh 14 month highs above Y86. The USD/JPY fell -0.37% closing at 92.67 after opening the week at 93.01. The GBP was the worst performing currency as markets took a dim view to the ongoing political stalemate and UK government debt outlook. UK data was upbeat with December Manufacturing PMI at 54.1 and Services at 56.8. the BoE held rates at 0.5% and left the Asset Purchase Program at 200bn. GBP/USD fell -0.89% closing at 1.6021 after opening at 1.6164. The AUD extended the recent rally breaking back above the key 0.9000 level on Monday and tracking higher for the rest of the week. Underpinning the move higher were large gains in Gold and Oil and continued cross buying from AUD/JPY, EUR/AUD and GBP/AUD. November Retail sales surprised to the upside at 1.4% vs. 0.4% m/m. forecast. The AUD/USD gained +2.94% closing at 0.9244 after opening at 0.8973.
The forex trading week preview
In the States On Tuesday, Nov Trade Balance forecast at -34.5bn vs. -32.9bn previously. On Wednesday, Fed’s Beige Book Released. On Thursday, December Weekly Jobless Claims at 433k vs. 434k previously. Also released, December Retail Sales forecast at 0.4% vs. 1.4% previously. Friday, December CPI forecast at 2.8% vs. 1.8% previously y/y. Also released, University of Michigan January Consumer Confidence forecast at 74 vs. 72.5 previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Wednesday, German GDP is forecast at -4.8%. Also released, November Industrial Production is forecast at 0.6% vs. -0.6% previously. On Thursday, ECB Rate announcement is forecast to remain at 1.0%. ECB President Trichet also speaks after announcement. On Friday, EU CPI is forecast at 0.9% vs. 1.0% previously. In the UK On Tuesday, Nov Trade Balance is forecast -7bn vs. -7.1bn previously. On Wedenesday, Nov Industrial Production is forecast at 0.3% vs. 0.0%. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Thursday, November Machine Orders forecast at 0.2% vs. -4.5% previously. In Australia On Tuesday, November Home Loans are forecast at -0.5% vs. -1.4% previously. On Thursday, December Unemployment Change forecast at 10k vs. 31.2k previously. Also released, December Unemployment Rate forecast at 5.8% vs. 5.7% previously. We will provide our previews and reviews of these data releases in the daily summary.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.4218 |
1.4258 |
1.4470 |
1.4484 |
1.4536 |
|
USD/JPY |
91.52 |
92.11 |
92.35 |
94.07 |
94.57 |
|
GBP/USD |
1.5833 |
1.5897 |
1.6090 |
1.6154 |
1.6241 |
|
AUD/USD |
0.8939 |
0.9093 |
0.9305 |
0.9323 |
0.9406 |
|
XAU/USD |
1115.00 |
1140 |
1155.00 |
1169 |
1200.00 |
|
OIL/USD |
82.00 |
82.50 |
83.30 |
84.00 |
85.00 |
Euro – 1.4470
Initial support at 1.4258 (Jan 4 low) followed by 1.4218 (Dec 22 low). Initial resistance is now located at 1.4484 (Jan 5 high) followed by 1.4536 (Dec 17 low)
Yen – 92.35
Initial support is located at 92.11 (Jan 7 low) followed by 91.52 (Jan 6 low). Initial resistance is now at 94.07 (Aug 28 high) followed by 94.57 (Aug 26 high).
Pound – 1.6090
Initial support at 1.5897 (Jan 7 low) followed by 1.5833 (Dec 30 low). Initial resistance is now at 1.6154 (Jan 5 high) followed by 1.6241 (Jan 4 high).
Australian Dollar – 0.9305
Initial support at 0.9093 (Jan 5 low) followed by the 0.8939 (Jan 4 low). Initial resistance is now at 0.9323 (Dec 3 high) followed by 0.9406 (Nov 6 high).
Gold – 1155
Initial support at 1140 (previous resistance) followed by 1115 (Jan 5 low). Initial resistance is now at 1169 (Dec 8 high) followed by 1200 (Major level).
Oil – 83.30
Initial support at 82.50 (Intraday support) followed by 82.00 (Intraday Support). Initial resistance is now at 84.00 (Intraday resistance) followed by 85 (Major level).
