Last week’s currency trading review

The Dollar was well supported in as stocks markets came under heavy selling pressure throughout the week and Eurozone banking concerns resurfaced. The FOMC on Tuesday offered some USD negatives but these where overlooked as the main theme of safe haven flows helped the dollar gain across the board. July Retail Sales were slightly less than expected at 0.4% m/m. The Euro broke through 1.300 on Wednesday as the market reacted to fresh fears that Irish banks would need capital form the government undermining the European Bank Stress tests. Q2 GDP was one positive at 1.0% vs. 0.7% q/q. The EUR/USD fell -4.12% closing at 1.2753, after opening the week at 1.3278.

The Japanese Yen had a volatile week gaining against most currencies and briefly testing a 15 year high against the USD under Y85 before talk of Japanese intervention inspired a sharp pullback. The BOJ held at 1.65 and is under pressure to stem the rise of the Yen which hurts the export industry. The USD/JPY gained +0.82% closing at 86.19 vs. 85.48 previously. The GBP tracked the Euro lower under heavy GBP/USD and GBP/JPY selling but was able to gain against the Euro with EUR/GBP breaking below 0.8200 and continuing its downtrend. The BoE Governor King spoke about Inflation and finally relented that it may remain higher than the central bank first forecast. The GBP/USD fell -2.23% closing at 1.5592 after opening at 1.5940. The AUD was under pressure in the weak investor environment as the risk sensitive currency followed stocks and Oil lower. July Unemployment showed a surprise jump to 5.3% vs. 5.1% previously. The AUD/USD fell -2.83% closing at 0.8927 after opening at 0.9180.

The Forex Trading Week Preview

In the States On Tuesday, July Housing Starts is forecast at 2% vs. -5% previously and Treasury Secretary Geithner speaks. On Thursday Weekly Jobless Claims forecast at 480k vs. 484k previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Tuesday, August German ZEW Economic sentiment is forecast at 20.6 vs. 21.2 previously. On Thursday, German PPI is forecast at 0.1% vs. 0.6%. In the UK, On Tuesday July CPI is forecast at 3.1% vs. 3.2% previously. On Wednesday, Bank of England minutes is released. We will provide our previews and reviews of these data releases in the daily summary.

In Japan On Thursday, July Machine Tool Orders previously at 144.8% previously. In Australia On Tuesday, RBA Minutes released. On Saturday, Federal Elections held. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.2825

Initial support at 1.2737 (July 22 low) followed by 1.2523 (July 13 low). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3334 (August 6 high)

Yen – 85.75

Initial support is located at 84.73 (August 11 low) followed by 83.50 (June 1995 low). Initial resistance is now at 86.66 (August 3 high) followed by 88.12 (July 28 high).

Pound – 1.5665

Initial support at 1.5400 (July 26 low) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5713 (August 12 high) followed by 1.5999 (Aug 6 high).

Australian Dollar – 0.8970

Initial support at 0.8738 (July 22 high) followed by the 0.8508 (61.8% retrace of 0.8067-0.9222). Initial resistance is now at 0. 9000 (Psychological Figure) followed by 0.9222 (Aug 6 high).

Gold – 1223

Initial support at 1190 (Aug 10 low) followed by 1157 (July 28 low). Initial resistance is now at 1244 (July 1 high) followed by 1265 (June 21 high).

Oil – 75.25

Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).