USD Makes Major move higher
Last week’s currency trading review
The Dollar made impressive gains across the board on the back of the FOMC statement and ongoing concern about the Eurozone. The FOMC held at 0.25% and said they saw signs that the unemployment situation was improving. November PPI was also very strong at 1.8% m/m and led some to question whether inflation may emerge in the coming months. The Euro broke through the 1.4500 support level after the FOMC news and led the rest of the market lower. Heavy stops and continuing liquidation of USD short positions kept the pair under pressure for the rest of the week. December German ZEW was at 50.4 vs. 50.1 forecast whilst the November IFO improved to 94.7 for the highest reading since July 2008. The EUR/USD fell -1.88% closing at 1.4346, after opening the week at 1.4616.
The Japanese Yen weakened against the USD through the key Y90 level as the market reacted to changes in the interest rate outlook for Japan and the US. Most crosses were roughly unchanged although the GBP/JPY managed solid gains. The December Quarter Tankan survey improved to -24 vs. -33 previously but still indicates very tough Business conditions. The BOJ held at 0.1%. The USD/JPY gained 1.55% closing at 90.45 after opening the week at 89.05. The GBP fell to the USD but was stronger against most currencies as EUR/GBP fell and GBP/JPY rallied. The big shock in Economic data was the fall in November Claimant count by -6.3k vs. 13.9k forecast. GBP/USD fell -0.59% closing at 1.6161 after opening at 1.6256. The AUD was the worst performing currency as the market unwound the USD carry trade which had supported the recent Aussie rally. Also hurting sentiment was a Dovish speech from the Deputy Governor of the RBA in which he stated Interest Rates were now back in the normal range. The AUD/USD fell -2.48% closing at 0.8904 after opening at 0.9125.
The forex trading week preview
In the States On Tuesday, Q3 GDP is forecast unchanged at 2.8%. November Existing Home Sales are forecast at 2.5% vs. 10.1% previously. On Wednesday, November Core PCE is forecast at at 1.3%. Also released, December UoM forecast at 74 vs. 73.4 previously. On Thursday, Weekly Jobless Claims are forecast at 470k vs. 480k previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, January German GFK Consumer Confidence is forecast at 3.5 vs. 3.7 previously. In the UK On Tuesday, Q3 Final GDP is forecast at -0.1% vs. -0.3% previously. On Wednesday, Bank of England minutes from the December meeting released. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Thursday, BOJ minutes released and BOJ Governor Shirakawa speaks. On Friday, November CPI is forecast at -2.0% y/y vs. -2.5% previously. In Australia On Wednesday, Q3 New Zealand GDP is forecast at 0.4% vs. 0.1% 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 |
1.4178 |
1.4262 |
1.4335 |
1.4536 |
1.4591 |
|
USD/JPY |
88.20 |
88.58 |
90.40 |
90.91 |
91.32 |
|
GBP/USD |
1.5903 |
1.5973 |
1.6140 |
1.6411 |
1.6516 |
|
AUD/USD |
0.8647 |
0.8760 |
0.8905 |
0.9011 |
0.9070 |
|
XAU/USD |
1080.00 |
1095 |
1116.00 |
1141.00 |
1147.00 |
|
OIL/USD |
70.00 |
72.50 |
74.50 |
75.00 |
76.00 |
Euro – 1.4335
Initial support at 1.4262 (Dec 18 low) followed by 1.4178 (Sept 1 low). Initial resistance is now located at 1.4536 (Dec 17 high) followed by 1.4591 (Dec 16 high)
Yen – 90.40
Initial support is located at 88.58 (Dec 15 low) followed by 88.20 (Dec 11 low). Initial resistance is now at 90.91 (Dec 17 high) followed by 91.32 (Nov 4 High).
Pound – 1.6140
Initial support at 1.5973 (Oct 15 low) followed by 1.5903 (Oct 14 low). Initial resistance is now at 1.6411 (Dec 16 high ) followed by 1.6516 (Dec 7 high).
Australian Dollar – 0.8905
Initial support at 0.8760 (Oct 6 low) followed by the 0.8647 (Oct 5 low). Initial resistance is now at 0.9011 (Dec 17 high) followed by 0.9070 (Dec 16 high).
Gold – 1116
Initial support at 1095 (Nov 17 low) followed by 1084 (Nov 5 low). Initial resistance is now at 1141 (Dec 17 high) followed by 1147 (Dec 9 high) .
Oil – 74.50
Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday support). Initial resistance is now at 75.00 (Key Psychological Level) followed by 76.00 (Intraday resistance).
