Weekly Summary – 22nd June 2010
G20 Ahead, Focus on China Currency Reform
Last week’s currency trading review
The Dollar lost ground across the board as global equities rallied for a 2nd week and risk appetite remained strong. Economic data was mixed with Housing starts dropping to 0.59m vs. 0.65mn previously and May Industrial Production increasing 1.2% vs. 0.7% previously. Gold was a big mover end at year highs just under $1260 an ounce as the precious metal continued its rally. The Euro led the markets higher rallying near every day as fear resided on European debt and short covering continued. A good Spain Debt Auction on Thursday helped the pair break above 1.2400 going into the weekend. Of concern was the large drop in German business confidence with the Zew Economic sentiment dropping to 28 vs. 45 previously. The EUR/USD gained +2.22% closing at 1.2386, after opening the week at 1.2111.
The Japanese Yen edged lower to the below Y91 on the major as the USD weakness was widespread. Crosses remained buoyant however as risk appetite sent AUD/JPY and CAD/JPY to month highs. The BOJ held at 0.1% as expected but kept a cautious economic outlook. The USD/JPY fell -1.03% closing at 90.70, after opening at 91.63 previously. The GBP was able to shrug off some weak economic data early in the week to end the on a positive note. May CPI dropped to 3.4% vs. 3.7% previously. Helping on Thursday was the jump in May retail sales from 0.0% to 0.6%. The GBP/USD gained +1.84% closing at 1.4821 after opening at 1.4548. The AUD once again the risk currency outperformed the rest of the market as AUD/JPY closed in on Y80 and Gold and Oil surged. RBA Minutes were neutral and gave the market little clues as to further rate hikes with the board deferring to July’s Q2 Inflation reading. The AUD/USD gained +2.50% closing at 0.8719 after opening at 0.8501.
The forex trading week preview
In the States On Tuesday, May Existing Home Sales are forecast at 6.5% vs. 7.5% previously m/m. On Wednesday, FOMC Rate Decision widely forecast to remain at 0.25%. Also released, May New Home Sales forecast at -18.5% vs. 14% previously m/m. On Thursday, Weekly Jobless Claims are forecast at 461k vs. 472k previously. On Friday, Q1 GDP forecast to be unrevised at 3.0% and the G20 summit begins. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, June German IFO is forecast at 101 vs. 101.5 previously. On Wednesday, June PMI services is forecast at 56.0 vs. 56.2 previously. Also released, June PMI Manufacturing is forecast at 54.8 vs. 55.8 previously. In the UK On Tuesday, UK Budget Report Published, On Wednesday, Bank of England MPC minutes released. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Wednesday, BOJ Governor Shirakawa is set to speak. In Australia On Wednesday, New Zealand Q1 GDP forecast at 0.5% vs. 0.8% 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 |
1.2045 |
1.2242 |
1.2345 |
1.2453 |
1.2672 |
|
USD/JPY |
88.87 |
89.81 |
91.05 |
91.48 |
92.12 |
|
GBP/USD |
1.4505 |
1.4646 |
1.4790 |
1.4918 |
1.5054 |
|
AUD/USD |
0.8582 |
0.8753 |
0.8810 |
0.8865 |
0.9027 |
|
XAU/USD |
1210.00 |
1227 |
1239 |
1280 |
1300.00 |
|
OIL/USD |
75 |
78.00 |
78.70 |
79.50 |
80.00 |
Euro – 1.2345
Initial support at 1.2242 (June 17 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2672 (May 21 high)
Yen – 91.05
Initial support is located at 89.81 (May 27 low) followed by 88.97 (May 20 low). Initial resistance is now at 91.48 (June 21 high) followed by 92.12 (June 14 high).
Pound – 1.4790
Initial support at 1.4646 (Jun 17 low) followed by 1.4505 (Jun 11 low). Initial resistance is now at 1.4918 (May 13 high) followed by 1.5054 (May 10 high).
Australian Dollar – 0.8810
Initial support at 0.8753 (June 21 low) followed by the 0.8582 (June low). Initial resistance is now at 0. 8865 (May 17 high) followed by 0.9027 (May 17 high).
Gold – 1239
Initial support at 1227 (June 16 low) followed by 1210 (June 7 low). Initial resistance is now at 1280 (1241.97 plus 1.618 of 1227.09- 1251.18) followed by 1300 (Round Number).
Oil – 78.70
Initial support at 78.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).
