Obama Bank Plans Scare the Market
Last week’s currency trading review
The Dollar gained across the board except against the Yen as risk aversion shot higher on new plans from Obama to limit the risk taking by banks. The reforms and uncertainty around it’s impact caused stock markets to tumble with the Dow Jones down over 5% on the week. The Euro continued its recent slide as Greece issues caused Euro weakness to intensify. EUR/JPY traded at 9 months lows under Y127 and EUR/GBP broke down to 4 month lows below 0.8700. January German ZEW fell more than expected to 47.2 vs. 49.8 previously. The EUR/USD fell -1.76% closing at 1.4137, after opening the week at 1.4386.
The Japanese Yen was the strongest currency as the USD fell out of favor vs. the Yen on speculation the Obama Bank reforms would cause US banks to under perform. Also helping the Yen was stories of possible Chinese bank lending being tightened. The USD/JPY fell -1.14% closing at 89.81 after opening the week at 90.83. The GBP fell back on GBP/USD and GBP/JPY selling but the Pound did find support against most other currencies as economic data improved. December Claimant Count improved to -15k vs. -3k forecast. EUR/GBP selling and GBP/AUD buying where a major source of support. GBP/USD fell -0.94% closing at 1.6111 after opening at 1.6262. The AUD weakened the most of the major currencies on concerns that Chinese tightening would lead to a constriction of Australian resource consumption from the emerging giant. AUD/JPY selling was aggressive as US stocks fell with the carry trade pair down over 3% on the week. The AUD/USD fell -2.43% closing at 0.9004 after opening at 0.9223.
The forex trading week preview
In the States a big week of data kicks off on Tuesday with November Case Shiller HPI forecast at -5.0% vs. -7.2% previously y/y. Also released Tuesday, January Consumer Confidence is forecast at 53.5 vs. 52.9 previously. On Wednesday, December New Homes +4.2% vs. -11.30%. Also released, FOMC Rate Decision forecast to remain at 0.25%. On Thursday December Durable Goods are forecast at 2.0% vs. 0.25 previously. Weekly Jobless Claims are forecast at 452k vs.482k previously. On Friday, Q4 GDP is forecast at 4.5% vs. 2.2% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, German IFO is forecast at 95.1 vs. 94.7 previously. On Wednesday, January Unemployment is forecast at 8.2% vs. 8.1% previously. On Friday, January EU CPI forecast at 1.2% y/y vs. 0.9% previously. In the UK On Tuesday, Q4 GDP is forecast at 0.4% vs. -0.2%. On Friday, GFK Consumer Confidence forecast at -18 vs -19 previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Tuesday, BOJ meet to discuss rates and the economy. On Wednesday, December Retail Trade is forecast at -0.2% vs. 0.2% previously. On Friday, December CPI is forecast at -1.7% vs -1.9% previously. In Australia On Wednesday, Q4 CPI is forecast at 2.0% y/y vs. 1.3% previously. On Thursday, RBNZ meet to discuss New Zealand Interest rates and are forecast to remain at 2.5%. 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 |
1.3964 |
1.4008 |
1.4150 |
1.4218 |
1.4414 |
|
USD/JPY |
89.29 |
89.79 |
90.05 |
91.87 |
92.05 |
|
GBP/USD |
1.5897 |
1.6038 |
1.6100 |
1.6312 |
1.6372 |
|
AUD/USD |
0.8902 |
0.8939 |
0.9020 |
0.9146 |
0.9243 |
|
XAU/USD |
1074.00 |
1082 |
1094.00 |
1117 |
1141.00 |
|
OIL/USD |
70.00 |
72.50 |
74.00 |
75.00 |
77.00 |
Euro – 1.4150
Initial support at 1.4008 (Jul 29 low) followed by 1.3964 (Jul 15 low). Initial resistance is now located at 1.4218 (Dec 22 high) followed by 1.4414 (Jan 19 high)
Yen – 90.05
Initial support is located at 89.79 (Jan 22 low) followed by 89.30 (50% retracement of 84.86 – 93.75). Initial resistance is now at 91.87 (Jan 21 high) followed by 92.05 (Jan 14 high).
Pound – 1.6100
Initial support at 1.6038 (Jan 21 low) followed by 1.6137 (Jan 13 low). Initial resistance is now at 1.6312 (Jan 21 high) followed by 1.6372 (Jan 20 high).
Australian Dollar – 0.9020
Initial support at 0.8939 (Jan 21 low) followed by the 0.8902 (Dec 30 low). Initial resistance is now at 0.9146 (Jan 21 high) followed by 0.9243 (Jan 20 high).
Gold – 1094
Initial support at 1082 (Jan 22 low) followed by 1074 (Dec 22 low). Initial resistance is now at 1117 (Jan 20 high) followed by 1141 (Jan 20 high).
Oil – 74.00
Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).
