Dow Jones Closes above 9500
Last week’s currency trading review
The Dollar finished the week on a low note as the stock market finished at year highs. The catalyst on Friday was a decade high jump in Existing home Sales in July +7%. Also helping on Friday was a speech from Ben Bernanke about the end of the global recession. Most of the week was good for the dollar until these events which forced a massive reversal of fortune. China had multiple stumbles during the week and caused sporadic USD strength on safe haven concerns. The Euro had help from some very strong data with German ZEW Survey jumping to 56.1 vs. 45.2 previously. Also very strong was PMI surveys on Friday with German Services jumping back to 54.1 vs. 48.8 previously. Also strong was Manufacturing at 49 vs. 45.7 previously. The EUR/USD gained 0.88% closing at 1.4328, after opening the week at 1.4202.
The Japanese Yen saw more strength with the continued downside in Chinese stocks hurting any attempts to weaken. Preliminary GDP was slightly worse than forecast at 0.9% vs. 1.1% previously. USD/JPY slipped to 93.40 before strong US news helped lift long term US interest rate expectations. The USD/JPY closed down -0.60% at 94.37 after opening the week at 94.94. The GBP was volatile in the 1.64-1.66 range with GBP/JPY selling running into good buying at lows. UK CPI was strong at 1.8% vs. 1.5% forecast y/y and July UK retails sales came in at 0.4% vs. 0.3% forecast. Weighing on Wednesday, the MPC minutes showing a 75bn expansion of the QE program was discussed. GBP/USD fell -0.23% closing at 1.6503 after opening at 1.6541. The AUD was pelted lower on any China concerns so couldn’t take advantage US stock market moves ending the week under the Key 0.8400 level and below 80 on the AUD/JPY. The AUD/USD closed down -0.17% at 0.8359 after opening at 0.8371.
The forex trading week preview
In the States On Tuesday, June S& P/CS Composite is forecast at -16.4% vs. -17.1%. August Consumer Confidence forecast is at 47.6 vs. 46.6 previously. On Wednesday, Durable Goods Orders in June forecast at 3.0% vs. -2.5% previously. New Home Sales forecast at 1.6% vs. 11% previously. On Thursday, Q2 GDP forecast at -1.4% vs. -1% previously and weekly jobless claims forecast at 563k vs. 576k previously. On Friday, UoM Consumer Confidence is forecast at 64.3 vs. 63.2 previously. Also released, July Personal Income forecast at 0.2% vs. 0.4% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Tuesday, German GDP Q2 is forecast to be finalized at 0.3%. German IFO on Wednesday is forecast to improve to 89 vs. 87.3 previously. On Thursday German CPI is forecast at -0.2% vs. -0.5% previously y/y. In the UK On Thursday, GFK consumer confidence forecast at -24 vs. -25. Also released, Q2 GDP forecast to remain unrevised at -0.8%. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Friday, July Jobless rate forecast at 5.5% vs. 5.4% previously and National Spending is forecast at -.6% vs. 0.2% previously. Also released National CPI forecast at -2.2% in August vs. -1.8% previously y/y. We will provide our previews and reviews of these data releases in the daily summary.
In Australia On Thursday, Q2 Capex is forecast at -5% vs. -8.9% 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 |
1.4046 |
1.4201 |
1.4290 |
1.4447 |
1.4621 |
|
USD/JPY |
92.72 |
93.10 |
94.40 |
95.29 |
96.73 |
|
GBP/USD |
1.6034 |
1.6276 |
1.6405 |
1.6665 |
1.6719 |
|
AUD/USD |
0.8126 |
0.8216 |
0.8370 |
0.8478 |
0.8519 |
|
XAU/USD |
925.00 |
930.00 |
943.00 |
960.00 |
971.00 |
Euro – 1.4290
Initial support at 1.4201 (AUG 20 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace 1.6038 -1.2330)
Yen – 94.40
Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.29 (August 18 high) followed by 96.73 (Aug 12 high).
Pound – 1.6405
Initial support at 1.6276 (Aug 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6665 (AUG 13 high) followed by 1.6719 (AUG 10 high).
Australian Dollar – 0.8370
Initial support at 0.8216 (AUG 21 low) followed by the 0.8126 (July 29 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).
Gold – 943
Initial support at 930 (Aug 17 low) followed by 925 (July 29 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).
