Dollar Bulls in Charge
Last week’s currency trading review
The Dollar broke higher against all currencies last week as the as the Euro losses continued and USD/JPY broke out of a 2 week range to the topside. US stocks traded at year highs above 10900 on the Dow Jones before settling slightly lower on fresh Korean peninsula concerns surfacing Friday. January Core Durable Goods climbed 0.9% vs. 0.6% previously and weekly jobless claims dropped to 442k vs. 456k previously. The Euro traded at fresh 10 month lows below 1.3300 on Thursday as the market’s concern about Greece debt and the EU’s bailout plan were put to the test. The EU summit on Friday emerged with a EU/IMF compromise bailout strategy that let the Euro stage a solid relief rally into the weekend. March German IFO surprised at 98 vs. 95.8 forecast. The EUR/USD fell -0.92% closing at 1.3406, after opening the week at 1.3529.
The Japanese Yen was the weakest currency in the market last week as the USD/JPY broke to the topside surging over 2 Yen. The main catalyst for the move higher was the change in yields on US Bonds leading the market to replace the Dollar with the Yen as the cheapest funding currency. Also weighing on the Yen was the differing monetary policy outlooks with US set to pare back support for the bond market whilst Japan is considering expanding support. The USD/JPY gained +2.14% closing at 92.52, after opening at 90.54 previously. The GBP fell below the key 1.5000 level on USD strength and ongoing political concerns in the UK. February Retail Sales jumped 2.1% vs. 0.8% forecast but this was offset from a January revision to -3.00% vs. -1.8% initially. GBP/USD fell -0.77% closing at 1.4897 after opening at 1.5011. The AUD held ground well against USD strength until Friday when heavy unwinding of short EUR/AUD positions sent the AUD/USD towards 0.9000. AUD/JPY traded at month highs above Y84.50 before slipping on Friday. High Australian interest rates continue to support the Aussie on dips. The AUD/USD fell -1.26% closing at 0.9039 after opening at 0.9153.
The forex trading week preview
In the States On Monday, February Core PCE is forecast at 1.3% vs. 1.4% y/y previously. Also released, February Personal Spending is forecast at 0.3% vs. 0.5% m/m. On Tuesday, March CB Consumer Confidence is forecast at 50 vs. 46 previously. On Wednesday, March Chicago PMI is forecast at 61 vs. 62.6 previously. Also released, February Factory Orders forecast at 0.5% vs. 1.7% previously. On Thursday, Weekly Jobless Claims are forecast at 440k vs. 442k previously. Also released, ISM March Manufacturing is forecast at 57 vs. 56.5 previously. On Friday, March Non Farm Payrolls are forecast at 190k vs. -36k previously. The March Unemployment Rate is forecast at 9.7% vs. 9.7% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone On Monday, German CPI is forecast at 0.9% vs. 0.6% y/y. On Wednesday, March German Unemployment Rate is forecast at at 8.2% vs. 8.2% previously. February EU Unemployment rate is forecast at 10.0% vs. 9.9% previously. On Thursday, March PMI manufacturing final is forecast unchanged at 56.3. In the UK On Monday, February Mortgage Approvals forecast at 48 vs. 48.2k previously. Also, BOE Dale speaks. On Tuesday, Q4 GDP Final is forecast unchanged at 0.3% Q/Q. On Thursday, March PMI Manufacturing forecast at 56.8 vs. 56.6 previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Tuesday, February Industrial Production is forecast at 31.75 vs. 18.5% previously. On Thursday, Q1 Tankan is forecast at -14 vs. -24 previously. Q1 Tankan Capex is forecast at -0.4% vs. -13.8% previously. In Australia On Wednesday, February Retail Sales are forecast at 0.35 vs. 1.2% previously. On Thursday, February Trade Balance is forecast at -1.37bn vs. -1.18bn 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 |
1.3247 |
1.3270 |
1.3435 |
1.3507 |
1.3569 |
|
USD/JPY |
91.09 |
91.77 |
92.40 |
92.96 |
93.77 |
|
GBP/USD |
1.4704 |
1.4784 |
1.4910 |
1.5049 |
1.5113 |
|
AUD/USD |
0.8936 |
0.8978 |
0.9050 |
0.9139 |
0.9199 |
|
XAU/USD |
1078.00 |
1085 |
1107.00 |
1109 |
1124.00 |
|
OIL/USD |
78.00 |
79.5 |
80.00 |
82 |
83.20 |
Euro – 1.3435
Initial support at 1.3270 (March 26 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3507 (Mar 24 high) followed by 1.3569 (Mar 23 high)
Yen – 92.40
Initial support is located at 91.77 (Mar 25 low) followed by 91.09 (Mar 24 low). Initial resistance is now at 92.96 (Mar 25) followed by 93.77 (Jan 8 high).
Pound – 1.4910
Initial support at 1.4784 (Mar 1 low) followed by 1.4704 (April 30 low). Initial resistance is now at 1.5049 (Mar 24 high) followed by 1.5113 (Mar 23 low).
Australian Dollar – 0.9050
Initial support at 0.8978 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9139 (Mar 25 high) followed by 0.9199 (March 23 high).
Gold – 1107
Initial support at 1085 (Mar 24 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1109 (Mar 22 high) followed by 1124 (0.618 of 1144.98-1092.47).
Oil – 80.00
Initial support at 79.50 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 83.20 (March high).
