Oil above $140, Neutral Fed statement hurt dollar.
30/06/08
last week’s currency trading review
The Dollar was sold heavily after the FOMC Interest rate statement last week was considerable more moderate than the market was looking for given the Fed held interest rates at 2.00%. The weak Dollar sent commodities into a rally with gold finishing above $920 an ounce and Crude Oil hitting record highs above $140. Crippling high Oil sent equities into a tumble with the Dow Jones hitting year lows. The equities sell off then spurred a spike in risk aversion causing a flight to safety in both bonds and currencies. Consumer Confidence showed a further decline in June to 50.4 from 56.4 in April. The Euro gained from the USD weakness heading towards the key 1.5800 level into the weeks close. Data out from Europe was poorer than expected with the Eurozone services and manufacturing PMI’s both slipping below 50 in contractionary reading. Germany’s IFO survey also disappointed at 101.3 vs. the 102.3 expected. Interest rate hike speculation continue to firm though and markets are now pricing in a near certain hike at the next ECB meeting. The EUR/USD gained 1.17% closing at 1.5790, after opening the week at 1.5605. The Japanese Yen gained into the weeks close as tumbling stock’s increased safe haven flows and risk aversion began to rise. During the week though many crosses reached year highs and the EUR/JPY scaled all time highs at 169.45. A lot of data was released last week with May CPI increasing to 1.5% y/y up from Aprils 0.9% y/y. Also out the May retail sales coming in better than expected at 0.2% m/m (-0.1% forecast) and Industrial production increased to 2.9% m/m. The USD/JPY lost 1.12% closing at 106.13, after opening the week at 107.32. The GBP made good gains as the BoE policy makers testified at the MPC Treasury Committee that they considered raising rates to combat inflation seen rising above 4%. UK Rightmove house prices showed a further drop in May of -1.2% and Q1 GDP was revised lower to 0.3% from 0.4%. The GBP/USD gained 0.95% closing at 1.9947 after opening at 1.9758. The AUD continued to make gains this week with little economic data out the market took direction from the softening USD and the continuing rally in commodities. The AUD/USD closed up 0.80% at 0.9608 after opening at 0.9531.
The forex trading week preview
In the States Tuesday sees the release of June Manufacturing PMI forecast to fall to 49 from May’s 49.6. Wednesday sees May factory orders released expected to fall to 0.5% from Aprils 1.1% and ADP employment report expected to fall -20k after last months surprising 40k rise. Thursday sees the early release of June Nonfarm Payrolls and June Non-Manfacturing ISM due to a public holiday on Friday. June Nonfarm Payrolls are expected at -54K down from May’s 49K and the Non-manufacturing ISM is expected to fall slightly to 51.4 from May’s 51.7 We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone Monday sees Euro-Zone CPI estimate released expected at 3.9%. Tuesday we have German retail sales seen at 0.5% up from -0.6% in April. Also out Eurozone Manufacturing PMI expected to remain unchanged at 49.1 along with an unchanged Unemployment rate. Thursday the PMI services index is seen unchanged at 49.5 and Eurozone Retail sales are expected to rebound to 0.5% from May’s -0.7%. The ECB also announces interest rates on Thursday and this is followed by a press conference where President Trichet is widely predicted to explain a 0.25% rise. Friday we have German Factory Orders for may forecasted to rebound to 0.6% from Aprils -1.8%. In the UK Monday see the GFK consumer Confidence Survey expected to fall further in June to -31 from May’s -29. On Tuesday we have Nationwide house prices forecasted to fall further -1.0% m/m in June along with PMI manufacturing index expected to fall below 50 to 49.8 this month. On Thursday the PMI services for June is expected to fall slightly to 49.6 from 49.8 in May. We will provide our previews and reviews of these data releases in the daily summary.
In Japan Tuesday sees the Tankan large Manufacturing survey expected at 3 in 2nd Quarter down from 11 the 1st Quarter. Friday sees the Leading Economic Index released for May expected up at 103.4% form Aprils 101.7%We will provide our previews and reviews of these data releases in the daily summary.
In Australia On Tuesday the RBA Interest Rate announcement expected to hold at 7.25% and on Wednesday we have May retail sales expected to recover to 0.1% from Aprils -0.2%. Also on Wednesday we have building approval’s expected to fall sharply to -3.4% from Aprils 7.8% m/m. We will provide our previews and reviews of these data releases in the daily summary.
Key Pivot levels
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.5537 |
1.5628 |
1.5795 |
1.5844 |
1.6018 |
|
USD/JPY |
104.42 |
105.87 |
106.40 |
108.61 |
108.98 |
|
GBP/USD |
1.9580 |
1.9715 |
1.9945 |
1.9966 |
2.0027 |
|
AUD/USD |
0.9491 |
0.9542 |
0.9625 |
0.9634 |
0.9648 |
|
XAU/USD |
874.50 |
885.10 |
927.00 |
930.80 |
935.40 |
·Euro – 1.5795
Initial support at 1.5628 (June 26 low) followed by 1.5537 (June 25 low). Initial resistance is now located 1.5844 (Jun 9 High) at followed by 1.6018 (April 22 high).
·Yen – 106.40
Initial support is located at 105.87 (June 27 low) followed by 104.42 (Jun 9 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).
·Pound – 1.9945
Initial support at 1.9715 (June 26 low) followed by 1.9580 (Jun 20 low). Initial resistance is now at 1.9966 (April 28 high) followed by 2.0027 (Apr 21 high)
·Australian Dollar – 0.9625
Initial support at 0.9542 (June 27 low) followed by 0.9491 (June 20 low). Initial resistance is now at 0.9634 (June 27 high) followed by 0.9648 (Jun 9 high).
·Gold – 927
Initial support at 885.1 (Jun 26 low) followed by 874.5 (Jun 25 low). Initial resistance is now at 930.8 (June 27 high) followed by 935.4 (May 22 high).
