Fear Returns On Friday
Last week’s currency trading review
The Dollar spent the first part of the week on the back foot as risk appetite slowly picked up. Sentiment turned quickly on Friday however as the Dow Jones crashed over 300 points for its first weekly close under the 10000 mark for the first time this year. May Manufacturing ISM remained solid at 59.7 vs. 60.4 previously. Service ISM also did well to remain at 55.4. US Nonfarm Payrolls missed at 431k vs. 521k forecast. The Euro finally broke below the key Psychological 1.2000 support on Friday with a combination of news Iran was selling 45bn Euros and French PM Fillion saying he sees only good things in a weaker Euro. German Unemployment change beat expectations at -45k vs. -18k forecast. The EUR/USD fell -2.55% closing at 1.1967, after opening the week at 1.2272.
The Japanese Yen had a volatile weak ending higher against risk currencies on Friday’s risk aversion. Against the USD though the Yen lost ground this week after the resignation of PM Hatoyama. His replacement in Kan is perceived by the market as supporting more measures to weaken the Yen.The USD/JPY gained +0.92% closing at 91.90, after opening at 91.05 previously. The GBP ended the week unchanged making major gains against its European counterpart. EUR/GBP slumped to year lows at 0.8250. Earlier in the week, news of a major Equity deal that would have been GBP negative falling apart helped support a relief rally. Friday’s stock market plunge pushed cable back to its opening level. May Services PMI continued to recover jumping to 55.4 vs. 54.3 previously. TheGBP/USD fell -0.02% closing at 1.4452 after opening at 1.4455. The AUD had a volatile week trading mostly in a 0.83-85 range on solid economic data until crashing with Friday’s stock and Euro plunge. The worst performing currency of the week had some upside in April Retail Sales jumping 0.6% vs. 0.4% forecast and strong Q1 GDP at 0.5% Q/Q. The RBA did hold however at 4.5% citing the Euro Crisis and previous rate rises as reasons. The AUD/USD fell -2.93% closing at 0.8231 after opening at 0.8472.
The forex trading week preview
In the States On Monday, Bernanke speaks along with Yellen. On Wednesday, The Fed Beige book is released and Bernanke speaks again. On Thursday, Weekly Jobless Claims are forecast at 447k vs. 453k previously. Also released, April Trade Balance is forecast at 41bn vs. 40.4bn previously. On Friday, UoM Consumer Confidence is forecast at 75 vs. 73.6 previously. Also released, May Retail Sales is 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 Monday, April Factory Orders are forecast at 0.2% vs. 5.0% previously. On Thursday, May CPI is forecast at 1.2% y/y. Also released, ECB rate announcement widely predicted to remain unchanged at 1.0%. Attention will be focused on Trichet comments at the press conference. In the UK On Tuesday, May Nationwide Consumer Confidence is forecast at 72 vs. 74 previously. On Wednesday, April Trade Balance is forecast at -7bn vs. -7.5bn previously. June BOE Rate Announcement is forecast to remain at 0.5% and the Asset Purchase program is forecast to remain at 200bn. On Friday, April Industrial Production is forecast at 2.3% vs. 2.0% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan On Friday, Q1 Final GDP is forecast at 1.0% vs. 1.2% previously. Also released, May Consumer Confidence previously at 42.1. In Australia On Thursday, RBNZ Rate Announcement is forecast to hike to 2.75% vs. 2.5%. Also Released, May Unemployment Rate is forecast unchanged at 5.4%. Employment Change is forecast at 16k vs. 33k 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 |
1.2135 |
1.2144 |
1.2310 |
1.2587 |
1.2747 |
|
USD/JPY |
89.81 |
90.61 |
91.40 |
91.88 |
92.97 |
|
GBP/USD |
1.4231 |
1.4366 |
1.4470 |
1.4703 |
1.4918 |
|
AUD/USD |
0.8067 |
0.8202 |
0.8490 |
0.8579 |
0.8725 |
|
XAU/USD |
1166.00 |
1185 |
1213 |
1229 |
1250.00 |
|
OIL/USD |
70.00 |
72.50 |
74.30 |
75.00 |
76.00 |
Euro – 1.2310
Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2587 (May 24 high) followed by 1.2747 (May 12 high)
Yen – 91.40
Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).
Pound – 1.4470
Initial support at 1.4231 (Mary 20 low) followed by 1.4111 (March 18 2009 low). Initial resistance is now at 1.4703 (May 14 High) followed by 1.4918 (May 13 low).
Australian Dollar – 0.8490
Initial support at 0.8529 (May 20 high) followed by the 0.7828 ( 2009 low). Initial resistance is now at 0. 8499 (May 18 low) followed by 0.8725 (May 19 high).
Gold – 1213
Initial support at 1166 (May 21 low) followed by 1146 (April 27 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).
Oil – 74.30
Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (March high) followed by 76.00 (Intraday Resistance).
