General Commentary
Last Week’s Currency Trading Review:
The EUR: TheEUR/USDtumbled this week to 1.3706 as it became more likely that the ECB would add stimulus after a disastrous GDP print. In Europe, France, Germany, Italy, and the general Eurozone are also releasing GDP numbers that are expected to reflect a strong quarter in Germany and a weak quarter elsewhere. It’s a perplexing and dangerous mix as German economic growth is looking good while the rest of the Eurozone is facing a bumpy road to recovery – and therefore the political interest in different types of monetary policy is to say the least disjointed. Revised European CPI data for April will also be released and analysts are looking for a 0.7% y/y number when everything’s said and done. How ECB council members scheduled to speak overnight will deal with that development is an open question, although this morning’s comments point to a fairly united front for monetary policy accommodation.
The Yen:
TheUSD/JPY eased all week to end at 101.48 as strong Japanese data helped give the yen momentum. The dollar came under pressure versus the yen in line with a tumble in the Nikkei average that reflected dismal U.S. and European stock markets. A decline in U.S. long-term Treasury yields prompted by lower New York stock prices dealt an additional blow to the dollar.
Investors shunned riskier assets after eurozone gross domestic product growth for January to March fell short of market expectations, while disappointing U.S. data such as industrial production for April fueled concerns over the course of its economy.
The U.S. currency later slumped as low as around ¥101.40 after the Nikkei average somewhat widened losses to approach the 14,000 threshold. The dollar recouped some losses in late trading.
The AUD: TheAUD/USDis trading in a very tight range this week closing at 0.9366 and opening the previous Monday at 0.9357. The Australian dollar remains lower as US inflation and jobs numbers met or exceeded expectations and eurozone first quarter GDP data disappointed.
The Forex Trading Week Preview:
The States: Tuesday: FOMC Member Plosser Speaks. Wednesday, FOMC Dudley speaks, Crude oil Inventories and Yellen Speaks. Thursday: FOMC Minutes, Unemployment Claims, Existing Home Sales. Friday New Home Sales.
The EZ: Monday: German Buba Speaks. Wednesday: Current Account. Thursday: French Manufacturing PMI, German PMI, Service PMI. Friday: German Ifo Business climate.
The BOE: Tuesday: CPI, PPI. Wednesday: MPC Asset Purchase, MPC officical ban rate votes. Thursday: Second estimate GDP, Prelim Business investment.
The BOJ: Wednesday: BOJ Monetary Policy statement, Press conference.
Technical Commentary
The AUD- 0.9357
Pivot: 0.9370
Support 0.9325, 0.9280 and 0.9250
Resistance: 0.9370, 0.9410 and 0.9460
The Eur: 1.3700
Pivot: 1.3680
Support: 1.3680, 1.3645 and 1.3620
Resistance: 1.3730, 1.3750 and 1.3775
The JPY: 101.53
Support: 101.30, 101.15 and 101
Resistance: 101.7, 101.9 and 102.10
The GBP: 1.6824
Pivot: 1.6780
Support: 1.6780, 1.6760 and 1.6730
Resistance: 1.6855, 1.6885 and 1.6905.
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