Bernanke is ready if the economy is.  

CURRENCY TRADING SUMMARY – 12th October (00:30GMT)

U.S. Dollar Trading (USD) traded higher against a number of majors as Fed Chairman Bernanke signaled that rates would tighten once the economy improves, although accommodative policy would likely be needed for an extended period. Hence the thought of exit strategies being at the forefront of the Central Bank’s mind ensured the market propped up the USD. In US share markets the NASDAQ traded higher by 15.35 pts (+0.72%) whilst the DJIA also traded higher by 78.07 pts (+0.8%). Thin trading is expected on Monday due to Columbus Day holidays.

The Euro (EUR) edged lower following Bernanke comments and further weighed upon as a report showed German Exports had declined unexpectedly. This was also reflected in a narrowing of the German trade balance to 8.1 mln from previous 14.1 mln. Overall the EURUSD traded with a low of 1.4672 and a high of 1.4795 before closing the day at 1.4727.    

The Japanese Yen (JPY) also traded lower versus the USD on the back of Bernanke comments once more. The Japanese Yen continues to trade near 9 month highs (despite bouncing on Friday) versus the dollar supported by views that the Japanese Government will not look to intervene in the near term. Overall the USDJPY traded with a low of 88.33 and a high of 89.88 before closing the day at 89.77. Japanese markets will be closed on Monday due to bank Holiday.

The Sterling (GBP) shrugged of an improvement in producer prices on Friday coming in at 0.4% (versus -0.1%) to continue to head lower versus the Dollar, as it followed suite by Comments by the Federal Reserve that it was considering the timing of an exit strategy. Overall the GBP traded with a low of 1.5824 and a high of 1.6073 before closing the day at 1.5834.  

The Australian Dollar (AUD) continued to trade near 14 month highs on Friday as Prime Minister Kevin Rudd said that an improvement in Unemployment (seen Thursday) could prompt the RBA to hike by 50 bpt in the November meeting, further fuelling the RBA hawkish comments seen post rate hike on Tuesday. Overall the AUDUSD traded with a low of 0.9010 and a high of 0.9080 before closing the day at 0.9040

Oil & Gold (XAU) XAU gave up some of its weekly gains on Friday falling US$7.70 an ounce to close at 1048.25 suffering on a broadly stronger USD. Further more, Oil traded higher as the International Energy Agency raised its outlook for Oil demand, trading higher by US$0.08 to US$71.77 a barrel.

TECHNICAL COMMENTARY                                                            

 

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4481

1.4646

1.4736

1.4844

1.4908

USD/JPY

87.13

87.98

89.85

89.98

90.41

GBP/USD

1.5805

1.5859

1.5860

1.6126

1.6207

AUD/USD

0.8760

0.8866

0.9055

0.9130

0.9347

XAU/USD

1015.70

1036.90

1051.50

1061.55

1100.00

OIL/USD

69.85

70.81

71.05

72.54

73.31

 

 

Euro – 1.4736

Initial support at 1.4646 (Oct 6 low) followed by 1.4481 (Oct 2 low). Initial resistance is now located at 1.4844 (Sept 23 high) followed by 1.4908 (August 22 ’08 high)

Yen – 89.85

Initial support is located at 87.981 (Jan 23 low) followed by 87.13 (Jan 21 low). Initial resistance is now at 89.88 (Oct 5 high) followed by 90.41 (Sept 03 high).

Pound – 1.5860

Initial support at 1.5859 (Oct 7 low) followed by 1.5805 (Oct 2 low). Initial resistance is now at 1.6126 (Sep 30 high) followed by 1.6207 (23.6% retracement 1.3503 – 1.7043).

Australian Dollar – 0.9055

Initial support at 0.8866 (Oct 7 low) followed by the 0.8760 (Oct 5 low). Initial resistance is now at 0.9130 (Aug 07 ’08 high) followed by 0.9347 (Aug 04 '08 high).

Gold – 1051.50

Initial support at 1036.90 (Oct 7 low) followed by 1015.70 (Oct 6 low). Initial resistance is now at 1061.55 (08 Oct high) followed by 1100 (Psych Level).

Oil – 71.05

Initial support at 70.81 followed by 69.85.  Initial resistance is now at 72.54 followed by 73.31.