Daily Outlook - China Hikes Rates, Risk Still On

By @ibtimes on

U.S. Dollar Trading (USD) was mixed with gains on the back of a Chinese rate increase during the European session reversed when the US session shrugged off the news, pushing to fresh highs in the stock market and weakening the dollar. In US stocks, DJIA +71 points closing at 12233, S&P +5 points closing at 1324 and NASDAQ +13 points closing at 2797. Looking ahead, Fed Chairman Bernanke Speaks.

The Euro (EUR) was strong as recent selling subsided and buyers returned aggressively to push the pair to week highs just under 1.3700. December German Industrial Output fell -1.5% vs. 0.3% forecast to add to the negative Factory orders reported on Monday. Overall the EUR/USD traded with a low of 1.3571 and a high of 1.3690 before closing the day around 1.3630 in the New York session. Looking ahead, December German Trade Balance forecast 12.1bn vs. 11.8bn previously.

The Japanese Yen (JPY) briefly dipped below Y82 before rebounding back to opening levels late in New York. The outlook is still very mixed as the weak USD fights strong Yen crosses. Overall the USD/JPY traded with a low of 81.75 and a high of 82.44 before closing the day around 82.30 in the New York session. Looking ahead, January Consumer Confidence previously at 40.1.

The Sterling (GBP) was on a weak footing under pressure on crosses with EUR/GBP in particular contributing to pound weakness. Support is seen at 1.6000 and is the first target of bears ahead of Thursday's key BOE Announcement. Overall the GBP/USD traded with a low of 1.6087 and a high of 1.6188 before closing the day at 1.6130 in the New York session. Looking ahead, December Trade Balance forecast at -8.6bn vs. -8.74bn previously.  

The Australian Dollar (AUD) was strong testing 1.0200 in late Asian before the surprise Chinese rate rise saw the commodity currency and Asian neighbor plummet sharply to 1.0130. Chinese stocks markets reopen after 5 days of closure for new year celebrations. Overall the AUD/USD traded with a low of 1.0113 and a high of 1.0191 before closing the US session at 1.0135. UPDATE February Westpac Consumer Sentiment forecast at 1.9% vs. -5.7% previously.

Oil & Gold (XAU) broke higher as the path of least resistance remains to the topside. Overall trading with a low of USD$1348 and high of USD $1368 before ending the New York session at USD$1363 an ounce. Continued to fall for a third day but bounced strongly off the $86 level. WTI Oil Closed -$0.44 at $87.04 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3449

1.3509

1.3605

1.3677

1.3826

USD/JPY

80.54

81.13

82.30

82.93

83.22

GBP/USD

1.6010

1.6059

1.6135

1.6163

1.6299

AUD/USD

0.9964

1.0056

1.0135

1.0228

1.0256

XAU/USD

1343.00

1348

1351

1371

1379

OIL/USD

85.00

87.00

87.50

88.00

90.00

Euro - 1.3605

Initial support at 1.3509 (Feb 7 low) followed by 1.3449 (Jan 21 low). Initial resistance is now located at 1.3677 (Feb 4 high) followed by 1.3826 (Feb 2 High)

Yen - 82.30

Initial support is located at 81.13 (Feb 4 low) followed by 80.54 (Nov 9 low). Initial resistance is now at 82.93 (Jan 28 high) followed by 83.22 (Jan 27 high).

Pound - 1.6135

Initial support at 1.6059 (Jan 18 high) followed by 1.6010 (Feb 1 low). Initial resistance is now at 1.6163 (Feb 8 high) followed by 1.6299 (Nov 4 High).

Australian Dollar - 1.0135

Initial support at 1.0056 (Feb 2 low) followed by the 0.9964 (Feb 1 low). Initial resistance is now at 1.0228 (Jan 3 high) followed by 1.0256 (Dec 31 high).

Gold - 1351

Initial support at 1348 (Feb 8 low) followed by 1343 (Feb 7 low). Initial resistance is now at 1371 (Jan 20 high) followed by 1379 (Jan 19 high).

Oil - 87.50

Initial support at 87.00 (Intraday Support) followed by 85.00 (Intraday Support). Initial resistance is now at 88.00 (Intraday Resistance) followed by 90.00 (Intraday Resistance).

Written by Anthony Darvall

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