Daily Outlook - Dollar Strong on Jobless Claims Drop

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U.S. Dollar Trading (USD) an impressive drop in weekly jobless claims to 3 year lows at 383k vs. 419k previously inspired a dollar rally throughout the markets. Stock markets also took a breather and this added to the USD buybacks in most major FX pairs. In US stocks, DJIA -10 points closing at 12229, S&P +1 points closing at 1321 and NASDAQ +1 points closing at 2791. Looking ahead, UoM Consumer Sentiment forecast at 75 vs. 74.2 previously.

The Euro (EUR) fell a full cent due to dollar strength as the rally this week retraced to under 1.3600. EUR/JPY was very well supported from the move higher in USD/JPY and could break higher in coming session if US data continues to improve. Overall the EUR/USD traded with a low of 1.3576 and a high of 1.3730 before closing the day around 1.3600 in the New York session. Looking ahead, German January CPI is forecast at -0.5%.

The Japanese Yen (JPY) responded sharply to the US jobless Claims data breaking back above Y83 in a potentially important technical move higher. The market has been in a Y83-82 range for months and could be poised for a breakout in coming sessions. Overall the USD/JPY traded with a low of 82.36 and a high of 83.41 before closing the day around 83.35 in the New York session.

The Sterling (GBP) ended up on the day after the MPC held rates at 0.5% as expected but the market focused on analysts calls for rate hikes earlier than expected. GBP/JPY pushed higher and EUR/GBP pulled back to 0.8450 support. Overall the GBP/USD traded with a low of 1.6010 and a high of 1.6140 before closing the day at 1.6100 in the New York session. Looking ahead, January PPI is forecast at 1.2% vs. 3.4% previously.

The Australian Dollar (AUD) was hit by a wave of negative sentiment which combined with a strong Dollar to push the Aussie down for a test of parity. January Employment Change was +24k vs. +15k forecast but inside this number the number of fulltime workers actually fell -8k. Overall the AUD/USD traded with a low of 1.0000 and a high of 1.0131 before closing the day at 1.0010 in the New York session.

Oil & Gold (XAU) was well supported on dips to $1350 to finish roughly unchanged. Overall trading with a low of USD$1350 and high of USD $1366 before ending the New York session at USD$1364 an ounce. Finished slightly higher on middle eastern issues. WTI Oil Closed +$0.50 at $87.52 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3509

1.3572

1.3600

1.3826

1.3862

USD/JPY

81.13

82.20

83.35

83.49

85.00

GBP/USD

1.5953

1.6010

1.6100

1.6163

1.6299

AUD/USD

0.9964

1.0002

1.0015

1.0152

1.0228

XAU/USD

1343.00

1348

1364

1371

1379

OIL/USD

85.00

86.00

87.60

88.00

90.00

Euro – 1.3600

Initial support at 1.3572 (Feb 8 low) followed by 1.3509 (Feb 7 low). Initial resistance is now located at 1.3826 (Feb 3 high) followed by 1.3862 (Feb 2 High)

Yen – 83.35

Initial support is located at 82.20 (Feb 9 low) followed by 81.13 (Feb 4 low). Initial resistance is now at 83.49 (Jan 11 high) followed by 85.00 (Major Figure).

Pound – 1.6100

Initial support at 1.6010 (Feb 1 high) followed by 1.5953 (61.8% retrace of 1.5752-1.6279). Initial resistance is now at 1.6163 (Feb 8 high) followed by 1.6186 (Feb 7 High).

Australian Dollar – 1.0015

Initial support at 1.0002 (50% retrace of 0.9804-1.02) followed by the 0.9964 (Feb 1 low). Initial resistance is now at 1.0152 (Feb 9 high) followed by 1.0228 (Jan 3 high).

Gold – 1364

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 – 87.60

Initial support at 86.00 (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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