Last week's currency trading review

The Dollar was under heavy selling pressure due to risk on trading and sharp moves higher in commodities. Gold broke to record highs and Oil surged above $110 a barrel. The FOMC minutes showed that most members still backed the finishing of QE2 and continued loose monetary policy. The Euro moved towards 1.4500 on the back on the widely expected ECB rate hike by 0.25% to 1.25%. ECB President Trichet did not indicate another rate hike in May but did leave the door open for further rate hikes if needed to stop inflation. In other major news Portugal requested Aid from the EU as politics stopped an austerity budget being passed. The EUR/USD is up +1.73% currently at 1.4483, after opening the week at 1.4233.

The Japanese Yen ended weaker against all currencies with Yen Crosses moving aggressively higher. USD/JPY broke above Y85 and spent a lot of time above the figure before reversing below on USD weakness Friday. The BOJ held at 0.1% as widely expected but did expand the types of collateral that could be used to access the central banks funding facilities.  The USD/JPY is up +0.83% currently at 84.75, after opening at 84.05. The GBP moved higher but was slightly behind other majors with traders buying Euro and AUD before the Pound. The BOE held at 0.5% and the Asset purchase facility at 200bn. March PPI increased to 3.7% m/m and suggest inflation will continue to be a problem in coming months for the UK. The GBP/USD is +1.65% currently at 1.6381 after opening at 1.6110. The AUD broke above the key 1.05 level on the back of very strong commodities and economic data. March Employment change of +37.8k vs. -8.6k helped restore confidence in the strength of the Australian economy. Interest rates are still expected to increase 0.5%-1.0% in the coming year and this would add to the allure of the carry trades in AUD/USD and AUD/JPY. The AUD/USD is up +1.69% currently at 1.0563 after opening at 1.0383.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, February Trade Balance is forecast at -44bn vs. -46bn previously. Also released, BOC Rate Decision forecast to hold 1.0%. On Wednesday, March Retail Sales forecast at 0.5% vs. 1.0% previously. On Thursday, Weekly Jobless Claims are forecast at 380k vs. 382k previously. On Friday, March CPI forecast at 0.5% m/m. Also released, Apr UoM Consumer Confidence forecast at 68.8 vs. 67.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, March German CPI forecast at 2.1. April German Zew Survey forecast at 85 vs. 85.4 previously. On Wednesday, February EU forecast at 0.75 vs. 0.3% previously. On Friday, March EU CPI forecast at 1.0% y/y. In the UK, On Tuesday, February Trade Balance forecast at 8.3bn vs. 7bn previously. March CPI forecast at 4.5% vs. 4.4% previously y/y. On Thursday, March Jobless Claims Change forecast at -3k vs. -10.2k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On February, Industrial Production previously at 2.8%. In Australia; On Wednesday, April Consumer Confidence previously at 104.1. Also RBA Governor Stevens Speaks.

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

1.4208

1.4243

1.4465

1.4512

1.4561

USD/JPY

84.03

84.51

84.80

85.62

86.00

GBP/USD

1.6091

1.6257

1.6370

1.6458

1.6516

AUD/USD

1.0315

1.0412

1.0570

1.0640

1.01023

XAU/USD

1430.00

1447

1472

1477

1480

OIL/USD

108.00



110.00

112.80

113.50

115.00





Euro - 1.4465

Initial support at 1.4243 (Apr 7 low) followed by 1.4208 (Apr 6 low). Initial resistance is now located at 1.4512 (Jan 15 2010 high) followed by 1.4561 (1.2867 plus 1.2588-1.4282)



Yen - 84.80

Initial support is located at 84.51 (Dec 51 low) followed by 84.03 (Apr 5 low). Initial resistance is now at 85.62 (50% retrace of 94.99-76.25) followed by 86.00 (Big Figure Resistance).

Pound - 1.6370

Initial support at 1.6257 (Apr 6 low) followed by 1.6091 (Apr 5 low). Initial resistance is now at 1.6458 (Jan 19, 2010 high) followed by 1.6516 (Dec 7 2009 high).



Australian Dollar - 1.0570

Initial support at 1.0412 (Apr 7 low) followed by the 1.0315 (Apr 6 low). Initial resistance is now at 1.0640 (0.8771 plus 1.618 of 0.8067-0.9222) followed by 1.1023 (61.8% retrace of 1.4885-0.4776).

Gold - 1472

Initial support at 1447 (Mar 24 high) followed by 1430 (Apr 5 low). Initial resistance is now at 1477 (1308.25 plus 0.618 of 1157.03-1431.25) followed by 1480 (Big Figure).



Oil - 112.80

Initial support at 110.00 (Intraday Support) followed by 108.00 (Intraday Support). Initial resistance is now at 113.50 (Intraday resistance) followed by 115.00 (Intraday Resistance).





Written by Anthony Darvall