Last week's currency trading review

The Dollar did well on the week as the market turned its attention to Italy and sold off risk across the board. Italian Bond Yields broke above 7% and European markets crashed on Monday before staging a strong recovery over the rest of the week to end close to opening levels. Helping the recovery was improving consumer sentiment at 64 vs. 61 previously and Weekly Jobless Claims dropped below 400k last week. The Euro led the market lower on Monday falling from 1.3800 to 1.3500 as Italian bonds yields spiked higher. The crisis sparked PM Berlusconi to resign and the ECB to enter the bond market and buy Italian and Spanish bonds. October German Industrial Production dropped -2.7% vs. -0.7% previously. The EUR/USD is down -0.27% currently at 1.3745, after opening the week at 1.3782.

The Japanese Yen was under pressure for most of the week as the BOJ intervention faded and the sellers took control. The pace of decline is slow at 30 pips a day on average. AUD/JPY and EUR/JPY had heavier losses as the Monday crash saw 3% and 4% dropped. The USD/JPY is down -1.44% currently at 77.11, after opening at 778.22. The GBP was able to close near the top of the recent range at 1.6100 with the market selling EUR/GBP aggressively supporting the GBP/USD. The Bank of England held at 0.5% and kept there QE at 275bn as largely expected. Of concern was a sharp drop in the Trade figures with the September deficit widening to -9.8bn vs. -8bn forecast. The GBP/USD is down +0.3% currently at 1.6076 after opening at 1.6028. The AUD was volatile falling sharply to 1.0100 on the Monday crash before recovering for the rest of the week on solid employment figures. The October Unemployment rate forecast at 5.2% vs. 5.3%. The stock market will  continue to direct the market with the European Crisis the main story but China and US QE3 also on the horizon. The AUD/USD is down -0.98% currently at 1.0266 after opening at 1.0367.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, October Retail Sales forecast at 0.3% vs. 1.1% previously. On Wednesday, October CPI forecast at 0.0% vs. 0.3% previously m/m. October Industrial Production forecast at 0.4% vs. 0.2%m/m previously. On Thursday, Weekly Jobless Claims forecast at 400k vs. 390k previously. Also released, Philly FED forecast at 10 vs. 8.7 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, Q3 GDP forecast at 0.2% vs. 0.2% previously. On Wednesday, EU CPI forecast at 1.6% y/y. On Friday, German PPI forecast at 0.1% vs. 0.3% previously. In the UK, October CPI forecast at 5.1% vs. 5.2% previously y/y. ON Wednesday, Claimant Count Change forecast at 23.5k vs. 17.5k previously. On Thursday, October Retail Sales forecast at -0.5% vs. 0.4% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Wednesday, BOJ rate meeting forecast to hold at 0.1%. In Australia; On Tuesday, RBA November Meeting minutes. ON Wednesday, RBA Governor Stevens speaks tomorrow. 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

1.3346

1.3484

1.3770

1.3871

1.4003

USD/JPY

76.95

77.54

77.20

78.42

78.98

GBP/USD

1.5825

1.5877

1.6065

1.6120

1.6203

AUD/USD

1.0000

1.0071

1.0320

1.0398

1.0567

XAU/USD

1728.00

1736

1791

1802

1816

OIL/USD

95.00



97.00

99.20

100.00

101.00

Euro - 1.3770

Initial support at 1.3484 (Nov 10 low) followed by 1.3346 (Oct 10 low). Initial resistance is now located at 1.3871 (Nov 1 high) followed by 1.4003 (61.8% retrace of 1.4247-1.3609)



Yen - 77.20

Initial support is located at 76.95 (61.8% retrace of 75.35-79.53) followed by 76.34 (76.4% retrace of 75.35-79.53). Initial resistance is now at 77.68 (Nov 11 high) followed by 77.89 (Nov 9  high).

Pound - 1.6065

Initial support at 1.5877 (Nov 3 low) followed by 1.5825 (38.2% retrace of 1.5272-1.6167). Initial resistance is now at 1.6131 (Nov 8 high) followed by 1.6167 (Oct 31 high).



Australian Dollar - 1.0320

Initial support at 1.0052 (Nov 10 high) followed by the 1.0000 (Round Number). Initial resistance is now at 1.0398 (Nov 9 high) followed by 1.0567 (Nov 1 high).

Gold - 1791

Initial support at 1736 (Nov 11 high) followed by 1728 (61.8% retrace of 1681.73-1802.93). Initial resistance is now at 1802 (Nov 8 high) followed by 1816 (Sep 21 high).



Oil - 99.20

Initial support at 97.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at  100.00 (Intraday resistance) followed by 101.00 (Intraday Resistance).





Written by Anthony Darvall