Japan Intervenes in Yen, Greece Shakes Euro Rally

Last week's currency trading review

The Dollar a big week in the markets for the USD which finished significantly higher against it two largest majors as USD/JPY soared on BOJ intervention and EUR/USD plunged on Greece brinkmanship. October NonFarm payrolls up 80k vs. 95 forecast but the Unemployment Rate fell to 9.0% vs. 9.1% previously. The other big story in the market was talk the QE3 would be moving closer to reality although the FOMC meeting and statement was fairly neutral. The Euro was under pressure from the open plunging on Monday and Tuesday as the Greece PM talked of a referendum to stay or leave the Eurozone and this hurt sentiment with the recent bailout deal not yet implemented and increasing the chance of a disorderly Greek Default. By the end of the week the Greece PM had reversed this decision and instead pledged to form a national unity government to pass the Bailout deal and then head into elections. The damage had been down however and the Euro is very fragile with Italian debt now in the spotlight. The EUR/USD is down -2.7% currently at 1.3782, after opening the week at 1.4154.

The Japanese Yen sprang into action surging on Monday as the BOJ/MOJ finally intervened in the USD/JPY pushing major from Y75 to Y79 in a violent move in Asia. The rest of the week saw the USD/JPY pullback to Y78 and go very quiet with action left to the EUR/JPY which gyrated widely. The USD/JPY is up +3.08% currently at 78.22, after opening at 75.81. The GBP ended roughly unchanged in a volatile week falling at the start in sympathy with Euro before reversing higher to close above the 1.6000 level. The BOE meet again this week and last month they increased their own QE in an aggressive move so the market will be once again reminded of the dovish outlook the central bank has taken to the UK economy. Q3 GDP was strong at 0.5% vs. 0.4% but is expected to slow down. The GBP/USD is down -0.54% currently at 1.6028 after opening at 1.6115. The AUD fell sharply as the risk sensitive currency crashed at the start of the week and the RBA cut interest rates to protect the economy form growing international risks. The RBA cut to 4.5% from 4.7% and this helped the AUD/USD hit day lows at 1.02 down 500 pips on the week at one stage before the Greek reversal saw a mini rally into the close. The AUD/USD is down -3.22% currently at 1.0367 after opening at 1.0701.

The Forex Trading Economic Data Ahead Preview

In the States; On Wednesday, Fed Chairman Bernanke speaks. On Thursday, Weekly Jobless Claims forecast at 402k vs. 397k previously. Also September Trade Balance forecast at -46.1b vs. -45.6bn previously. On Friday, UoM Consumer Confidence forecast at 61.1 vs. 60.9 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, Retail Sales forecast at 0.0% vs. -0.3% m/m. On Tuesday, September German Trade Balance forecast at 14.4b vs. 13.8bn previously. In the UK, On Monday, October Halifax HPI forecast at 0.1% vs. -0.5% m/m. On Tuesday, September Manufacturing Production forecast at 0.2% vs. -0.3% m/m previously. On Wednesday, September Trade Balance forecast at -7.9bn vs. -7.8bn previously. On Thursday, BOE Rate meeting with widely forecast to hold at 0.5% and keep the Asset Purchase Program at 275b. On Friday, September PPI forecast at 0.0% vs. 1.7% previously m/m. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; no major data but continued intervention watch. In Australia; On Tuesday, September Trade Balance forecast at 3.04b vs. 3.1bn previously. On Thursday, October Employment Change forecast at 10k vs. 20k previously. The Unemployment Rate forecast 5.3% vs. 5.2% previously. We will provide our previews and reviews of these data releases in the daily summary.



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Euro - 1.3795

Initial support at 1.3657 (Nov 3 low) followed by 1.3609 (Nov 1 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 - 78.15

Initial support is located at 77.54 (50% retrace of 75.57-79.50) followed by 76.95 (61.8% retrace of 75.35-79.53). Initial resistance is now at 78.42 (Nov 2 high) followed by 78.98 (Nov 1  high).

Pound - 1.6030

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 1.6097 (Nov 1 high) followed by 1.6167 (Oct 31 high).

Australian Dollar - 1.0415

Initial support at 1.0203 (Oct 21 low) followed by the 1.0148 (Oct 20 low). Initial resistance is now at 1.0447 (Nov 3 high) followed by 1.0567 (Nov 1 high).

Gold - 1758

Initial support at 1735 (38.2% retrace of 1681.73-1768.03) followed by 1714 (Nov 2 low). Initial resistance is now at 1772 (61.8% retrace of 1921.15-1532.72) followed by 1786 (Sept 22 high).

Oil - 94.50

Initial support at 92.00 (Intraday Support) followed by 90.00 (Intraday Support). Initial resistance is now at  95.00 (Intraday resistance) followed by 96.50 (Intraday Resistance).

Written by Anthony Darvall