Last week's currency trading review

The Dollar a major market sell off during the start of the week saw the USD gain against risk currencies but lose against other safe havens in Gold and CHF. The market was spooked by the US rating downgrade and concerns that the world was about to slip back into recession. The FOMC meeting on Tuesday tried to support the market by announcing that the US central bank will hold rates low until 2013 and that QE3 was possible. Stocks rebounded on the news and finished well off lows. The Euro was supported from moves by the ECB to support the European debt market with the central bank stepping in to buy Italian and Spanish bonds and pave off the debt crisis spreading. The EUR/USD finished roughly unchanged in what was an extremely volatile weak with EUR/CHF hitting all-time lows under 1.05 before spiking higher on talks the Swiss national bank mate peg the Swiss Franc to the Euro. The EUR/USD is down -0.03% currently at 1.4394, after opening the week at 1.4398.

The Japanese Yen gained broadly against most currencies with safe haven demand supporting. The BOJ and MOF complained loudly about the price of the Yen and recent one sided movements. The allowed the USD/JPY to find support at Y86.50. The USD/JPY is up +0.17% currently at 76.88, after opening at 76.75. The GBP was volatile but under pressure with GBP/JPY selling and risk off trading through the week. Some support was seen with EUR/GBP selling but the ECB move saw any downside momentum evaporate. The GBP/USD is down -0.51% currently at 1.6340 after opening at 1.6424. The AUD was crushed lower in heavy long liquidation with the heavily bought Aussie dollar falling out of favor with the stock crash. Down below parity at one stage the Aussie was able to recover over 400 pips but finished still heavily down on the week. The AUD/USD is down -5.38% currently at 1.0431 after opening at 1.0992.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, July Industrial Production forecast at 0.2% vs. 0.5%. July Housing Starts forecast at -3.3%. Wednesday, July PPI forecast at 7.0% m/m. On Thursday, July CPI forecast at 3.3% y/y. July Home Sales forecast 2.7% vs. -0.8%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, Q2 GDP forecast at 0.5% vs. 1.5% previously. On Wednesday, July CPI forecast at 1.7% vs. 1.6% previously y/y. On Friday, July German PPI 0.1% vs. 0.1% previously. In the UK, On Tuesday, July CPI forecast at 4.3% vs. 4.2% previously. On Wednesday, BOE Minutes forecast at 0-7-2. July Claimant change at 20k vs. 24.5k previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Monday, GDP Q2 forecast -2.5% vs. -3.5% previously. In Australia; On Tuesday, RBA minutes from August meeting. 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

1.4055

1.4150

1.4425

1.4401

1.4454

USD/JPY

75.00

76.25

76.85

77.31

78.47

GBP/USD

1.6121

1.6167

1.6375

1.6411

1.6547

AUD/USD

1.0246

1.0331

1.0475

1.0500

1.0600

XAU/USD

1702.00

1732

1765

1800

1815

OIL/USD

82.50



85.00

87.45

87.50

88.00



Euro - 1.4425

Initial support at 1.4150 (Aug 12 low) followed by 1.4055 (Aug 5 low). Initial resistance is now located at 1.4401 (Aug 11 high) followed by 1.4454 (Aug 1 high)



Yen - 76.85

Initial support is located at 76.25 (Mar 15 low) followed by 75.00 (Psych level). Initial resistance is now at 77.31 (Aug 10 high) followed by 78.47 (Aug 8 high).

Pound - 1.6375

Initial support at 1.6167 (Aug 12 low) followed by 1.6121 (Jul 21 low). Initial resistance is now at 1.6411 (Aug 9 high) followed by 1.6547 (May 31 high).



Australian Dollar - 1.0475

Initial support at 1.0311 (Aug 15 low) followed by the 1.0246 (Aug 12 low). Initial resistance is now at 1.0500 (Previous support) followed by 1.0600 (Big figure).

Gold - 1765

Initial support at 1732 (Aug 11 low) followed by 1702 (Aug 9 low). Initial resistance is now at 1800 (Pysch level) followed by 1815 (Aug 10 high).



Oil - 87.45

Initial support at 85.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 88.00 (Intraday resistance) followed by 90.00 (Intraday Resistance).





Written by Anthony Darvall