Last week's currency trading review

The Dollar was under pressure as the relief rally extended gains early in the week but when stocks crashed on Thursday and Friday the safe haven demand for the USD saw losses pared back. The big gainer was gold which soared towards $1900 an ounce. CPI data was as expected at 0.2% in July m/m. A big shock was the Aug Philly FED Index dropping to -30 vs. 3.2 forecast. The Euro was contained in a 1.43-1.45 range with the market focused now on the idea that Eurobonds as a solution to the Debt crisis. Hurting sentiment is Eurozone growth concerns with Q2 GDP a paltry 0.2% vs. 0.8% previously q/q. The EUR/USD is up +1.03% currently at 1.4394, after opening the week at 1.4246.

The Japanese Yen Q2 GDP was better than expected at -0.3% vs. -0.6% q/q forecast. The USD/JPY was extremely contained though with market happy to hold in a 50 pip range with dips below Y76.50 causing verbal intervention. The USD/JPY is down -0.21% currently at 76.53, after opening at 76.69. The GBP was the best performing currency in the market surging above 1.6500 after above forecast inflation data. CPI is remaining high at 4.4% y/y vs. 4.2% previously. The market was able to overlook a changed BOE vote that came in at 9-0 voting for no change after two rate hike voters changed their decisions. The GBP/USD is up +1.13% currently at 1.6457 after opening at 1.6271. The AUD was well supported early in the week with the US equity rebound but then came under pressure as the market reversed on Thursday. The RBA Minutes states they were close to raising rates on inflation concerns but held back on global market uncertainty which proved a wise decision given the volatility since the US rating downgrade. The AUD/USD is up +0.54% currently at 1.0402 after opening at 1.0346.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, July Home Sales forecast at 1% vs. -1%. On Wednesday, July Durable Goods Orders forecast at 2% vs. -1.9% previously. On Wednesday, Weekly jobless claims forecast at 402k vs. 408k previously. On Friday, Q2 GDP forecast at 1.1% vs. 1.3% initially Q/Y. Also Fed Chief Bernanke speaks in a widely anticipated Jackson Hole conference. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, Aug PMI Services forecast at 51.0 vs. 51.1 previously. Also, Aug PMI Manufacturing forecast at 51 vs. 51.6 previously. On Wednesday, Aug German IFO forecast at 111.2 vs. 112.9 previously. On Friday, ECB President Trichet Speaks. In the UK, On Wednesday, Nationwide Consumer Confidence forecast at 45 vs. 51 previously. On Friday, Q2 GDP forecast at 0.2% vs. 0.2% initially. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, CPI forecast at 0% vs. -0.4% previously y/y. In Australia; On Friday, 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

1.4150

1.4226

1.4375

1.4452

1.4536

USD/JPY

75.00

76.25

76.80

77.31

78.86

GBP/USD

1.6256

1.6421

1.6495

1.6592

1.6661

AUD/USD

1.0246

1.0315

1.0430

1.0559

1.0786

XAU/USD

1784.00

1821

1868

1900

1931

OIL/USD

80.00



82.50

83.05

85.00

87.00



Euro - 1.4375

Initial support at 1.4226 (Aug 15 low) followed by 1.4150 (Aug 12 low). Initial resistance is now located at 1.4452 (Aug 18 high) followed by 1.4536 (Jul 27 high)



Yen - 76.80

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 - 1.6495

Initial support at 1.6421 (Aug 18 low) followed by 1.6256 (Aug 15 low). Initial resistance is now at 1.6592 (Aug 17 high) followed by 1.6661 (May 3 high).



Australian Dollar - 1.0430

Initial support at 1.0315 (Aug 19 low) followed by the 1.0246 (Aug 12 low). Initial resistance is now at 1.0559 (Aug 18 high) followed by 1.0786 (Aug 3 High).

Gold - 1868

Initial support at 1821 (Aug 19 low) followed by 1784 (Aug 18 low). Initial resistance is now at 1900 (Psych level) followed by 1931 (1723.70 plus 0.618 of 1478.83-1814.95).



Oil - 83.05

Initial support at 82.50 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 85.00 (Intraday resistance) followed by 87.00 (Intraday Resistance).





Written by Anthony Darvall