Last week's currency trading review

The Dollar managed solid gains over the week against its two biggest traded pairs as Yields started to increase on US Treasuries. US Data is improving with solid Weekly Jobless Claims (421k) and Trade Balance at -38.7b vs. -43.5b previously. Helping the US stocks rally to year highs was the announcement that the Bush Tax Cuts would be extended and that Consumer Confidence was improving. The Euro struggled against the resurgent USD even with strong risk appetite. Weighing on the Euro was the ongoing division between the ECB/EU on bailout expansion and domestic austerity budgets. The EUR/USD fell -1.41% closing at 1.3225, after opening the week at 1.3412.

The Japanese Yen remained on the back foot as the major pushed back above Y84 and risk crosses such as the AUD/JPY pushed to month highs. The Yen is becoming the risk trade in the market. The USD/JPY gained 1.68% closing at 83.94, after opening at 82.19. The GBP was able to finish roughly unchanged against the dollar but higher across the board with heavy EUR/GBP selling the main support. GBP/JPY regained Y130 and pushed another 2 Yen higher as stocks extended gains. The GBP/USD gained +0.15% closing at 1.5799 after opening at 1.5775. The AUD underperformed the rest of the market on Gold weakness and a neutral RBA statement after the central bank meeting on Tuesday. Very strong however was the November Employment numbers at +54k and a drop in the Unemployment Rate to 5.2% vs. 5.4% previously. The AUD/USD gained -0.79% closing at 0.9852 after opening at 0.9930.

The Forex Trading Week Preview

In the States; On Tuesday, November Retail Sales are forecast at 0.6% vs. 1.2% previously. Also on Tuesday, FOMC Rate Decision and Statement. On Wednesday, Nov CPI is forecast at 0.2% vs. 0.2%. November Industrial Production is forecast at 0.3% vs. 0.0% previously. On Thursday, Jobless Claims are forecast at 425k vs. 421k previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Zew Survey is forecast at 84 vs. 81.5 previously. On Thursday, December Manufacturing PMI forecast at 55.2 vs. 55.3 previously. Services PMI is forecast 55.3 vs. 55.4 previously. December German IFO forecast at 109 vs. 108.7. In the UK, On Tuesday, November CPI forecast 3.2% vs. 3.2% previously. On Wednesday, October Unemployment Rate forecast to remain at 7.7%. November Core Retail Sales are forecast at 1.6% vs. 1.2% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Wednesday, Q4 Tankan Survey forecast at 3 vs. 8 previously. In Australia; On Thursday, RBA Bulletin released. 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

1.2969

1.3165

1.3205

1.3323

1.3401

USD/JPY

82.32

83.46

83.90

84.41

85.40

GBP/USD

1.5581

1.5712

1.5795

1.5863

1.5965

AUD/USD

0.9625

0.9739

0.9855

0.9939

1.000

XAU/USD

1362.00

1371

1383

1404

1438

OIL/USD

85.00

87.00

87.70

88.00

90.00





Euro - 1.3205

Initial support at 1.3165 (Dec 9 low) followed by 1.2969 (Nov 30 low). Initial resistance is now located at 1.3323 (Dec 9 high) followed by 1.3401 (Dec 7 high)



Yen - 83.90

Initial support is located at 83.46 (Dec 8 high) followed by 82.32 (50% retrace of 80.22-84.41). Initial resistance is now at 84.41 (Nov 29 high) followed by 85.40 (Sept 24 high).

Pound - 1.5795

Initial support at 1.5712 (Dec 9 Low) followed by 1.5581 (Dec 3 low). Initial resistance is now at 1.5841 (Dec 9 high) followed by 1.5965 (Nov 23 high).

Australian Dollar - 0.9855

Initial support at 0.9739 (Dec 3 low) followed by the 0.9625 (Dec 2 low). Initial resistance is now at 0.9939 (Dec 3 high) followed by 1.0000 (Psychological Resistance).

Gold - 1383

Initial support at 1371 (Dec 3 low) followed by 1362 (Nov 30 low). Initial resistance is now at 1404 (Dec 8 high) followed by 1438 (1329.70 plus 1315.45-1424.60).

Oil - 87.70

Initial support at 87.00 (Intraday Support) followed by 85.00 (Intraday Support). Initial resistance is now at 88.00 (Intraday Resistance) followed by 90.00 (Intraday Resistance).





Written by Anthony Darvall