Last week’s currency trading review

 

The Dollar had a very mixed week with risk appetite encouraging selling while Euro weakness improved USD demand. The stock market remained buoyant bringing a 6th week of gains but this failed to translate to fresh gains in risky trades such as the AUD/JPY. US retail sales dropped -1.1% vs. +0.3% forecast and revived fresh concerns about the US consumer. CPI (Mar) fell -0.1% and raised the question of deflation. Also weaker than expected was Industrial Production (Mar) at -1.5% vs. -0.9% previously. On a positive note Consumer sentiment (April) jumped to 61.9 vs. 58.4. The Euro continued to come under pressure last week as speculation that the ECB will join the ranks of UK, US and Japan in unconventional measures. Speculation was fueled by ECB member comments that further rate cuts are possible and that details will be revealed at the May meeting. CPI (Mar) at 0.6% y/y at forecasts. Industrial Production improved to -2.3% vs. -2.5% forecast. The EUR/USD fell -0.96% closing at 1.3043, after opening the week at 1.3168. The Japanese Yen strengthened across the board as the market took profits on the recent large rallies seen on all the crosses. The pullback of the USD/JPY below 100 accelerated the selling. The Corporate Goods Price Index fell -2.2% vs. -1.7% forecast adding to fears of deflation in the worlds second largest economy. The USD/JPY fell -1.28% closing at 99.14 after opening at 100.41. The GBP continued to ride the improvement in risk appetite higher although the market found the 1.5000 level to hard to sustain pulling back sharply after Chinese GDP continued to slow. Also helping the pound was the rebound in the RICS house Price Balance to -73 vs. -78 previously. The GBP/USD gained 0.79% closing at 1.4796 after opening at 1.4679. The AUD attempted to make new gains this week but the 0.7300 level failed to provide fresh follow through and the lackluster Chinese data began to weigh into the close. The AUD/USD is due for a pullback technically after weeks of rallying. The AUD/USD closed down -0.86% at 0.7224 after opening at 0.7286.

The forex trading week preview

 

In the States; another light data week with the Bank of Canada Rate decision on Tuesday the only central bank meeting. In the US, on Wednesday we have Feb House price index forecast at -0.6% vs. 1.7%. On Thursday we have initial jobless claims forecast at 630k vs. 610k previously. On Friday we have Mar Durable Goods Orders forecast at -1.5% vs. 3.4% previously. Also on Friday we have New Home Sales forecast at 340k vs. 337k previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday we have German PPI (Mar) forecast at -0.3% vs. -0.5%. Also released, German Zew forecast at -90.0 vs. -89.4 previously. On Wednesday we have PMI Manufacturing (Apr) forecast at 34.7 vs. 33.9 previously. PMI services are forecast at 41.2 vs. 40.9 previously. Finally on Friday we have German IFO Business climate forecast at 82.4 vs. 82.1 previously. In the UK; CPI (Mar) on Tuesday is forecast at 2.9% vs. 3.2% y/y previously. On Wednesday BOE minutes forecast at 9-0 vote. Also on Wednesday, March Jobless claims are forecast at 116k vs. 138.4k previously. The ILO unemployment rate is forecast at 6.7% vs. 6.5% previously. In a jam packed day the UK chancellor will make the budget statement. On Friday we have GDP Q1 forecast at -1.5% vs. -1.6% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; light data week with Feb All industry activity index forecast at -2.1% vs. -1.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

 

In Australia; on Monday we have the PPI (Q1) forecast at 0.6% vs. 1.3% previously. On Tuesday we have RBA minutes and RBA Governor Stevens speaking. On Wednesday we have CPI (Q1) forecast at 0.5% vs. -0.3% previously.  We will provide our previews and reviews of these data releases in the daily summary.

 

TECHNICAL COMMENTARY




CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.27321.28331.29251.31981.3297
USD/JPY97.2397.6697.9599.76100.43
GBP/USD1.42411.44501.45401.48171.4942
AUD/USD0.68570.69500.69650.70340.7249
XAU/USD843.00852.00884.00893.00909.00

 

 

·         Euro – 1.2925

Initial support at 1.2833 (March 16 low) followed by 1.2732 (Mar 12 low). Initial resistance is now located at 1.3198 (April 17 high) at followed by 1.3297 (Apr 15 high)

 

·         Yen – 97.95

Initial support is located at 97.66 (Apr 20 low) followed by 97.23 (Mar 31 low). Initial resistance is now at 99.76 (Apr 17 high) followed by 100.43 (Apr 14 high).

 

·         Pound – 1.4540

Initial support at 1.4450 (Apr 2 low) followed by 1.4241 (Mar 31 low). Initial resistance is now at 1.4817 (Apr 20 high) followed by 1.4942 (Apr 17 high).

 

·         Australian Dollar – 0.6965

Initial support at 0.6950 (Barrier Support) followed by the 0.6857 (Apr 1 low). Initial resistance is now at 0.7034 (Apr 8 low) followed by 0.7249 (Apr 20 high).

 

·         Gold – 884

Initial support at 852 (Jan 23 low) followed by 843 (Jan 21 low). Initial resistance is now at 893 (Apr 16 high) followed by 909 (Apr 3 high).