Last week's currency trading review

The Dollar was under heavy selling pressure on Friday with the Dow up over 200 points on plenty of FED talk (Tarullo and Evans) supporting QE3. US data was minimal with the main other focus in the market on the continue turmoil in Europe. September CPI at 0.3% m/m. The Euro waxed and waned with headlines out of Europe showing the complexity of the EU bailout and the issues that the different parties have to deal with. German Political pressure not to expand the EFSF or change the ECB role in the Crisis is tempering expectations out of the summit which had its final day pushed back to Wednesday this week. October German Business IFO was at expectations at 106.4 vs. 107.4 previously. The EUR/USD is up +0.10% currently at 1.3892, after opening the week at 1.3878.

The Japanese Yen finally broke out of the recent range to the downside with USD/JPY hitting all time lows under Y76 on broad USD weakness Friday. Adding to USD/JPY downside pressure is the announcement of new measures from the BOJ to help companies affected by the strengthening yen. These measures are seen by some as an acceptance of recent Yen strength and levels. The USD/JPY is down 1.38% currently at 76.19, after opening at 77.18. The GBP enjoyed solid gains through the week against the USD and the Euro with strong stocks supporting and some better than expected UK data forcing a rethink of the outlook. September CPI came in very strong at 5.2% vs. 3.5% y/y. September Retail Sales also came in hot at 0.6% vs. -0.4% previously. The GBP/USD is up +0.82% currently at 1.5950 after opening at 1.5819. The AUD struggled to make substantial gains with resistance above 1.0300 proving solid and instead traded in 1 .01 to 1.03 range for most of the week. The market closed at highs however as stocks soared into the weekend with all eyes now on the EU summit over the next couple of days to set direction. The AUD/USD is up +0.35% currently at 1.0372 after opening at 1.0336.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, October CB Consumer Confidence forecast at 46 vs. 45.4 previously. Also Bank of Canada forecast at unchanged at 1.00%. On Wednesday, September Durable Goods forecast at -0.7% vs. -0.1% previously m/m. Also released September New Home Sales forecast at 1.7% vs. -2.3% previously. On Thursday, Q3 GDP forecast at 2.3% vs. 1.3% previously Q/Y. Also weekly jobless claims forecast at 404k vs. 403k previously. On Friday, September Personal Income forecast at 0.3% vs. -0.1%. October UoM Consumer Confidence forecast at 58 vs. 57.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, October PMI Manufacturing forecast at 48.1 vs. 48.5 previously. Also PMI servers forecast 48.6 vs. 48.8 previously. On Tuesday, ECB President Trichet Speaks. On Wendesday, EU Summit Deal announced. In the UK, on Tuesday, BOE Governor King speaks. On Wednesday, Oct CBI Industrial Order Expectation forecast at -7 vs. -9 previously. On Thursday, CBI Realized Sales forecast unchanged at -15. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, BOJ Rate meeting forecast to hold at 0.1% but with focus on whether new measures announced to fight the stronger Yen. On Friday, CPI forecast at 0.2% y/y. In Australia; On Monday, Q3 PPI forecast at 0.8% vs. 0.8% previously. On Wednesday, Q3 CPI forecast at 0.7% vs. 0.9%. 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

1.3566

1.3653

1.3845

1.3937

1.4013

USD/JPY

74.44

75.00

76.40

77.09

77.49

GBP/USD

1.5681

1.5754

1.5940

1.5991

1.6104

AUD/USD

1.0102

1.0203

1.0330

1.0399

1.0440

XAU/USD

1583.00

1603

1641

1665

1676

OIL/USD

85.00



85.00

87.05

88.00

89.00

Euro - 1.3845

Initial support at 1.3653 (Oct 18 low) followed by 1.3566 (Oct 11 low). Initial resistance is now located at 1.3937 (Sept 15 high) followed by 1.4013 (61.8% retrace of 1.4549-1.3146)



Yen - 76.40

Initial support is located at 75.00 (big figure Support) followed by 74.44 (77.86 minus 0.618 of 81.48-75.95). Initial resistance is now at 77.09 (Oct 20 high) followed by 77.49 (Oct 12 high).

Pound - 1.5940

Initial support at 1.5754 (Oct 21 low) followed by 1.5681 (Oct 20 low). Initial resistance is now at 1.5991 (Sept 9 high) followed by 1.6104 (61.8% retrace of 1.6618-1.5272).



Australian Dollar - 1.0330

Initial support at 1.0203 (Oct 21 low) followed by the 1.0102 (Oct 13 low). Initial resistance is now at 1.0399 (Sept 16 high) followed by 1.0440 (76.4% retrace of 1.0765-0.9388).

Gold - 1641

Initial support at 1603 (Oct 20 low) followed by 1583 (Sept 29 low). Initial resistance is now at 1665 (Oct 19 high) followed by 1676 (Oct 18 low).



Oil - 87.05

Initial support at 85.00 (Intraday Support) followed by 83.00 (Intraday Support). Initial resistance is now at  88.00 (Intraday resistance) followed by 89.00 (Intraday Resistance).





Written by Anthony Darvall