Last week's currency trading review

The Dollar was able to gain widespread support on safe haven demand for the world's reserve currency after stock markets continued to fall and Greece Debt remained an unresolved headache for the EU. The end of the QE2 program and the fear that China may be heading for a hard landing kept bears in control. The Euro was punished even as the ECB signaled a rate hike was coming in July with the uncertainty of Greece Debt restructuring boiling over into an open fight between the ECB and EU government officials. The open disagreements are creating fresh risks to the EU bailout fund with the largest member in Germany the most vocal dissenter.  The EUR/USD is down -1.96% currently at 1.4349, after opening the week at 1.4630.

The Japanese Yen was unchanged against the USD but gained against risk currencies with EUR/JPY and AUD/JPY sold heavily. Q1 GDP was confirmed at the weak -0.9%. The outlook for the major is closely linked to US monetary policy and the subsequent yield on US debt. The USD/JPY is down -0.02% currently at 80.23, after opening at 80.25. The GBP was mixed able to gain slightly against the Euro but under pressure from heavy stock markets and commodities. Cable have been in a 1.600-1.65 range for most of the year and is relatively comfortable in the band given an uncertain outlook for the UK recovery and speed of BOE rate hikes. The BOE held at 0.5%. May PPI fell -2.0% vs. 2.8% previously. The GBP/USD is down -1.2% currently at 1.6228 after opening at 1.6423. The AUD was under heavy selling pressure for most of the week with the RBA holding at 4.75% and releasing a dovish statement and Unemployment numbers missing at 7.8k vs. 25k forecast. The weak stock market and concern about China is undermining the usually very bullish outlook for the Aussie dollar. The AUD/USD is down -1.7% currently at 1.0534 after opening at 1.0713.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, May Retail Sales forecast at -0.3% vs. 0.5% previously. Also released, May PPI forecast at 0.1% vs. 0.8% previously. On Wednesday, May CPI forecast at 0.2% vs. 0.2% previously. Also released, May Industrial Production forecast at 0.3% vs. 0.0% previously m/m. On Thursday, Weekly Jobless Claims 421k vs. 427k previously. Also released, May Housing Starts forecast at 0.54m vs. 0.52m previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, ECB President Trichet speaks. On Thursday, May CPI forecast at 2.7% vs. 2.7% previously. On Friday, May Trade Balance forecast at -2.0bn vs. -0.9bn previously. In the UK, On Tuesday, May CPI forecast at 4.5% y/y. On Wednesday, May Claimant Count forecast at 7.2k vs. 12.4k previously. On Thursday, May Retail Sales forecast at -0.5% vs. 1.1% previously m/m. Also BOE Governor King Speaks. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday BOJ Rate Announcement forecast to remain at 0.1%. On Friday BOJ meeting minutes released. In Australia; On Wednesday, 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

1.4308

1.4333

1.4425

1.4551

1.4653

USD/JPY

78.83

79.57

80.25

81.01

81.33

GBP/USD

1.6132

1.6173

1.6405

1.6473

1.6496

AUD/USD

1.0440

1.0510

1.0634

1.0664

1.0877

XAU/USD

1504.00

1513

1520

1545

1577

OIL/USD

95.00



96.50

97.30

98.00

100.00





Euro - 1.4425

Initial support at 1.4333 (50% retrace of 1.3970-1.4697) followed by 1.4308 (Jun 2 low). Initial resistance is now located at 1.4551 (Jun 10 high) followed by 1.4653 (Jun 9 high)



Yen - 80.25

Initial support is located at 79.57 (May 5 low) followed by 78.83 (Mar 18 low). Initial resistance is now at 81.01 (Jun 3 high) followed by 81.33 (Jun 2 high).

Pound - 1.6405

Initial support at 1.6173 (76.4% retrace of 1.6058-1.6547) followed by 1.6132 (May 25 low). Initial resistance is now at 1.6473 (Jun 7 high) followed by 1.6496 (Jun 1 high).



Australian Dollar - 1.0634

Initial support at 1.0510 (May 26 low) followed by the 1.0440 (May 25 low). Initial resistance is now at 1.0664 (Jun 8 high) followed by 1.0877 (76.4% retrace of 1.1012-1.0441).

Gold - 1520

Initial support at 1513 (May 24 low) followed by 1504 (May 23 low). Initial resistance is now at 1545 (June 6 high) followed by 1577 (All time high).



Oil - 97.30

Initial support at 96.50 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 98.00 (Intraday resistance) followed by 100.00 (Intraday Resistance).





Written by Anthony Darvall