Last week's currency trading review

The Dollar rallied off multi-month lows against a spectrum of currencies to finish on a slightly better footing. The major event risk of the week was the FOMC meeting at which the FED kept rates lows although they upgraded the economic outlook and stated there intention to keep rates low for some time. Speculation from the market that stimulus would have to be withdrawn sooner rather than later helped pare back stock market gains which led to fresh USD strength and profit taking. Oil fell over 8% and this also helped support the Dollar. The Euro traded at fresh highs above 1.4840 before falling as US stocks fell for the last 3 days in the trading week. German IFO increased to 91.3 vs. 90.5 previously but less that 92.1 forecast. EUR/GBP broke new multi month highs above .9200. The EUR/USD fell 0.11% closing at 1.4694, after opening the week at 1.4710.

The Japanese Yen continued to strengthen after losing value against the USD early in the week with Japan away on a 3 day holiday. A topside failure on the USD/JPY at 92.50 led to another 90 test on Friday with the level finally giving way and the crosses pulling pack across the board. The USD/JPY closed lower 1.91% at 89.57 after opening the week at 91.28. The GBP crashed through 1.6000 on more bearish comments from the BOE Governor King this time in regards to the weaker Sterling being good for the economy. The GBP had managed to make some ground back before these remarks on the back of MPC minutes not mentioning a cut in Bank reserves interest rates and a 9-0 vote on current levels of QE. GBP/USD fell -2.05% closing at 1.5943 after opening at 1.6270. The AUD pushed higher earlier in the week as US stocks hit year highs. Aussie year highs followed just under 0.8800 but the level held firm and the pair slipped with equities into the weekend. AUD/NZD push fresh low near 1.2000 as Q2 GDP came in positive in a surprise to the market at 0.1%. The AUD/USD closed up 0.03% at 0.8676 after opening at 0.8673.

The forex trading week preview

In the States; On Wednesday Q2 GDP forecast at -1.2% vs. -1.0% y/y. Core PCE is also released forecast unchanged at 2.0% in Q2. On Thursday, Weekly Jobless Claims are forecast at 531k vs. 530k previously. Also released, August Personal Income and Spending is forecast at 0.1% and 1.1% respectively. Finally on Thursday, September ISM Manufacturing is forecast at 54.0 vs. 52.9 previously. On Friday, September Non Farm Payrolls are forecast at -190k vs. -216k previously and an Unemployment Rate of 9.8% vs. 9.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, ECB President Trichet speaks, and German CPI in September is tentatively released forecast at -0.1% vs. 0.0% y/y. On Wednesday, German Unemployment Change is forecast at 19k vs. -1k previously. EU CPI is forecast at -0.2% y/y unchanged. On Thursday, August German Retail Sales is forecast at -0.8% vs. -1%. EU Unemployment is forecast at 9.6% vs. 9.5% previously. In the UK; On Tuesday Q2 GDP is forecast at -0.6% vs. -0.7% originally. Q2 Current Account is forecast at -7.8bn vs. -8,5bn previously. Also, Mortgage Approvals are forecast at 51.5bn vs. 50.1bn. On Wednesday, BOE releases Quarterly Credit Conditions Survey. Finally on Friday, Construction PMI is forecast at 48.1 in September vs. 47.7 previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; Q3 Tankan Survey on Thursday the Highlight forecast at -33 vs. -48 previously. On Friday, August Jobless Rate forecast at 5.8%. In Australia; On Wednesday, August Retail Sales forecast at 0.5% vs. -1.0% previously. Also released, August Building Approvals forecast at 1.5% vs. -3.9% previously. 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

1.4467

1.4516

1.4590

1.4844

1.4866

USD/JPY

87.99

88.60

89.15

91.63

92.50

GBP/USD

1.5450

1.5779

1.5800

1.6207

1.6468

AUD/USD

0.8529

0.8591

0.8600

0.8789

0.8814

XAU/USD

982.00

985.00

991.00

1020.00

1024.00


Euro - 1.4590
Initial support at 1.4516 (Sept 14 low) followed by 1.4467 (Sept 9 low). Initial resistance is now located at 1.4844 (Sept 23 high) followed by 1.4866 (September 22 2008 high)

Yen - 89.15
Initial support is located at 88.60 (Feb 3 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 91.63 (Sept 24 high) followed by 92.53 (Sept 21 high).

Pound - 1.5800
Initial support at 1.5779 (May 26 low) followed by 1.5450 (May 20 low). Initial resistance is now at 1.6207 (23.6% retrace 1.3503-1.7043) followed by 1.6450 (May 20 high).

Australian Dollar - 0.8600
Initial support at 0.8591 (Sept 21 low) followed by the 0.8529 (Sept 8 low). Initial resistance is now at 0.8789 (Sept 23 high) followed by 0.8814 (Aug 22 '08 high).

Gold - 991
Initial support at 985 (Sept 25 low) followed by 9982 (Sept 10 low). Initial resistance is now at 1020 (Sept 22 high) followed by 1024 (September 17 high).