Last week's currency trading review

The Dollar retreated across the board as global stocks extended gains. The key 10000 level on the Dow Jones was broken mid week with risk currencies benefiting the most. Core CPI was 0.2% m/m and Unemployment Claims improved to 514k vs. 524k previously. October Preliminary Consumer Confidence fell to 69.4 vs. 73.6 previously. The Euro traded to the mid 1.49 levels as EUR/JPY soared and dollar weakness extended. German Zew survey continued to fall to 56 vs. 57.7 previously. Eurozone Industrial Production climbed 0.9% vs. 0.2% previously in August. The EUR/USD gained 1.19% closing at 1.4903, after opening the week at 1.4726.

The Japanese Yen was a major mover as crosses led by the GBP/JPY climbed aggressively dragging the USD/JPY back above 90 Yen. AUD/JPY climbed to new year highs above 84 Yen as investors searched for higher yields. The USD/JPY gained 1.29% at 90.92 after opening the week at 89.75. The GBP rebounded from heavy selling over the last month to climb over 4% against the Yen. EUR/GBP was also a big mover along with GBP/AUD with the GBP gaining against all currencies. GBP/USD gained 3.15% closing at 1.6354 after opening at 1.5839. The AUD found support against the Dollar and Yen with Gold and Oil surging higher. Also helping was talked from the RBA Governor Stevens about the need to aggressively raise rates as the economy normalizes. The AUD/USD gained 1.36% at 0.9162 after opening at 0.9037.

The forex trading week preview

In the States; On Tuesday, September PPI is forecast at 0.1% vs. 1.7% previously. September Building Permits is forecast at 590k vs. 579k previously. On Wednesday, Fed Releases Beige Book. On Thursday, Weekly Jobless Claims are forecast at 519k vs. 514k previously. On Friday, Bernanke and Kohn Speak. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German September PPI is forecast at -7.1% vs. -6.9% y/y. On Friday German IFO is forecast at 92 vs. 91.3 previously. Also released, October PMI services and Manufacturing is forecast at 51.3 and 50.1. respectively. In the UK; On Tuesday, BoE King Speaks and on Tuesday the MPC minutes are released from last rate meeting. On Thursday, Q3 GDP is forecast at 0.1% vs. -0.6%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, August All Industry Activity Index forecast at 0.4% vs. 0.5%. In Australia; On Thursday, NAB Business Confidence previously at -4. 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

1.4674

1.4839

1.4850

1.4980

1.5000

USD/JPY

88.84

89.24

90.85

91.63

92.53

GBP/USD

1.5903

1.6252

1.6300

1.6468

1.6568

AUD/USD

0.8866

0.8985

0.9120

0.8347

0.9476

XAU/USD

1015.00

1036

1049.00

1070.00

1100.00

OIL/USD

75.22

76.45

78.40

78.70

80.00


Euro - 1.4850
Initial support at 1.4839 (Oct 14 low) followed by 1.4674 (Oct 9 low). Initial resistance is now located at 1.4980 (Aug 13 high) followed by 1.5000 (Psychological Level)

Yen - 90.85
Initial support is located at 89.28 (Oct 16 low) followed by 88.84 (Oct 14 low). Initial resistance is now at 91.63 (Sept 13 high) followed by 92.53 (Sept 21 high).

Pound - 1.6300
Initial support at 1.6252 (Sept 28 low) followed by 1.5903 (Oct 14 low). Initial resistance is now at 1.6468 (Sept 23 high) followed by 1.6568 (Sept 23 high).

Australian Dollar - 0.9120
Initial support at 0.8985 (Oct 12 low) followed by the 0.8866 (Oct 7 low). Initial resistance is now at 0.9347 (Aug 4 08 high) followed by 0.9476 (Jul 31 08 high).

Gold - 1049
Initial support at 1036 (Oct 7 low) followed by 1015 (Oct 6 low). Initial resistance is now at 1070 (Oct 14 high) followed by 1100 (Psychological level).

Oil - 78.40
Initial support at 76.45 (Fib Support) followed by 75.22 (Previous Support). Initial resistance is now at 78.70 (Fib Resistance) followed by 80 (Major level).