Last week's currency trading review

The Dollar enjoyed widespread support throughout the market on a combination of strong US data and safe haven flows from Egypt. Friday night saw Egyptian President Mubarak step down and this allowed some dollar strength to be retraced. Weekly Jobless Claims dropped to 2 year lows at 383k vs. 419k previously. The Euro hurt by some weak German production data the major traded in a large range rallying early in the week before reversing aggressively. German factory orders fell -3.45% vs. +5.2% previously. Also weighing on the single currency was renewed widening in Portuguese bond spreads as the market pushes the small European union member closer towards a bailout. The EUR/USD fell -0.18% closing at 1.3556, after opening the week at 1.3581.

The Japanese Yen enjoyed solid gains on the back of surging US treasury Yields which indicate interest rate expectations in the future. Moving the US Yields higher was the surprise drop in weekly jobless claims to two year lows. Bulls will need to break Y85 to start a new trend higher after months of Y81-84 range. The USD/JPY gained +1.50% closing at 83.42, after opening at 82.17. The GBP fell back to the 1.6000 level as traders failed to hold onto gains from any rallies. The major news was the MPC rate announcement in which they held at 0.5%. The Pound is receiving support from speculation that inflation will remain high this year with the result being pressure to raise rates. The GBP/USD fell -0.66% closing at 1.6004 after opening at 1.6109. The AUD was under pressure due to profit taking and mixed economic data. January employment Change +24k was interpreted as weak after drilling down into the data revealed full time employment -8k and part time +32k. The pair slipped below 1.000 on Friday after RBA Governor Stevens spoke and suggested interest rates were appropriate for now. The AUD/USD gained +1.93% closing at 0.9896 after opening at 0.9885.

The Forex Trading Week Preview

In the States; On Monday, January Advance Retail Sales forecast at 0.5% vs. 0.6% previously. On Tuesday, TICS Flows previously at 85.1bn. On Wednesday, January Industrial Production is forecast at 0.5% vs. 0.8% previously. Also Released, FOMC Minutes released from January meeting. On Thursday, January CPI is forecast at 0.3% vs. 0.5% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Q4 GDP forecast at 0.5% vs. 0.7% previously Q/Q. European GDP is forecast at 0.45 vs. 0.3% previously. Also during the week EU Finance Ministers Meet. In the UK, On Thursday, January CPI is forecast at 4.0% vs. 2.0% 3.7% previously. On Wednesday, BOE Inflation report released. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Q4 GDP forecast at -0.5% Q/Q. On Tuesday BOJ Rate Decision forecast at 0.1%. In Australia; On Tuesday, RBA minutes from February meeting. 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

1.3449

1.3482

1.3540

1.3621

1.3736

USD/JPY

81.13

82.34

83.20

83.68

83.91

GBP/USD

1.5922

1.5953

1.6055

1.6113

1.6138

AUD/USD

0.9897

0.9955

1.0040

1.0045

1.0137

XAU/USD

1343.00

1348

1357

1371

1379

OIL/USD

82.50

85.00

85.70

86.50

88.00





Euro - 1.3540

Initial support at 1.3482 (38.2% retrace of 1.2867-1.3862) followed by 1.3449 (Jan 21 low). Initial resistance is now located at 1.3621 (Feb 11 high) followed by 1.3736 (Feb 10 High)



Yen - 83.20

Initial support is located at 82.34 (Feb 10 low) followed by 81.13 (Feb 4 low). Initial resistance is now at 83.68 (Jan 7 high) followed by 83.91 (Dec 21 high).

Pound - 1.6055

Initial support at 1.5953 (61.8% retrace of 1.5752-1.6279) followed by 1.5922 (38.2% retrace of 1.5345-1.6279). Initial resistance is now at 1.6113 (Feb 11 high) followed by 1.6138 (Feb 10 High).



Australian Dollar - 1.0040

Initial support at 0.9955 (61.8% retrace of 0.9804-1.02) followed by the 0.9897 (76.4% retrace of 0.9804-1.02). Initial resistance is now at 1.0045 (Feb 11 high) followed by 1.0137 (Jan 10 high).

Gold - 1357

Initial support at 1348 (Feb 8 low) followed by 1343 (Feb 7 low). Initial resistance is now at 1371 (Jan 20 high) followed by 1379 (Jan 19 high).



Oil - 85.70

Initial support at 85.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 86.50 (Intraday Resistance) followed by 88.00 (Intraday Resistance).





Written by Anthony Darvall