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Last week’s currency trading review

The Dollar lost ground against all except the Yen with worldwide stock markets soaring on the back of global Central bank intervention and hopes that the EU leaders might be able to work out a new treaty that will allow them to better stave off the debt crisis. US November Unemployment data in good with 120k jobs and the Unemployment rate dropped to 8.6% vs. 9.0% previously. November ISM manufacturing up at 52.7 vs. 50.8 previously. The Euro was under heavy pressure as the debt crisis rolled on but was able to reverse losses with the stock markets after the central bank liquidity swap moves and China loosened monetary policy. Investors also began to look forward to the EU summit this week and were impressed when the Italian PM announced major new austerity measures. The EUR/USD is up +1.25% currently at 1.3402, after opening the week at 1.3234.

The Japanese Yen was the weakest currency in the market with stocks around the world soaring over 6% and sending the crosses up across the board. AUD/JPY and NZD/JPY gained over 5% and EUR/JPY and GBP/JPY also moved significantly higher. USD/JPY is struggling to get above Y78 but the downside is equally limited with stronger USD data supporting. The USD/JPY is up 0.31% currently at 77.95, after opening at 77.71. The GBP gained from recent monthly lows but the gains were limited with other currencies chosen over the Pound. Investors are worried that a Eurozone debt meltdown will affect the UK economy more than other risk currencies. The downtrend is still in place and more positive EU news would be needed to get the GBP/USD to rally. The GBP/USD is up +1.03% currently at 1.5595 after opening at 1.5435. The AUD was the currency of choice for investors to express the risk appetite improvement. Stocks in US gained near 9% and this allowed the Aussie to rally on a near daily basis. This week a lot more risk events are evident with the RBA expected to cut rates as Chinese growth slows. The AUD/USD is up +4.92% currently at 1.0210 after opening at 0.9708.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, BOC Rate Announcement forecast at 1.0% vs. 1.0% previously. On Wednesday, Treasury Secretary Geithner meets with EU leaders. On Thursday, Weekly Jobless Claims forecast at 397k vs. 402k previously. On Friday, December UoM Consumer Confidence forecast at 65.5 vs. 64.1 previously. Looking ahead, October Trade Balance forecast at -43bn vs. 43.2 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, Factory Orders forecast at 1.0% vs. -4.3% previously. Also revised GDP forecast to hold at 0.2% q/q. On Wednesday, German October Industrial Production forecast at 0.3% vs. -2.7% previously. On Thursday, ECB Rate announcement forecast to cut to 1.0% vs. 1.25% previously. Also EU leaders Summit begins. On Friday, EU Summit Continues in Brussels. In the UK, on Wednesday, October Industrial Production forecast at -0.6% vs. -0.7% previously. On Thursday, BOE rate announcement forecast to hold at 0.5% and keep the Asset purchase program at 275bn. On Friday, October Trade Balance forecast at -9.6bn vs. -9.8bn previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q3 GDP forecast 1.2% Q/Q vs. 1.5% previously Q/Q. In Australia; On Tuesday, RBA Rate Announcement forecast at cut to 4.25% vs. 3.5% previously. On Wednesday, RBNZ forecast to hold at 2.5%. On Thursday, November Unemployment Change forecast 10k vs. 10.1k previously. The unemployment rate is forecast to remain at 5.2%. 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

1.3212

1.3259

1.3410

1.3607

1.3730

USD/JPY

77.01

77.49

78.05

78.29

78.42

GBP/USD

1.5459

1.5526

1.5605

1.5780

1.5883

AUD/USD

1.0000

1.0151

1.0245

1.0350

1.0447

XAU/USD

1728.00

1736

1750

1767

1816

OIL/USD

99.00

100.00

101.40

102.00

105.00

Euro – 1.3410

Initial support at 1.3259 (Nov 30 low) followed by 1.3212 (Nov 25 low). Initial resistance is now located at 1.3607 (38.2% retrace of 1.4247-1.3212) followed by 1.3730 (50% retrace of 1.4247-1.3212)

Yen – 78.05

Initial support is located at 77.49 (Dec 1 low) followed by 77.01 (Nov 24low). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.42 (Nov 2 high).

Pound – 1.5605

Initial support at 1.5526 (Nov 30 low) followed by 1.5459 (Nov 28 low). Initial resistance is now at 1.5780 (Nov 30 high) followed by 1.5883 (61.8% retrace of 1.6167-1.5423).

Australian Dollar – 1.0245

Initial support at 1.0151 (Dec 1 high) followed by the 1.0000 (Round Number). Initial resistance is now at 1.0350 (Nov 14 high) followed by 1.0447 (Nov 3 high).

Gold – 1750

Initial support at 1736 (Nov 11 high) followed by 1728 (61.8% retrace of 1681.73-1802.93). Initial resistance is now at 1767 (Nov 17 high) followed by 1816 (Sep 21 high).

Oil – 101.40

Initial support at 99.00 (Intraday Support) followed by 100.00 (Intraday Support). Initial resistance is now at 102.00 (Intraday resistance) followed by 105.00 (Intraday Resistance).

Written by Anthony Darvall