Weekly Outlook - Fresh Risk Appetite hurts USD

By @ibtimes on

Last week's currency trading review

The Dollar continued to lose ground as US stocks markets soared to year highs and Gold traded to fresh all time highs. Economic data was light but multiple FED speakers all re-emphasized that US rates will remain low for some time. Weekly Jobless Claims improved to 502k vs. 512k forecast. Trade Balance -36.5bn vs. -31.8bn forecast. UoM consumer Sentiment fell to 66 vs. 71.1 previously. The Euro was volatile but ended higher as stocks helped to lift whilst weak Oil contained gains. Solid resistance above 1.5000 is proving hard to break for the time being. German ZEW Economic Sentiment slumped to 51.1 vs. 55.2 forecast and 56 previously. Preliminary EU Q3 GDP was weaker than expected at 0.4% vs. 0.6% forecast. The EUR/USD gained 0.41% closing at 1.4906, after opening the week at 1.4845.

The Japanese Yen once again kept to tight ranges against the USD but weakened across most other pairs as improving risk appetite caused high yielding pairs such as the AUD/JPY to be bought. September Core Machinery Orders improved 10.5% vs. 3.4% forecast. The USD/JPY fell -0.25% closing at 89.66 after opening the week at 90.88. The GBP continued to shrug off the best efforts of the BoE to keep the Pound under pressure. BoE Governor King in the Inflation report once again talked of the weak GBP helping the UK economy to recover via exports. Claimant Count Change was strong at 12.9k vs. 20.2k forecast. GBP/USD gained 0.42% closing at 1.6681 after opening at 1.6611. The AUD gained heavily on the back of gold and US stocks rallying but was also aided by strong economic data. October Employment improved by +24.5k vs. -10.1k forecast and September Home loans improved by 5% vs. 3% forecast. The AUD/USD gained 1.52% at 0.9328 after opening at 0.9186.

The forex trading week preview

In the States; On Tuesday, October Industrial Production is forecast at 0.4% vs. 0.7% previously. Also released, Oct PPI forecast at -1.7% vs. -4.8% y/y. On Wednesday, October CPI is forecast at 0.3% vs. -0.9% previously. Also released, October Building Permits are forecast at 580k vs. 573k previously. On Thursday, Weekly Jobless Claims are forecast at 504K vs. 502k previously. On Friday, Philly Fed is forecast at 12 vs. 11.5 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 Wednesday, EU September Current account is released previously at -1.3bn. On Friday, October German PPI is forecast at -7.5% vs. -7.6% previously. In the UK; On Tuesday, October CPI is forecast at 1.4% vs. 1.1% previously y/y. On Wednesday, BoE minutes are forecast to show 9-0 vote. On Thursday, October Retail Sales are forecast at 2.9% vs. 2.4% previously y/y. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, BOJ meet to discuss rates and are expected to hold at 0.1%. In Australia; On Tuesday, RBA minutes. On Wednesday, Q3 Wage Cost index forecast at 0.7% vs. 0.8% previously Q/Q. 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

1.4786

1.4822

1.4930

1.5048

1.5063

USD/JPY

89.20

89.46

89.60

90.60

90.86

GBP/USD

1.6519

1.6532

1.6710

1.6843

1.7043

AUD/USD

0.9196

0.9211

0.9340

0.9370

0.9476

XAU/USD

1087.00

1095

1125.00

1129.00

1136.00

OIL/USD

74.00

75.00

76.80

78.00

80.00

Euro - 1.4930

Initial support at 1.4822 (Nov 12 low) followed by 1.4786 (0.618 OF 1.4624-1.5049). Initial resistance is now located at 1.5048 (Nov 11 high) followed by 1.5063 (Oct 26 high)

Yen - 89.60

Initial support is located at 89.46 (Nov 13 low) followed by 89.20 (Nov 2 low). Initial resistance is now at 90.60 (Nov 12 high) followed by 91.32 (Oct 29 high).

Pound - 1.6710

Initial support at 1.6516 (Nov 12 low) followed by 1.6402 (Nov 4 low). Initial resistance is now at 1.6843 (Nov 9 high) followed by 1.7043 (Aug 5 high).

Australian Dollar - 0.9340

Initial support at 0.9211 (Nov 12 low) followed by the 0.9196 (Nov 9 low). Initial resistance is now at 0.9370 (Nov 12 High) followed by 0.9476 (Jul 31 ' 08 high).

Gold - 1125

Initial support at 1095 (Nov 9 low) followed by 1087 (Nov 6 high). Initial resistance is now at 1129 (1026.60 plus 0.618 of 905.10-1070.80) followed by 1136 (1.618 retrace 930.34 - 1024.28 through 985).

Oil - 76.80

Initial support at 75.00 (Key level) followed by 74 (Intraday support). Initial resistance is now at 78 (Intraday resistance) followed by 80 (Key Level).

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