Last week's currency trading review

The Dollar was on the back foot against most risk assets in the market with a sharp reversal of global investor sentiment seeing Stock markets gain 5%+. Better than expected US economic data and a positive result in the Greece Debt saga put Bulls back firmly in control and shorts scrambling to cover in the second half of the week. June Manufacturing PMI surged to 55.3 vs. 51.9 forecast. The Euro competed with the more pure risk currencies in a major rally throughout the week. Firstly on hopes the Greece parliament would pass Austerity measures and secondly when they actually did pass the vote and US Data prompted an equity rally. EUR/USD broke above 1.4500 and closed above the figure in a strong technical signal that further gains are likely. This week's ECB Rate announcement is expected to be a 0.25% hike and could be the catalyst for further gains. The EUR/USD is up +2.29% currently at 1.4519, after opening the week at 1.4187.

The Japanese Yen was sold off in risk on trade and even the USD gained testing Y81 on a few occasions as US Bond Yields increased with the improving data. AUD/JPY and EUR/JPY led the crosses higher but noted under performed was seen on the GBP/JPY which failed to reclaim Y130. The Tankan Manufacturing Index dropped sharply post earthquake to -9 vs. +6 previously. The USD/JPY is up +0.21% currently at 80.56, after opening at 80.39. The GBP was the noted underperformer in the market with sentiment towards the Pound extremely bearish given the expectations they will hold rates low for an extended period of time and may even expand the Asset purchase program (Quantitative Easing). Weak data is not discouraging this view with June Gfk Consumer Confidence falling to -25 vs. -21 previously and June Manufacturing PMI dropping to 51.3 vs. 52.2 forecast. EUR/GBP and GBP/AUD took advantage with both trading at year highs and lows respectively. The GBP/USD is up +0.68% currently at 1.6065 after opening at 1.5965. The AUD the Aussie was one of the strongest in the market with the traditional risk currency tracking the 5% gain in US stock markets to regain a bullish footing. AUD/JPY also surged back to life above Y87 after testing Y84 last week. The only limiting factor was some mixed performance on commodities as Gold and Silver faced safe haven liquidations and Oil struggled to regain bullish momentum. The AUD/USD is up +2.56% currently at 1.0763 after opening at 1.0487.

The Forex Trading Economic Data Ahead Preview

In the States; On Monday, Markets Closed for Independence Day Holiday. On Tuesday, May Factory forecast at +1.0% vs. -1.2% m/m. On Wednesday, June ISM Services forecast at 53.5 vs. 54.6. June ADP Employment Chance forecast at 70k vs. 38k previously. On Thursday, Weekly Jobless Claims forecast at 421k vs. 428k previously. On Friday, June Unemployment Rate forecast at 9.1%. June NonFarm Payrolls forecast at 83k vs. 54k previously.  We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, May EU PPI forecast at 6.3% vs. 6.7% previously y/y. On Tuesday, Jun PMI Services forecast at 54.2. May EU Retails Sales forecast -0.6% vs. 0.8% previously. On Thursday, ECB Rate Announcement forecast to raise rates 0.25% to 1.5% vs. 1.25% previously. Also ECB's Trichet speaks 45mins after. In the UK, On Monday, PMI Construction forecast at 53.5 vs. 54.0 previously. On Tuesday, PMI Services forecast at 53.5 vs. 53.8 previously. ON Thursday, July BOE Rate Decision forecast at 0.5% and the Asset Purchase Program unchanged at 200BN. On Friday, June PPI input forecast at 16.2% vs. 15.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, May Trade Balance forecast at -764bn vs. -417bn previously. In Australia; ON Tuesday, May Trade Balance forecast at 1900Mn vs. 1597mn previously. Also, RBA Cash Target forecast at 4.75%.  ON Wednesday, NZD Q1 GDP forecast at 0.3% vs. 0.2% previously. ON Thursday, June Employment Change forecast at 15k vs. 7.8k previously. June Unemployment Rate forecast at 4.9%.

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

1.4333

1.4427

1.4550

1.4653

1.4697

USD/JPY

80.00

80.29

80.80

81.33

81.63

GBP/USD

1.5822

1.5881

1.6075

1.6200

1.6263

AUD/USD

1.0436

1.0520

1.0740

1.0775

1.0865

XAU/USD

1471.00

1485

1490

1526

1549

OIL/USD

92.50



95.00

95.10

96.50

98.00



Euro - 1.4550

Initial support at 1.4427 (Jun 30 low) followed by 1.4333 (Jun 29 low). Initial resistance is now located at 1.4653 (Jun 9 high) followed by 1.4697 (Jun 7 high)



Yen - 80.80

Initial support is located at 80.29 (Jun 27 low) followed by 80.00 (Key Support). Initial resistance is now at 81.33 (Jun 2 high) followed by 81.63 (76.4% retrace of 82.23-79.7).

Pound - 1.6075

Initial support at 1.5881 (61.8% retrace of 1.5345-1.6747) followed by 1.5822 (Jan 31 low). Initial resistance is now at 1.6200 (Psych Resistance) followed by 1.6263 (Jun 22 high).



Australian Dollar - 1.0740

Initial support at 1.0520 (Jun 29 low) followed by the 1.0436 (Jun 28 low). Initial resistance is now at 1.0775 (Jun 3 high) followed by 1.0865 (76.4% retrace of 1.1012-1.0391).

Gold - 1490

Initial support at 1485 (76.4% retrace of 1462.45-1558.25) followed by 1471 (May 17 low). Initial resistance is now at 1526 (June 24 high) followed by 1523 (Jun 23 high).



Oil - 95.10

Initial support at 95.00 (Intraday Support) followed by 92.50 (Intraday Support). Initial resistance is now at 96.50 (Intraday resistance) followed by 98.00 (Intraday Resistance).





Written by Anthony Darvall