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Last week’s currency trading review
The Dollar a large rally in US stocks saw some stabilization and retracement in the markets after heavy falls were seen the week before. The Eurozone Debt Crisis still creating market moving headlines but seems to have stabilized for the time being. News that the North Korea leader had died tempered risk appetite as the failed nuclear state began the transition to new leadership. Stocks in the US rebounded as economic data improved in particular Weekly Jobless Claims which fell for a 3rd week to 364k vs. 376k forecast. The Euro the introduction of the new ECB lending vehicle to banks was introduced on Wednesday and lent over 400bn to banks in a much higher than expected take up. Initial gains were sold however as Bond yields fell only marginally and some analysts suggested that the money was not going to be used to increase bank lending or buy European debt. The new ECB President Draghi was quit candid as he described the threats to the Eurozone, but reiterated his belief it would survive the crisis and was a lot stronger than speculators doom scenarios. The EUR/USD is up 0.08% currently at 1.3047, after opening the week at 1.3037.
The Japanese Yen USD/JPY grinded higher as risk appetite came back into the markets and US economic data improved. Resistance at Y78 was broken and Y78.30 is being tested. The outlook since the BOJ intervened has improved markedly for the USD/JPY as the Japanese economy struggles to recover. The USD/JPY is up 0.32% currently at 78.03, after opening at 77.78. The GBP was able to enjoy strong gains for most of the week before faltering on Friday and giving up a substantial chunk of the move higher. EUR/GBP selling saw the important cross test 0.8300 but this also rebounded into the close on Friday back to 0.8360. The GBP/USD is up 0.25% currently at 1.5582 after opening at 1.5543. The AUD was able to break above 1.0000 on Tuesday’s 300 point Dow Jones Rally and we saw 1.0200 tested later in the week in a positive return for the risk and commodity currency. RBA minutes from the December meeting showed that the European crisis was the main reason the central bank cut rates and that the local economic data did not support rate cuts. The AUD/USD is up 1.73% currently at 1.0143 after opening at 0.9968.
The Forex Trading Economic Data Ahead Preview
In the States; On Monday, Bank Holiday. On Tuesday December, CB Consumer confidence forecast at 58.5 vs. 56.0previously. On Thursday, Weekly Jobless Claims forecast at 370k vs. 364k previously. Also December Chicago PMI forecast at 60.4 vs. 62.4 previously. On November Pending Home Sales forecast at 1.4% vs. 10.4% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone; ON Thursday, December German CPI forecast at 0.8% vs. 0.0% previously. In the UK, On Friday, December Nationwide HPI forecast at 0.3% vs. 0.4% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan; On Tuesday, BOJ Meeting Minutes. ON Wednesday, December Core CPI forecast at -0.2% vs. -0.1% y/y. Also released, November Industrial Production forecast at -0.7% vs. 2.2% previously. In Australia; On Friday, December Private Sector Credit forecast at 0.3% vs. 0.2% previously. We will provide our previews and reviews of these data releases in the daily summary.
Euro – 1.3060
Initial support at 1.3025 (Dec 21 low) followed by 1.2983 (Dec 19 low). Initial resistance is now located at 1.3237 (Dec 13 high) followed by 1.3386 (Dec 12 high)
Yen – 78.00
Initial support is located at 77.49 (Dec 9 low) followed by 76.84 (Nov 22 low). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.98 (Nov 1 high).
Pound – 1.5605
Initial support at 1.5557 (Dec 16 low) followed by 1.5465 (Dec 19 low). Initial resistance is now at 1.5889 (Nov 18 high) followed by 1.5932 (Nov 15 high).
Australian Dollar – 1.0160
Initial support at 1.0052 (Dec 21 high) followed by the 0.9861 (Dec 15 low). Initial resistance is now at 1.0225 (Dec 9 low) followed by 1.0380 (Dec 8 high).
Gold – 1603
Initial support at 1583 (Dec 19 high) followed by 1560 (Dec 15 low). Initial resistance is now at 1642 (Dec 12 low) followed by 1677 (Dec 13 high).
Oil – 99.70
Initial support at 98.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 100.00 (Intraday resistance) followed by 101.00 (Intraday Resistance).
Written by Anthony Darvall