Last week's currency trading review

The Dollar was mixed under pressure most of the week until a dramatic stock market fall on Friday sent the dollar higher on save haven flows. Concerns of a possible revolution in Egypt saw Oil soar on supply problems and stocks sink on contagion risk to other middle eastern countries. The FED's FOMC met and held rates at 0.25% whilst also signaling QE2 would continue as planned. The Euro spent most of the 2week at the 1.3700 level before falling sharply on Friday below 1.3600 on Egyptian fears. Sentiment towards the Eurozone and the Euro have improved markedly in recent weeks on expectations that the ECB will find new solutions to the debt crisis. The EUR/USD fell -0.07% closing at 1.3610, after opening the week at 1.3620.

The Japanese Yen was volatile being sold aggressively mid-week when S&P downgraded Japan on there fiscal plan. The move above Y83 was short-lived however with risk aversion sending the major and crosses aggressively lower during Friday's stock market rout. The USD/JPY fell -0.52% closing at 82.12, after opening at 82.55. The GBP was under heavy pressure due to the shock Q4 GDP print during the week. Q4 GDP was forecast at 0.5% came in at -0.5% and saw the Pound sold across the board. Adding to the pressure was risk aversion Friday and the Pound finished on a weak footing. The GBP/USD fell -0.88% closing at 1.5858 after opening at 1.5997. The AUD was under pressure Friday as the traditional risk currency tracked stock markets lower as Egypt protests grew. On Tuesday, CPI was released much lower than expected at 0.4% vs. 0.7% forecast and helped to pare back expectations of more central bank rate hikes this year. The AUD/USD gained 0.11% closing at 0.9896 after opening at 0.9885.

The Forex Trading Week Preview

In the States; On Monday, January Chicago PMI forecast at 65 vs. 66.8 previously. Also released, December Personal Spending is forecast at 0.5% vs. 0.4% previously. On Tuesday, January ISM Manufacturing is forecast at 58 vs. 58.5 previously. On Wednesday, January Unemployment ADP Employment Change forecast at 150k vs. 297k previously. On Thursday, Weekly Jobless Claims are forecast at 420k vs. 454k previously. Also released, January ISM Services forecast at 57 vs. 57.1 previously. Fed Chief Bernanke Speaks. January NonFarm Unemployment Change forecast at 136k vs. 103k. Unemployment Rate forecast at 9.5% vs. 9.4%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; January CPI forecast at 2.4% vs. 2.2% previously. On Tuesday, German Unemployment forecast at 7.5%. Also ECB President Trichet Speaks. On Thursday, ECB Rate Annoucement forecast unchanged at 1.0%. On December EU Retail Sales forecast at 0.2% vs. 0.3% previously. On Friday, EU Leaders Summit Begins. In the UK, On Tuesday, January PMI Manufacutring is forecast at 57.9 vs. 58.3 previously.  On Wednesday, PMI Construction forecast at 48.9 vs. 49.1 previously. On Thursday, PMI Services forecast at 50.5 vs. 49.7 previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; No major data this week. In Australia; On Tuesday, RBA Rate Announcement is forecast unchanged at 4.75% but focus will be on the accompanying statement. On Thursday, New Zealand Unemployment Rate is forecast 6.5% vs. 6.4%. On Friday, December Trade Balance forecast at 1600mn vs. 1925mn previously. 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

1.3541

1.3573

1.3580

1.3758

1.3825

USD/JPY

81.61

81.98

82.20

83.22

84.11

GBP/USD

1.5618

1.5702

1.5830

1.6017

1.6059

AUD/USD

0.9753

0.9864

0.9870

1.0009

1.0077

XAU/USD

1290.00

1300

1343

1353

1371

OIL/USD

89.50

90.00

90.50

91.50

92.50





Euro - 1.3580

Initial support at 1.3573 (Jan 25 low) followed by 1.3541 (Jan 24 low). Initial resistance is now located at 1.3758 (Jan 27 high) followed by 1.3825 (Nov 10 high)



Yen - 82.20

Initial support is located at 81.89 (Jan 5 low) followed by 81.61 (Jan 4 low). Initial resistance is now at 83.22 (Jan 27 high) followed by 84.11 (Dec 20 high).

Pound - 1.5830

Initial support at 1.5702 (50 % retrace of 1.5345-1.6059) followed by 1.5618 (61.8% retrace of 1.5345-1.6059). Initial resistance is now at 1.6017 (Jan 25 high) followed by 1.6059 (Jan 18 High).

Australian Dollar - 0.9870

Initial support at 0.9864 (Jan 24 low) followed by the 0.9753 (Dec 8 low). Initial resistance is now at 1.0009 (Jan 20 High) followed by 1.0077 (Jan 19 high).

Gold - 1343

Initial support at 1300 (Round Number) followed by 1290 (Intraday). Initial resistance is now at 1353 (Jan 24 high) followed by 1371 (Jan 20 high).



Oil - 90.50

Initial support at 90.00 (Intraday Support) followed by 89.50 (Intraday Support). Initial resistance is now at 91.50 (Intraday Resistance) followed by 92.50 (Intraday Resistance).





Written by Anthony Darvall