Last week's currency trading review

The Dollar was broadly lower with commodities leading most markets higher. Stocks finished at year highs and risk is firmly 'on' as data and confidence improve globally. Weekly Jobless Claims dropped below 400k for the first time this year with an impressive 388k print. The Euro was able to shrug off lingering EU debt concerns to break higher and close on a strong footing. Weak USD and strong EUR/GBP are helping to lift the single currency. Year-end adjustments also heavily favored the Euro. The EUR/USD gained +1.96% closing at 1.3373, after opening the week at 1.3111.

The Japanese Yen resumed its downtrend after failing to break above the key Y85 level and USD weakness dominated the market. Deflations remained an issue with November Core CPI -0.5% y/y. The USD/JPY fell -2.07% closing at 81.19, after opening at 82.87. The GBP underperformed the rest of the market gaining less than most against the USD in illiquid markets. The EUR/GBP is continuing to rally and is a major drag for the major. GBP/JPY is also under pressure hitting year lows as USD/JPY slumps. The GBP/USD gained +0.99% closing at 1.5590 after opening at 1.5436. The AUD was one of the favorites once again support on strong risk appetite and soaring commodities. Oil trading above $90 a barrel and Gold above $1400 is providing solid support for the Aussie. The AUD/USD gained +1.89% closing at 1.0237 after opening at 1.0044.

The Forex Trading Week Preview

In the States; On Tuesday, FOMC minutes released. On Wednesday, ADP Private Employment Change is forecast at 100k vs. 93k previously. December ISM Services 55.5 vs. 55 previously. On Thursday, Weekly Jobless Claims are forecast at 400k vs. 388k previously. On Friday, December Non Farm Payolls at 135k vs. 39k previously and the Unemployment rate at 9.7% vs. 9.8% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German December unemployment Rate is forecast at 7.5% and EU December Inflation is forecast at 2.0% vs. 1.9% previously. On Wednesday, EU Retail Sales forecast at 2.2% vs. 1.4% previously. On Thursday, EU Retail Sales are forecast at 2.2% vs. 1.4% previously. On Friday, November Industrial Production forecast at -0.2% vs. 2.9% m/m previously. In the UK, On Tuesday, December PMI Manufacturing is forecast at 57.2 vs. 58 previously. ON Wednesday, December PMI Construction is forecast at 51 vs. 51.8 previously. On Thursday, PMI Service 52.7 vs. 53.0 previously.  We will provide our previews and reviews of these data releases in the daily summary.

In Japan; No data this week. In Australia; On Thursday, Building Approvals forecast at -2% vs. 9.3% 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

1.3085

1.3216

1.3360

1.3425

1.3499

USD/JPY

80.54

80.93

81.70

82.47

83.17

GBP/USD

1.5297

1.5345

1.5480

1.5577

1.5647

AUD/USD

0.9863

1.0040

1.0160

1.0256

1.0300

XAU/USD

1372.00

1401

1415

1421

1431

OIL/USD

89.00

90.00

91.60

92.50

94.00





Euro - 1.3360

Initial support at 1.3216 (Dec 30 low) followed by 1.3085 (Dec 29 low). Initial resistance is now located at 1.3425 (Dec 31 high) followed by 1.3499 (Dec 14 high)



Yen - 81.70

Initial support is located at 80.93 (Jan 3 low) followed by 80.54 (Nov 9 low). Initial resistance is now at 82.47 (Dec 29 high) followed by 83.17 (Dec 24 high).

Pound - 1.5480

Initial support at 1.5345 (Sep 8 Low) followed by 1.5297 (Sep 7 low). Initial resistance is now at 1.5577 (Dec 20 high) followed by 1.5647 (Dec 17 high).

Australian Dollar - 1.0160

Initial support at 1.0040 (Dec 28 low) followed by the 0.9863 (Dec 20 low). Initial resistance is now at 1.0256 (Dec 31 high) followed by 1.0300 (Round Number Support).

Gold - 1415

Initial support at 1401 (Dec 29 low) followed by 1372 (Dec 23 low). Initial resistance is now at 1421 (Dec 31 high) followed by 1431 (Dec 7 High).

Oil - 91.60

Initial support at 90.00 (Intraday Support) followed by 89.00 (Intraday Support). Initial resistance is now at 92.50 (Intraday Resistance) followed by 94.00 (Intraday Resistance).





Written by Anthony Darvall