Last week’s currency trading review

The Dollar was mixed with gains on safe haven flows against the GBP and CAD being offset by losses against the Yen. Data wise the US did well with better than forecast Q2 GDP at -1.0% vs. -1.4% expected and New Home Sales jumping 9% in July. The Euro was helped by German Unemployment data showing job creation in July. Somewhat less helpful was the drop in EU CPI dipping to -0.6% vs. -0.4% previously. Large gains were seen against the Hapless GBP with EUR/GBP breaking above 0.88. The EUR/USD fell 0.16% closing at 1.4304, after opening the week at 1.4328.

The Japanese Yen was extremely strong as multiple fresh china stock falls helped the pair to ease towards 93 Yen. Helping the Yen strengthen was speculation that the government will be changed in the weekend elections, a thought which proved true on Sunday with the first change of government in 50 years. The USD/JPY closed down -0.83% at 93.61 after opening the week at 94.39. The GBP weakened from heavy GBP/JPY selling and other broad cross weakness. GBP/USD found support at 1.6160 but is looking very fragile as the market continues to test the downside after trading above 1.7000 just two weeks ago. Nationwide HPI was one source of brightness with the index jumping 1.3% in July for a third month of gains. GBP/USD fell -1.46% closing at 1.6268 after opening at 1.6505. The AUD ended above 0.8400 as the market readied itself for strong RBA comments and Q2 GDP this week. AUD/JPY selling weighed on the Aussie as did fresh AUD/NZD weakness but the fundamentals remain strong. The AUD/USD closed up 0.75% at 0.8409 after opening at 0.8346.

The forex trading week preview

In the States; On Tuesday, August ISM Manufacturing is forecast at 50.5 vs. 48.9 previously. Also released Pending Home Sales forecast at 1.6% vs. 3.6% previously. On Wednesday, Productivity is forecast at 6.4% in Q2 whilst Labor Costs are forecast at -5.7% previously. Also released, Fed FOMC minutes form the September meeting. On Thursday, Weekly Jobless Claims forecast at 560k vs. 570k previously. Also released, Services PMI forecast at 48.2 vs. 48.5 previously. On Friday, Non farm Payrolls forecast at -225k vs. -247k previously. The Unemployment Rate is forecast at 9.5% vs. 9.4% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German August Unemployment Rate is forecast 8.4% vs. 8.3% previously. Also released, EU Unemployment forecast at 9.5% vs. 9.4% previously. On Wednesday, Q2 EU GDP is forecast to remain unrevised at -0.1%. On Thursday, ECB announces Interest rate decision widely forecast to remain at 1.0%. In the UK; On Wednesday, August PMI manufacturing forecast at 51.5 vs 50.8 previously. On Thursday, PMI services forecast at 54 vs. 53.2 previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, Capex is forecast at -23% vs. -25% in Q2. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; On Tuesday, RBA meet and discuss Rates, On Wednesday, Q2 GDP is seen at 0.6% vs. 0.4% previously. On Thursday, July Trade Balance forecast at -880 vs. -441m 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

1.4046

1.4201

1.4300

1.4447

1.4621

USD/JPY

92.72

93.10

93.15

95.29

96.73

GBP/USD

1.6034

1.6154

1.6280

1.6444

1.6546

AUD/USD

0.8126

0.8216

0.8430

0.8478

0.8519

XAU/USD

930.00

939.00

959.00

971.00

990.00

Euro – 1.4300

Initial support at 1.4201 (AUG 20 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace 1.6038 - 1.2330)

Yen – 93.15

Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.29 (August 18 high) followed by 96.73 (Aug 12 high).

Pound – 1.6280

Initial support at 1.6154 (Aug 27 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6444 (AUG 25 high) followed by 1.6546 (AUG 24 high).

Australian Dollar – 0.8400

Initial support at 0.8216 (AUG 21 low) followed by the 0.8126 (July 29 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold – 955

Initial support at 939 (Aug 17 low) followed by 930 (July 29 low). Initial resistance is now at 971 (August 6 high) followed by 990 (Jun 3 high).