Weekly Outlook - US Monetary Policy under Market Microscope

By @ibtimes on

Last week's currency trading review

The Dollar rout ended last week as the Eurozone Debt crisis resurfaced and traders focused on the possibility of higher oil prices slowing the global recovery. Most majors were unchanged with the exception of the Yen which gained across the board as the safe haven of choice. March US Retail Sales grew +0.4% vs. 1.1% previously. The Euro the Euro rallied stalled at the 1.4500 figure but was well supported on dips consolidating the recent move higher. The April German Zew fell to 7.6 vs. 14 previously and EU CPI crept higher to 2.7% vs. 2.6% previously. EUR/JPY was a sharp mover on Japanese Nuclear fears falling to Y120. The EUR/USD is down -0.38% currently at 1.4428, after opening the week at 1.4483.

The Japanese Yen reversed the recent gains falling heavily across the board as Japan's nuclear accident was upgraded to the same level as Chernobyl. The large 10 Yen gains on GBP/JPY AUD/JPY and EUR/JPY had plenty of room to move and where the biggest movers in the market.  The USD/JPY is down -1.97% currently at 83.11, after opening at 84.75. The GBP underperformed the rest of the market on weaker than expected march CPI which came in at 4.0% vs. 4.4% previously y/y. EUR/GBP peaked above 0.8900 before reversing lower into the weekend. The weaker than expected CPI has allowed BOE members more room to delay raising interest rates to combat higher than mandated inflation. The GBP/USD is down -0.34% currently at 1.6325 after opening at 1.6381. The AUD remained well supported above 1.0500 as the market still had demand for the high yielding currency. AUD/JPY selling capped the Aussie below its all time high at 1.0580 and analysts are warning of potential corrections given the size of the recent move. The AUD/USD is up +.02% currently at 1.0565 after opening at 1.0563.

The Forex Trading Economic Data Ahead Preview

In the States; On Tuesday, March Housing Starts forecast at 9.6% vs. -22.5% previously. On Wednesday, March Existing home Sales are forecast at 2.5% vs. -9.6% previously. On Thursday, Weekly Jobless Claims are forecast at 393k vs. 412k previously. Also released, April Philly Fed forecast at 36.0 vs. 43.4 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, March PMI Manufacturing is forecast at 57.0 vs. 57.5 previously. Also released, PMI Services forecast at 56.9 vs. 57.2 previously. On Thursday, German IFO forecast at 110.6 vs. 111.1 previously. In the UK, On Wednesday, BoE minutes from April meeting with focus on any split from members on the rate outlook. On Thursday, March Retail Sales forecast at 1.1% vs. 1.3% 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, Q1 PPI forecast at 1.0% vs. 0.1% previously y/y.

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

1.4062

1.4152

1.4220

1.4450

1.4520

USD/JPY

81.31

82.37

82.50

83.27

83.78

GBP/USD

1.6091

1.6227

1.6245

1.6385

1.6516

AUD/USD

1.0315

1.0390

1.0465

1.0584

1.0600

XAU/USD

1452.00

1471

1490

1500

1513

OIL/USD

105.00

106.00

107.20

108.00

110.00

Euro - 1.4220

Initial support at 1.4152 (Apr 5 low) followed by 1.4062 (Apr 1 low). Initial resistance is now located at 1.4450 (Apr 18 high) followed by 1.4520 (April 12 high)

Yen - 82.50

Initial support is located at 82.37 (March 30 low) followed by 81.31 (Mar 30 low). Initial resistance is now at 83.27 (Mar 30 low) followed by 83.78 (Apr 15 High).

Pound - 1.6245

Initial support at 1.6227 (April 12 low) followed by 1.6091 (Apr 5 low). Initial resistance is now at 1.6385 (Apr 14 high) followed by 1.6516 (Dec 7 2009 high).

Australian Dollar - 1.0465

Initial support at 1.0390 (Apr 12 low) followed by the 1.0315 (Apr 6 low). Initial resistance is now at 1.0584 (Apr 8 high) followed by 1.0600 (1.0412 plus 1.0289-1.0508).

Gold - 1490

Initial support at 1471 (Apr 15 low) followed by 1452 (Apr 14 low). Initial resistance is now at 1500 (Big Figure Major Resistance) followed by 1513 (1157.03 plus 1.618 of 1044.85-1265.30).

Oil - 107.20

Initial support at 106.00 (Intraday Support) followed by 105.00 (Intraday Support). Initial resistance is now at 108.00 (Intraday resistance) followed by 110.00 (Intraday Resistance).

Written by Anthony Darvall

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