Weekly Outlook - Yen Roars back into favor

 @ibtimes
on August 17 2009 9:11 PM

Last week's currency trading review

The Dollar was mixed to stronger against most currencies except the Yen which took back all of Non Farm Payrolls gains during the week. Data was a lot weaker than expected with US retail Sales down -0.1% vs. 0.8% forecast and August UoM Consumer Confidence slumping to 63.2 vs. 68.5 forecast. The Fed Meeting was a non event with a slight improvement in economic outlook being countered by a slight extension of the Treasury buying program with the net result neutral for the Dollar. The Euro was volatile as the USD strength story falling apart given the US retail sales disappointment on the same day the German and French GDP turned positive. Stock weakness on Friday pressured the pair onto the back foot with heavy EUR/JPY selling clouding the outlook. The EUR/USD gained 0.14% closing at 1.4202, after opening the week at 1.4181.

The Japanese Yen saw nothing but strength for nearly the whole week as US data underperformed and a series of heavy losses on the Shanghai Stock Index forced the USD/JPY back to below 95. AUD/JPY was also hit hard as the markets risk barometer slid 3%. CAD/JPY lower on the commodity slump fell 4%. The USD/JPY closed down -2.78% at 94.91 after opening the week at 97.55. The GBP continued on the downside slide that began last week with risk aversion and GBP/JPY dragging the pair towards 1.6400 supports. The BOE Inflation report was bearish as forecast although the pound did find support as the pull back from 1.7000 entered oversold territory. RICS House Balance improved to -8 from -17 in July. GBP/USD fell -0.86% closing at 1.6540 after opening at 1.6683. The AUD slumped with stocks after heavy AUD/JPY selling hit the markets on Friday Night. Earlier in the day fresh Year highs were seen on the back of RBA governor Stevens speaking about the need for rate rises as soon as conditions normalize. NAB Business Confidence rose to 10 from 4 previously and Consumer Confidence rallies another 3.7% in August. The AUD/USD closed down -1.27% at 0.8325 after opening at 0.8431.

The forex trading week preview

In the States; On Tuesday, July PPI is forecast at -5.8% vs. -4.6% y/y. Also released, July Housing starts forecast at 598k vs. 582k previously and Building Permits at 575k vs. 570k previously. On Thursday, Weekly Jobless Claims forecast at 55k vs. 558k previously. Also released, Philly Fed Forecast at -1.5% vs. -7.5% previously. July Existing Home Sales forecast at 2.1% vs. 3.6% previously. Also on Friday, Bernanke Speaks. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German Zew Survey forecast at -85 vs. -89 in August. On Wednesday, German PPI forecast at -6.5% vs. -4.6% y/y. On Friday August EU PMI services forecast at 46.5 vs. 45.7 previously whilst Manufacturing PMI forecast at 47.5 vs. 46.3 previously. In the UK; On Tuesday, July CPI forecast at 1.5% vs. 1.8% previously y/y. On Wednesday, BOE minutes released. On Thursday, July Retail Sales forecast at 2.7% vs. 2.9% y/y. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Monday. Q2 GDP forecast at 1.1% vs. -3.8% previously. UPDATE Q2 GDP 0.9% slightly worse than forecast. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; On Tuesday, RBA Minutes released from August meeting. 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

1.3833

1.4008

1.4180

1.4447

1.4621

USD/JPY

94.02

94.37

94.60

97.79

98.89

GBP/USD

1.6266

1.6392

1.6480

1.6719

1.6831

AUD/USD

0.8126

0.8181

0.8280

0.8519

0.8694

XAU/USD

925.00

940.00

946.00

971.00

990.00

Euro - 1.4180 Initial support at 1.4008 (July 29 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace of 1.6038 -1.2330)

Yen - 94.60 Initial support is located at 94.37 (Aug 4 low) followed by 94.02 (July 29 low). Initial resistance is now at 97.79 (August 7 high) followed by 98.89 (June 4 high).

Pound - 1.6480 Initial support at 1.6392 (Jun 22 low) followed by 1.6266 (Jul 17 low). Initial resistance is now at 1.6719 (AUG 10 high) followed by 1.6831 (AUG 7 high).

Australian Dollar - 0.8280 Initial support at 0.8181 (AUG 12 low) followed by the 0.8121 (July 29 low). Initial resistance is now at 0.8519 (Aug Sept high) followed by 0.8519 (Sept 22 low).

Gold - 946 Initial support at 940 (Aug 12 low) followed by 925 (July 29 low). Initial resistance is now at 971 (August 6 high) followed by 990 (Jun 3 high).

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