Forex Trader News – Currencies Direct

To discuss further details on EU plans for Greece and the next steps. The euro has taken a beating over the past couple of weeks over the wrangling with Greece and ministers need to tread carefully or risk further fear in the markets and selling of the euro. Aside from this we have very little to focus on today. Risk appetite remains weak as Greece and other European countries continue to undermine confidence; in addition monetary tightening in China and comments of revaluing the Yuan are adding to the reduced confidence. In relation to the Yuan Jim O’Neill from Goldman Sachs suggests that China may revalue the Yuan by up to 5%- this may not happen especially during Chinese New Year but it is still a possibility and hence undermining risk.

Better than expected retail sales data on Friday from the US at +0.5% for January helped to stave off further fear in the markets but was not enough to turn the tide.

Today we have lots of closed markets with a US holiday for President’s day, Family day in Canada and the Chinese New Year leading to markets in China, Taiwan and Vietnam to be closed all week. With little economic data from Europe we will instead focus on the week ahead with inflation data from the US, UK, Germany, Canada and New Zealand.

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U.S. Dollar Trading (USD) was strong in general as US stocks remained on the back foot. Risk sentiment was also dented by a large fall in US consumer Confidence with October dropping to 47.7 vs. 53.4 previously. August Case-Shiller House prices rose 1.2% vs. 0.7% forecast. In US Stocks, DJIA +14 points closing at 9882, S&P -3 points closing at 1063 and NASDAQ -25 points closing at 2116. Looking ahead, September Durable Goods Orders forecast at 1% vs. -2.6% previously. Crude Oil Inventories released forecast at 1.4mln vs. 1.3mln previously.

The Euro (EUR) took the full force of USD and Yen strength falling below 1.4800 and breaking the key 1.4840 support level. EUR/JPY also fell heavily below 136 yen. September Private Loans forecast at -0.3% was at expectations. Overall the EUR/USD traded with a low of 1.4770 and a high of 1.4928 before closing at 1.4810. Looking ahead, German Import prices forecast at -0.6% vs. 1.3% previously.

The Japanese Yen (JPY) gained across the board on increasing risk aversion and a drop in US yields after a strong treasury auction overnight. USD/JPY slipped from the 92 figure and EUR/JPY and AUD/JPY were under pressure. Overall the USDJPY traded with a low of 91.61 and a high of 92.33 before closing the day around 92.25 in the New York session. Update September Retail Sales -1.4%, forecast at -1.6% vs. -1.8% y/y previously.

The Sterling (GBP) continued to find strength as traders ignored the rest of the market and supported the pound. EUR/GBP continued lower after October CBI Distributive Trades are forecast at 5 vs. 3 previously, came in strong at 8. Overall the GBP/USD traded with a low of 1.6286 and a high of 1.6440 before closing the day at 1.6380 in the New York session.

The Australian Dollar (AUD) struggled above 0.9200 as the Euro fell and AUD/JPY also came under pressure. A rise in Oil failed to offset and the pair tested 0.9120 support again. Attention is still focused on RBA next Tuesday and CPI today. Overall the AUD/USD traded with a low of 0.9122 and a high of 0.9219 before closing the US session at 0.9160. UPDATE Q3 CPI 1.0% vs. 0.8% forecast.

Oil & Gold (XAU) was weak again testing support in the low 1030’s. Overall trading with a low of USD$1032 and high of USD$1043 before ending the New York session at USD$1038 an ounce. Gained as the market rebounded from two days of heavy selling. Crude Oil was up $0.87 ending the New York session at $79.55.

TECHNICAL COMMENTARY

Euro – 1.4820

Initial support at 1.4770 (Oct 27 low) followed by 1.4762 (Oct 13 low). Initial resistance is now located at 1.5083 (Oct 21 high) followed by 1.5163 (76.4% retrace 1.6038 – 1.2330)

Yen – 91.70

Initial support is located at 91.18 (Oct 23 low) followed by 90.49 (Oct 21 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound – 1.6380

Initial support at 1.6241 (Oct 19 low) followed by 1.6120 (Oct 8 low). Initial resistance is now at 1.6533 (61.8% retrace 1.7043 – 1.5708) followed by 1.6693 (Oct 23 high).

Australian Dollar – 0.9170

Initial support at 0.9113 (Oct 19 low) followed by the 0.8985 (Oct 12 low). Initial resistance is now at 0.9347 (Aug 4 08 high) followed by 0.9476 (Jul 31 08 high).

Gold – 1040

Initial support at 1024 (Sep 17 low) followed by 1000 (Big Figure). Initial resistance is now at 1067 (Oct 20 high) followed by 1070 (Oct 14 high).

Oil – 79.70

Initial support at 78.00 (Intraday Support) followed by 77.50 (Intraday support). Initial resistance is now at 80.00 ( Major Level) followed by 82.00 (October High).

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U.S. Dollar Trading (USD) gained across the board as US stocks came under continued pressure and reports that China should diversify its reserves into Euro’s and Yen was discounted as personal opinion of the author. Banking stocks led the market lower. In US Stocks, DJIA -104 points closing at 9867, S&P -12 points closing at 1066 and NASDAQ -12 points closing at 2141. Looking ahead, August Case Shiller House prices are forecast at 0.7% vs. 1.6% previously. Also released, CB Consumer Confidence forecast at 53.1 in October.

The Euro (EUR) fell heavily after forming a double top at 1.5060 earlier in the Asian session. Gains were on the back of the Chinese report which when later discounted caused the Euro to pare back and this turned into a rout as US stocks slumped for a second day. Overall the EUR/USD traded with a low of 1.4844 and a high of 1.5063 before closing at 1.4870. September Private Loans is forecast at -0.3% vs. 0.1%.

The Japanese Yen (JPY) held above 92 Yen against the Dollar but the crosses slumped as risk aversion ticked higher on mounting stock losses. GBP/JPY held up well shrugging off risk aversion as GBP rebounded from Fridays sell off. Overall the USDJPY traded with a low of 91.58 and a high of 92.29 before closing the day around 92.25 in the New York session. Looking ahead, September Retail Sales are forecast at -1.6% vs. -1.8% y/y.

The Sterling (GBP) managed to eek out small gains as the market recovered both on the crosses and the major during the day. Speculation the sell off on Friday was overdone and that the GDP numbers would be revised higher helped sustain gains. Overall the GBP/USD traded with a low of 1.6253 and a high of 1.6396 before closing the day at 1.6320 in the New York session. Looking ahead, October CBI Distributive Trades are forecast at 5 vs. 3 previously.

The Australian Dollar (AUD) was hit hard by the USD strength and large falls in Commodities. Q3 PPI was also weak at 0.1% vs. 0.3% forecast as the high Aussie dollar helped stem inflation. CPI numbers tomorrow are very important as the market focuses on the speed of RBA rate rises. Overall the AUD/USD traded with a low of 0.9126 and a high of 0.9277 before closing the US session at 0.9160.

Oil & Gold (XAU) Gold fell back heavily as Oil remained heavy. Overall trading with a low of USD$1037 and high of USD$1060 before ending the New York session at USD$1038 an ounce. Was under pressure as stocks fell and sentiment soured. Crude Oil was down -1.82 ending the New York session at $88.68.

TECHNICAL COMMENTARY

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Euro – 1.4875

Initial support at 1.4829 (Oct 19 low) followed by 1.4762 (Oct 13 low). Initial resistance is now located at 1.5083 (Oct 21 high) followed by 1.5163 (76.4% retrace 1.6038 – 1.2330)

Yen – 92.25

Initial support is located at 91.18 (Oct 23 low) followed by 90.49 (Oct 21 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound – 1.6320

Initial support at 1.6241 (Oct 19 low) followed by 1.6120 (Oct 8 low). Initial resistance is now at 1.6693 (Oct 23 high) followed by 1.6743 (Sept 11 high).

Australian Dollar – 0.9170

Initial support at 0.9113 (Oct 19 low) followed by the 0.8985 (Oct 12 low). Initial resistance is now at 0.9347 (Aug 4 08 high) followed by 0.9476 (Jul 31 08 high).

Gold – 1038

Initial support at 1037 (Oct 26 low) followed by 1036 (Oct 7 low). Initial resistance is now at 1067 (Oct 20 high) followed by 1070 (Oct 14 high).

Oil – 78.60

Initial support at 78.50 (Intraday Support) followed by 77.50 (Intraday support). Initial resistance is now at 80.00 ( Major Level) followed by 82.00 (October High).

Currency Exchange News

U.S. Dollar Trading (USD) was on the front foot as risk appetite waned and profit taking on the most pairs saw the USD gain across the board. The Euro struggled to stay above 1.5000 and USD/JPY made fresh multi-month highs above the 92 Yen level. September Existing Home Sales +9.4% vs. 5% forecast. In US Stocks, DJIA -109 points closing at 9972, S&P -13 points closing at 1079 and NASDAQ -10 points closing at 2154.

The Euro (EUR) had a mixed day but fell in the end with US stocks closing at 1.5000 but struggled to break higher. Weighing the single currency down was heavy losses in the GBP although EUR/JPY did manage to support as USD/JPY rallied. October IFO Business Climate at 91.9 vs forecast at 92. Overall the EUR/USD traded with a low of 1.4993 and a high of 1.5060 before closing at 1.5000.

The Japanese Yen (JPY) traded above 92 as the rally extended. Talk of the differing medium term outlook on interest rates are helping the USD to become the higher yielding currency. Also helping the Yen to weaken is the continued reemergence of the carry trade. Overall the USDJPY traded with a low of 91.29 and a high of 92.12 before closing the day around 92.07 in the New York session.

The Sterling (GBP) was sold aggressively as Q3 GDP remained negative leaving the UK in recession. The pair fell over 3 big figures giving up a week of gains. Q3 GDP -0.4% vs. 0.2% forecast. Overall the GBP/USD traded with a low of 1.6300 and a high of 1.6693 before closing the day at 1.6308 in the New York session.

The Australian Dollar (AUD) slipped on profit taking and risk aversion falling back to supports at 0.9200. AUD/JPY remained well supported as it ignored the falls in New York. Attention is turning to the RBA meeting in November and whether they will raise and by how much. Overall the AUD/USD traded with a low of 0.9200 and a high of 0.9295 before closing the US session at 0.9220.

Oil & Gold (XAU) Gold fell with USD strength but kept to the recent range. Overall trading with a low of USD$1051 and high of USD$1068 before ending the New York session at USD$1053 an ounce. Oil fell back to $80 a barrel supports. Crude Oil was down -0.69 ending the New York session at $80.50.

TECHNICAL COMMENTARY

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Euro – 1.5010

Initial support at 1.4829 (Oct 19 low) followed by 1.4762 (Oct 13 low). Initial resistance is now located at 1.5083 (Oct 21 high) followed by 1.5163 (76.4% retrace 1.6038 – 1.2330)

Yen – 92.10

Initial support is located at 90.78 (Oct 22 low) followed by 90.08 (Oct 20 low). Initial resistance is now at 92.53 (Sept 21 high) followed by 93.3 (Sept 7 high).

Pound – 1.6320

Initial support at 1.6241 (Oct 19 low) followed by 1.6120 (Oct 8 low). Initial resistance is now at 1.6742 (Sept 11 high) followed by 1.6831 (Aug 7 high).

Australian Dollar – 0.9220

Initial support at 0.9113 (Oct 19 low) followed by the 0.8985 (Oct 12 low). Initial resistance is now at 0.9347 (Aug 4 08 high) followed by 0.9476 (Jul 31 08 high).

Gold – 1053

Initial support at 1048 (Oct 21 low) followed by 1043 (Oct 16 low). Initial resistance is now at 1067 (Oct 20 high) followed by 1070 (Oct 14 high).

Oil – 79.90

Initial support at 79.80 (Pivot Point) followed by 78.50 (Intraday support). Initial resistance is now at 82 (Oct 21 high) followed by 82.80 (Fib Projection).

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Currency Exchange News – Currencies Direct

It was the big one that the market had been waiting for- UK GDP. This was touted to show that the UK economy had exited the recession but it was woefully disappointing. UK Q-3 GDP has come in demonstrably weaker than expected, -0.4% quarter on quarter, -5.2% year on year compared to median forecasts of +0.2%, -4.6% y/y.  Following on from yesterdays weaker retail sales data the pound has once again fallen of a cliff this morning- so far we have lost over 1.5% against the USD and the EUR. Unfortunately the good cheer surrounding sterling earlier in the week following a less dovish stance from the Bank of England has now been smashed and talk of parity against the euro is likely to be the market chatter once again.

Over to the Eurozone and we have seen some decent data in the form of PMI (Purchasing Manager Index) for services and manufacturing. The data came in better than expected and is an important indicator of business conditions in the Eurozone. Meanwhile the German IFO came in pretty much as expected.

Looking at the currencies this morning we can see that EUR/USD is still holding firm above 1.50 following the positive economic data. Sterling is the big loser as you would expect and is still falling against the major currencies- it has breached 1.10 against the euro and is testing 1.64 against the USD; the next support is 1.6340.

Currency Exchange Market News – Currencies Direct

Yesterday the spotlight was firmly on the Bank of England minutes in the morning and onto the Fed beige book in the afternoon. The BoE minutes cheered sterling into a rally against the USD over 1.66 and to 1.11 against the euro. The tone from the BoE although not conclusive was more hawkish and importantly there was no mention of expanding the Quantitative Easing programme. This facet was the impetus behind sterling gaining across the markets. In addition there is ongoing interest in GBP/USD by an oil company who are touted to be buying as much as £500 million each day supporting the rally to 1.66.

Yesterday afternoon we finally saw a breach of 1.50 for EUR/USD; however it did not last long as the Fed beige book release brought a sense of reality back into the markets. The disappointing feedback from the Fed beige book which offers a survey of economic conditions led to a dip in the Dow and some strength coming back into the USD in later trading. The feedback suggests that the economic recovery in the US could be prolonged and shaky.

Today UK retail sales data came in lower than expected with month on month sales coming in flat against the expectation of a 0.5% rise. This has taken the shine away from sterling after an impressive rally over the last few trading days. Currently the pound although dipping on the news is still above 1.10 on the euro and 1.65 against the USD and 150 against the Japanese Yen. Tomorrows GDP will now be the focus of attention for sterling.

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