Daily Outlook - Irish Concerns, China Tightening & G20 |
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| Written by Tony Darvall | |||||||||||||||||||||||||||||||||||||||||||||
| Tuesday, 16 November 2010 04:03 GMT | |||||||||||||||||||||||||||||||||||||||||||||
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Last week's currency trading review The Dollar had a dramatic reversal of fortune last week after months of selling the market reversed direction and bought the USD aggressively across the board, making it the strongest currency in the market. Stock markets slumped and gold crashed adding to the momentum started from the return of Eurozone Debt concerns. Data was good with Trade balance improving to -44bn and Unemployment Claims improving to 435k vs. 459k previously. The Euro came under sustained selling pressure as the Irish situation deteriorated so much that talk of bailouts dominated the G20 meeting on Friday and fear spread of contagion with Portugal under pressure as well. EU GDP was at 0.4% vs. 1.0% previously q/q. The EUR/USD slumped -2.48% closing at 1.3691, after opening the week at 1.4031. The Japanese Yen pushed higher as demand for dollar outpaced the safe haven demand for Yen. Risk sensitive currencies fell such as AUD/JPY but most losses were contained as the major threatens to break a multi month downtrend. Expectations of a test of Y80 have been put on the back burner for now as the market found itself caught very short. The USD/JPY gained +1.51% closing at 82.51, after opening at 81.26. The GBP enjoyed major gains against the beleaguered Euro fell against risk aversion fueled dollar buying. The Bank of England inflation report opens up the door for higher than expected inflation in some scenarios going forward and resulted in GBP gains on Wednesday after its release. The GBP/USD fell -0.43% closing at 1.6111 after opening at 1.6180. The AUD came under the most pressure as the market had been buying the commodity currency aggressively for the last few months. On Thursday a mixed Jobs report adding to the selling pressure and the market pushed below parity falling quickly lower on large stop losses. October Employment change was +29k but the Unemployment Rate Jumped to 5.4% vs. 5.1% previously. The AUD/USD fell -3.19% closing at 0.9844 after opening at 1.0158. The Forex Trading Week Preview In the States; On Monday, October Retail Sales are forecast at 0.7% vs. 0.6% m/m. On Tuesday, October Industrial Production is forecast at 0.3% vs. -0.2% m/m. On Wednesday, October CPI is forecast at 0.3% vs. 0.1% previously. On Thursday, Weekly Jobless Claims is forecast at 445k vs. 435k previously. On Friday, Bernanke and China PBOC Zhou speak. We will provide our previews and reviews of these data releases in the daily summary. In the Eurozone; On Tuesday, EU CPI is forecast 1.9% y/y. November German ZEW Survey is forecast at 75 vs. 72.6 previously. On Friday, German PPI is forecast at 4.2% vs. 3.9% previously y;/y. In the UK, On Tuesday October CPI is forecast at 3.1% y/y. October RPI is forecast at 4.5% y/y. on Wednesday, BOE Minutes released. We will provide our previews and reviews of these data releases in the daily summary. In Japan; On Monday, Industrial Production is forecast at 0.6% vs. 0.4% previously. On Friday, BOJ Board Meeting Minutes released. In Australia; On Tuesday, RBA Minutes Released. On Thursday RBA Battellino speaks. We will provide our previews and reviews of these data releases in the daily summary. TECHNICAL COMMENTARY
Euro - 1.3740 Initial support at 1.3560 (Sept 30 low) followed by 1.3435 (50% retrace of 1.2588-1.4282). Initial resistance is now located at 1.3974 (Nov 9 High) followed by 1.4282 (Nov 4 high) Yen - 82.60 Initial support is located at 81.55 (Nov 10 low) followed by 80.54 (Nov 9 low). Initial resistance is now at 83.03 (Oct 7 high) followed by 83.99 (Oct 5 high). Pound - 1.6150 Initial support at 1.5878 (Oct 29 Low) followed by 1.5762 (Oct 28 low). Initial resistance is now at 1.6299 (Nov 4 high) followed by 1.6458 (Jan 19 high). Australian Dollar - 0.9895 Initial support at 0.9825 (Nov 12 low) followed by the 0.9652 (Oct 27 low). Initial resistance is now at 1.0183 (Nov 5 high) followed by 1.0212 (0.9652 plus 0.618 of 0.8316-0.9222). Gold - 1375 Initial support at 1360 (Nov 12 low) followed by 1346 (Nov 4 low). Initial resistance is now at 1429 (1157.03 plus 1.236 of 1044.85-1265.30) followed by 1500 (Round Number). Oil - 85.05 Initial support at 85.00 (Intraday Support) followed by 84.50 (Intraday Support). Initial resistance is now at 86.00 (Intraday Resistance) followed by 88.00 (Intraday Resistance). Written by Anthony Darvall
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