Weekly Outlook -- Dollar Under Heavy Selling Pressure |
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| Written by Tony Darvall | |||||||||||||||||||||||||||||||||||||||||||||
| Tuesday, 28 September 2010 12:00 GMT | |||||||||||||||||||||||||||||||||||||||||||||
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Last week's currency trading review The Dollar was sold aggressively after the FOMC statement suggested the US Central Banks was considering expanding unconventional easing measures if the US economy weakens further. Stock markets reacted very positively and the market sold the safe haven Dollar against all currencies. The Euro gained over 4 big figures on the combination of short Euro covering and weak USD. The market has now turned net long the Euro for the first time since the European debt crisis but worries still remain as Irish banking sector remains in the spotlight. German September IFO showed a modest bounce to 106.8 vs. a drop to 106.3. The EUR/USD gained +3.26% closing at 1.3488, after opening the week at 1.3048. The Japanese Yen the effects of the BOJ intervention waned as little follow through buying emerged and the market took advantage of the higher levels to sell more USD. The Japanese government has warned it will intervene again if they feel the market moves are too one sided. The USD/JPY fell -1.96% closing at 84.20 vs. 85.85 previously. The GBP did extremely well rallying to month highs on improving investor risk appetite. The market has broken topside resistance and is looking to retest 1.6000 in coming days. MPC Meeting minutes showed an 8-1 split as expected with BoE Member Sentence once again voting for a rate hike. The GBP/USD gained +1.21% closing at 1.5821 after opening at 1.5630. The AUD traded at fresh year highs after the US rate meeting and continued to press higher tracking the rally in stock markets. September RBA minutes were very hawkish stating above trend growth would have to be managed with monetary policy. Analysts are now expecting future rate hikes this year and potential for the Aussie to reach parity. The AUD/USD gained +2.40% closing at 0.9590 after opening at 0.9360. The Forex Trading Week Preview In the States; On Tuesday, September Consumer Confidence is forecast at 52.5 vs. 53.5 previously. On Thursday, Q2 GDP forecast unchanged at 1.6% Q/Q. Weekly Jobless Claims are forecast at 458k vs. 565k previously. On Friday, August Core PCE is forecast at 0.1% m/m and Personal Income is forecast at 0.3%. Also released, Sept ISM Manufacturing is forecast at 54.5 vs. 56.3 previously. We will provide our previews and reviews of these data releases in the daily summary. In the Eurozone; On Tuesday, German CPI is forecast at 1.3% y/y. On Thursday, German Unemployment is forecast at 7.6% in September. On Friday, August Retail Sales are forecast at 3.6% y/y. In the UK, On Tuesday, Q2 GDP is forecast at 1.2% q/q. On Wednesday, September GFK Consumer Confidence is forecast at -18 vs. -18 previously. On Friday, Sept PMI Manufacturing is forecast at 54 vs. 54.3 previously. We will provide our previews and reviews of these data releases in the daily summary. In Japan; On Wednesday, Q3 Tankan Survey is forecast at 7 vs. 1 previously. In Australia; On Thursday, August Building Approvals is forecast at 0.0% vs. 2.3% previously. Also released, RBA Financial Stability review released. We will provide our previews and reviews of these data releases in the daily summary. TECHNICAL COMMENTARY
Euro - 1.3475 Initial support at 1.3248 (Sep 22 low) followed by 1.2919 (Sep 6 low). Initial resistance is now located at 1.3493 (Sept 24 High) followed by 1.3818 (Mar 17 high) Yen - 84.30 Initial support is located at 84.04 (61.8% retrace of 1.5999-1.5297) followed by 82.88 (Sept 15 low). Initial resistance is now at 85.93 (Sep 16 high) followed by 86.70 (38.2% retrace of 92.89-81.88). Pound - 1.5820 Initial support at 1.5449 (Sept 15 low) followed by 1.5297 (Sep 7 low). Initial resistance is now at 1.5844 (Sep 24 high) followed by 1.5999 (Aug 6 high). Australian Dollar - 0.9600 Initial support at 0.9442 (Sept 21 low) followed by the 0.9314 (Sep 14 low). Initial resistance is now at 0.9615 (Sep 24 high) followed by 0.9850 (July 15, 2008 high). Gold - 1297 Initial support at 1263 (Sept 15 low) followed by 1232 (Aug 31 low). Initial resistance is now at 1300 (Round Number) followed by 1324 (1263.20 plus 1.618 of 1236.80-1274.95). Oil - 76.70 Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 78 (Intraday Resistance) followed by 80.00 (Intraday Resistance). Written by Anthony Darvall
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