Weekly Outlook -- Pressure Building on Ireland to Accept Bailout |
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| Written by Tony Darvall | |||||||||||||||||||||||||||||||||||||||||||||
| Monday, 22 November 2010 00:36 GMT | |||||||||||||||||||||||||||||||||||||||||||||
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Last week's currency trading review The Dollar was strong for the first half of the week as stock markets and commodities came under pressure due to concerns regarding European government debt and China tightening monetary policy. When sentiment improved on Thursday the markets once again sold the USD heavily. Retail Sales surprised to the topside up 1.2% vs. 0.7% forecast m/m. The Euro came under heavy pressure on Monday as the market focused on widening Credit Default Spreads on Irish Debt and talk intensified that the small European Country may need a bailout. Talk on Thursday that the Irish Central Bank was working on a multi-billion loan helped improve sentiment and allowed a major rally in the Euro of week lows under 1.3500. The EUR/USD gained +0.11% closing Asia at 1.3706, after opening the week at 1.3691. The Japanese Yen the strength of the USD early in the week allowed the USD/JPY to remain very well supported and when the Yen crosses rallied on Thursday the Major broke above Y83 developing large topside potential after months of selling. The USD/JPY gained +0.85% closing Asia at 83.22, after opening at 82.51. The GBP struggled with large banking exposure to Ireland and some heavy selling above BoE King mentioned that more QE was still on the table for the Bank of England. Strong October Retail Sales at 0.5% vs. 0.4% forecast helped Cable regain the 1.6000 handle on Thursday. The GBP/USD fell -0.19% closing Asia at 1.6080 after opening at 1.6111. The AUD while not immune to the downside pressures caused from Eurozone concerns the Aussie held up well in risk off trading early in the week. When Stocks around the world rallied the AUS/USD outperformed with AUD/JPY in particular shining. November RBA Minutes showed the board decision to hike rates by 0.25% to 4.75% was a very close call. The AUD/USD gained +0.28% closing at 0.9872 after opening at 0.9844. The Forex Trading Week Preview In the States; On Wednesday, Q3 GDP is forecast at 2.4% vs. 2.0% Q/Q. Also released, Existing Home Sales forecast at 4.51m vs. 4.53m previously. The release of the FOMC meeting minutes will conclude the important day of economic data. On Thursday, Weekly Jobless Claims are forecast at 434k vs. 439k previously. Also Released, UoM Consumer Confidence is forecast at 69.7 vs. 69.3 previously. On Friday, Bank Holiday for Thanksgiving Day. We will provide our previews and reviews of these data releases in the daily summary. In the Eurozone; On Tuesday, European Manufacturing PMI is forecast at 54.4 vs., 54,6 previously. Services PMI is forecast at 53.2 vs. 53.3 previously. On Wednesday, German IFO Business Climate is forecast at 107.9 vs. 107.6 previously. On Friday, German CPI is forecast at 0.2% vs. 0.1% previously. In the UK, On Wednesday, Q3 GDP is forecast at 0.8% vs. 0.8% previously. On Thursday, Inflation Report Hearing. We will provide our previews and reviews of these data releases in the daily summary. In Japan; On Tuesday, Bank Holiday. On Friday, CPI is forecast at 0.6% vs. -1.1% y/y. In Australia; On Thursday, Q3 CAPEX is forecast at 3.3% vs. -4.0% previously. ON Friday, RBA Governor Stevens speaks. We will provide our previews and reviews of these data releases in the daily summary. TECHNICAL COMMENTARY
Euro - 1.3745 Initial support at 1.3448 (Nov 16 low) followed by 1.3435 (50% retrace of 1.2588-1.4282). Initial resistance is now located at 1.3825 (Nov 9 High) followed by 1.4282 (Nov 4 high) Yen - 83.40 Initial support is located at 82.40 (Nov 15 low) followed by 81.66 (Nov 12 low). Initial resistance is now at 83.99 (Oct 5 high) followed by 85.40 (Sept 24 high). Pound - 1.6005 Initial support at 1.5840 (Nov 16 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 - 0.9915 Initial support at 0.9652 (Oct 27 low) followed by the 0.9542 (Oct 5 low). Initial resistance is now at 1.0004 (Nov 12 high) followed by 1.0183 (Nov 5 high). Gold - 1358 Initial support at 1329 (Nov 16 low) followed by 1315 (Oct 22 low). Initial resistance is now at 1424 (Nov 9 high) followed by 1500 (Round Number). Oil - 82.30 Initial support at 82.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 84.00 (Intraday Resistance) followed by 85.00 (Intraday Resistance). Written by Anthony Darvall
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