Market Quiet, Still Weak

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) traded in tight ranges against most pairs but finished on the front foot as US stocks slumped into the close. With little direction given from the G7 over the weekend the market continued to focus on unresolved Eurozone risks. January Employment trend was at 93.2 vs. 91.8. In US stocks DJIA -103 points closing at 9908, S&P -9 points closing at 1056 and NASDAQ -15 points closing at 2126. Looking ahead, December Wholesale Inventories is forecast at 0.5% vs. 1.5%.

European Euro

The Euro (EUR) recovered into the 1.3700 a few times during the day but failed to hold onto gains and slipped back to the lower 1.36 region on weak US stocks. February Sentix fell to -8.2 vs. -3.7 previously. The Greek Fin Min stated that his government was fully committed to the stability program. Overall the EUR/USD traded with a low of 1.3620 and a high of 1.3715 before closing at 1.3645. Looking ahead, German December Trade Balance forecast at 15bn vs. 17.2bn. January CPI is forecast -0.6% vs. 0.8% m/m.

Japanese Yen (JPY)

The Japanese Yen (JPY) was very quiet against the USD but was higher for most of the day against the Crosses as oversold conditions allowed the market to rebound. Late US stock market weakness induced some paring back of these gains but traders are wary of getting caught short from sudden changes in sentiment at these levels. Overall the USDJPY traded with a low of 89.13 and a high of 89.58 before closing the day around 89.33 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) weekend press reports that the UK was headed for a hung Parliament after the next election sent the Pound to its lowest level in 9 months at 1.5535. Also weighing was comments from PIMCO CEO El-Erian that the UK should be put in the same category as Greece and Spain. Overall the GBP/USD traded with a low of 1.5532 and a high of 1.5663 before closing the day at 1.5595 in the New York session. Looking ahead, December Trade Balance forecast at -6.63bn vs. -6.78bn.

Australian Dollar (AUD)

The Australian Dollar (AUD) tracked the Euro failing above 0.8700 but generally better supported than in previous days as AUD/JPY rebounded. Stock markets are still the AUD's major driver and if weakness continues then further falls are likely. Overall the AUD/USD traded with a low of 0.8611 and a high of 0.8711 before closing the US session at 0.8640.

Oil & Gold

Oil & Gold (XAU) was very contained rallying in Asia before slipping back in the US session. Overall trading with a low of USD$1061 and high of USD$1074 before ending the New York session at USD$1064 an ounce. Bounced after heavy falls recently. Crude Oil was down +$0.50 ending the New York session at $71.70.

Technical Analysis: Market Quiet

Euro (EUR)

Euro – 1.3645 : Initial support at 1.3584 (May 20 low) followed by 1.3531 (May 19 low). Initial resistance is now located at 1.3903 (Feb 4 high) followed by 1.4026 (Feb 3 high).

Yen (JPY)

Yen – 89.30 : Initial support is located at 88.56 (Feb 4 low) followed by 88.20 (Dec 11 low). Initial resistance is now at 89.79 (0.236 of 93.77-88.56) followed by 90.55 (0.382 of 93.77-88.56).

Pound Sterling (GBP)

Pound – 1.5580 : Initial support at 1.5517 (May 17 low) followed by 1.5450 (May 20 low). Initial resistance is now at 1.5918 (Feb 4) followed by 1.6069 (Feb 3 high).

Australian Dollar (AUD)

Australian Dollar – 0.8640 : Initial support at 0.8608 (Feb 4 low) followed by the 0.8570 (Oct 2 low). Initial resistance is now at 0.8778 (0.382 of 0.9328-0.8608) followed by 0.8883 (0.382 of 0.9328-0.8608).

Gold (XAU)

Gold – 1063 : Initial support at 1041 (Nov 2 low) followed by 1035 (Oct 30 low). Initial resistance is now at 1073 (Jan 28 low) followed by 1111 (Feb 4 high).

Oil

Oil – 71.70 : Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

US Jobs Numbers Disappoint

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) continued on its recent strengthening run as stock markets fell further on Friday with the US jobs report doing little to instill fresh investor confidence. January NonFarm Payrolls fell -20k vs. 5k forecast. January Unemployment Rate did fall however to 9.7% from 10.0% as people stopped looking for work. In US stocks DJIA +10 points closing at 10012, S&P +3 points closing at 1066 and NASDAQ +15 points closing at 2141. Looking ahead, January Employment Trend previously at 91.8.

European Euro

The Euro (EUR) fell not only to USD strength but ongoing European debt concerns in Spain, Portugal and Greece. German Industrial Output fell -2.6% vs. 0.6% previously. EUR/JPY also fell to 8 month lows near Y120 before bouncing into the end of the day on speculation the EU would be forced into some form of bailout for its troubled members. Overall the EUR/USD traded with a low of 1.3586 and a high of 1.3746 before closing at 1.3652. Looking ahead, February Sentix forecast at -3.2% vs. -3.7% previously.

Japanese Yen (JPY)

The Japanese Yen (JPY) tested multimonth highs against the EUR and GBP as the safe haven currency enjoyed broad-based support. USD/JPY found solid support below Y89 but likewise found solid resistance close to the key Y90 level. Overall the USDJPY traded with a low of 88.84 and a high of 89.89 before closing the day around 89.33 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) was under pressure for most of the day falling at one stage into the 1.55's before staging a small recovery into the close. Very Weak Oil is weighing on the risk sensitive currency as is GBP/JPY selling which pushed through Y140 support. January PPI was at 2.0% vs. 0.6% forecast m/m. Overall the GBP/USD traded with a low of 1.5560 and a high of 1.5775 before closing the day at 1.5623 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) the commodity currency was able to hold ground better than most as the recent selling was seen as overdone and spent most of the day in a tight range. A brief trip in the US session below 0.8600 found solid buyers and helped the pair close on a firmer footing. Overall the AUD/USD traded with a low of 0.8578 and a high of 0.8717 before closing the US session at 0.8660.

Oil & Gold

Oil & Gold (XAU) staged a $15 bounce off the $1050 level to end on a strong note. Overall trading with a low of USD$1045 and high of USD$1068 before ending the New York session at USD$1065 an ounce. The rout continued as Oil traders fretted on the Global economic outlook. Crude Oil was down $-1.94 ending the New York session at $71.19.

Technical Analysis: Stock Markets Fell Further On Friday

Euro (EUR)

Euro – 1.3645 : Initial support at 1.3584 (May 20 low) followed by 1.3531 (May 19 low). Initial resistance is now located at 1.3903 (Feb 4 high) followed by 1.4026 (Feb 3 high).

Yen (JPY)

Yen – 89.30 : Initial support is located at 88.56 (Feb 4 low) followed by 88.20 (Dec 11 low). Initial resistance is now at 89.79 (0.236 of 93.77-88.56) followed by 90.55 (0.382 of 93.77-88.56).

Pound Sterling (GBP)

Pound – 1.5600 : Initial support at 1.5517 (May 17 low) followed by 1.5450 (May 20 low). Initial resistance is now at 1.5918 (Feb 4) followed by 1.6069 (Feb 3 high).

Australian Dollar (AUD)

Australian Dollar – 0.8665 : Initial support at 0.8608 (Feb 4 low) followed by the 0.8570 (Oct 2 low). Initial resistance is now at 0.8778 (0.382 of 0.9328-0.8608) followed by 0.8883 (0.382 of 0.9328-0.8608).

Gold (XAU)

Gold – 1067 : Initial support at 1041 (Nov 2 low) followed by 1035 (Oct 30 low). Initial resistance is now at 1073 (Jan 28 low) followed by 1111 (Feb 4 high).

Oil

Oil – 71.70 : Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

Euro leads Market Crash

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) broad based gains on the back of risk aversion and safe haven flows saw the USD trade at fresh 2010 highs. Stocks crashed as the market was spooked by European Debt concerns and rapid falls in commodities. In US stocks DJIA -26 points closing at 10270, S&P -6 points closing at 1097 and NASDAQ +1 points closing at 2190. Looking ahead, January Unemployment Rate forecast at 10.1% vs. 10.0% previously. January NonFarm Payrolls are forecast at 5k vs. -85k previously.

European Euro

The Euro (EUR) broke through support at 1.3850 as concerns about Portugal and Spain debt added to the Greece saga. The ECB held rates at 1.0% but the President Trichet failed to install confidence at the press conference. Overall the EUR/USD traded with a low of 1.3712 and a high of 1.3905 before closing at 1.3740. Looking ahead, December Industrial Output is forecast at 0.5% vs. 0.7%.

Japanese Yen (JPY)

The Japanese Yen (JPY) was the strongest currency as USD/JPY slumped through supports at Y90 and crosses crashed lower. GBP/JPY traded below Y140 and EUR/JPY slumped to below Y122. Yen strength was especially seen after the US Weekly Jobless claims increased to 480k. Overall the USDJPY traded with a low of 88.53 and a high of 91.10 before closing the day around 89.10 in the New York session. Looking ahead, December Leading Indicators Index previously at 1.8.

Pound Sterling (GBP)

The Sterling (GBP) managed a brief rally after the BOE held at 0.5% and kept the Asset Purchase Program at 200bn. Heavy GBP/JPY selling in the US session resumed the pressure on the downside and cable fell through 1.5800. Overall the GBP/USD traded with a low of 1.5729 and a high of 1.5921 before closing the day at 1.5760 in the New York session. Looking ahead, January PPI Output forecast at 0.35 vs. 0.55 previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) was under heavy pressure with stock/commodity crash and weak December Retail Sales at -0.7% vs. -0.2%m/m previously. AUD/JPY slumped over 3 Yen in the US session as longs capitulated and AUD/USD broke through December lows at 0.8735. Overall the AUD/USD traded with a low of 0.8605 and a high of 0.8828 before closing the US session at 0.8640. Looking ahead, RBA monetary statement released.

Oil & Gold

Oil & Gold (XAU) Gold broke through recent supports falling over $40 an ounce on the day. Overall trading with a low of USD$1059 and high of USD$1111 before ending the New York session at USD$1168 an ounce. Fell over 5% as investors bailed out of riskier trades. Crude Oil was up $-3.76 ending the New York session at $73.25.

Technical Analysis: Stocks Crashed

Euro (EUR)

Euro – 1.3730 : Initial support at 1.3584 (May 20 low) followed by 1.3485 (61.8% retrace of 1.2459 to 1.5144). Initial resistance is now located at 1.3903 (Feb 4 high) followed by 1.4026 (Feb 3 high).

Yen (JPY)

Yen – 89.25 : Initial support is located at 89.00 (big figure) followed by 88.50 (Feb 4 low). Initial resistance is now at 90 (key level) followed by 91.28 (Feb 3 high).

Pound Sterling (GBP)

Pound – 1.5760 : Initial support at 1.5708 (Oct 13 low) followed by 1.5517 (May 21 low). Initial resistance is now at 1.5918 (Feb 4) followed by 1.6069 (Feb 3 high).

Australian Dollar (AUD)

Australian Dollar – 0.8675 : Initial support at 0.8647 (Oct 5 low) followed by the 0.8570 (Oct 2 low). Initial resistance is now at 0.8826 (Feb 4 high) followed by 0.8928 (Feb 2 high).

Gold (XAU)

Gold – 1065 : Initial support at 1055 (Nov 3 low) followed by 1041 (Nov 2 low). Initial resistance is now at 1100 (Big figure) followed by 1125 (Feb 3 high).

Oil

Oil – 73.30 : Initial support at 73.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).

US Data Continues To Improve

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) reversed losses nicely in the US session as Economic data continued show the worlds largest economy was improving. January ADP Employment change was at -22k vs. -84k previously. January Services ISM also showed improvement to 50.5 vs. 49.8 previously. In US stocks DJIA -26 points closing at 10270, S&P -6 points closing at 1097 and NASDAQ +1 points closing at 2190. Looking ahead, Weekly Jobless Claims forecast at 460k vs. 470k previously.

European Euro

The Euro (EUR) tested resistance at 1.4000 before slumping as Greece/Portugal concerns flared again and the USD strengthened nicely in New York. December Retail Sales did little to help at 0.0% vs. 0.4% forecast. EUR/JPY did manage to hold up well though as USD/JPY broke higher. Overall the EUR/USD traded with a low of 1.3884 and a high of 1.4028 before closing at 1.3900. Looking ahead, ECB Rate announcement expected to hold.

Japanese Yen (JPY)

The Japanese Yen (JPY) was on the back foot for most of the day as USD/JPY support finally pushed through resistance at Y91. EUR/JPY traded to Y127 and GBP/JPY pivoted the key Y145 level. US interest rate expectations are still very important for medium term outlook so Fridays US Unemployment Report is especially important for the USD/JPY. Overall the USDJPY traded with a low of 90.06 and a high of 91.30 before closing the day around 90.90 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) broke through the 1.6000 level in early Europe be reversed quite aggressively later in the day as USD gained and concern about UK government debt resurfaced. January Consumer Confidence forecast at 73 vs. 70R previously. Overall the GBP/USD traded with a low of 1.5874 and a high of 1.6072 before closing the day at 1.5900 in the New York session. Looking ahead, BOE rate announcement expected to hold and Asset purchase program decision.

Australian Dollar (AUD)

The Australian Dollar (AUD) tracked the Euro movement testing Tuesday's resistance above 0.8900 before falling for the rest of the day. AUD/JPY remained above Y80 but is struggling to gain traction. AUD/NZD shot higher in late US session Wednesday as New Zealand Q4 Unemployment rate jumped to 7.3% vs. 6.8% previously. Overall the AUD/USD traded with a low of 0.8803 and a high of 0.8919 before closing the US session at 0.8820. Looking ahead, December Retail Sales forecast at -0.2% vs. 1.4% previously.

Oil & Gold

Oil & Gold (XAU) waxed and waned with USD strength throughout the day. Overall trading with a low of USD$1106 and high of USD$1125 before ending the New York session at USD$1110 an ounce. Pulled back as US Crude Inventories unexpectedly rose. Crude Oil was up $-0.29 ending the New York session at $76.80.

Technical Analysis: USD Reversed Losses Nicely In The US Session

Euro (EUR)

Euro – 1.3890 : Initial support at 1.3853 (Feb 1 low) followed by 1.3833 (Jun 8 low). Initial resistance is now located at 1.4053 (Jan 28 high) followed by 1.4097 (Jan 27 high).

Yen (JPY)

Yen – 90.95 : Initial support is located at 89.59 (Jan 29 low) followed by 89.14 (Jan 27 low). Initial resistance is now at 91.88 (Jan 21 high) followed by 92.05 (Jan 14 high).

Pound Sterling (GBP)

Pound – 1.5905 : Initial support at 1.5833 (Dec 30 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.6083 (0.236 of 1.6458-1.5851) followed by 1.6179 (Jan 29 high).

Australian Dollar (AUD)

Australian Dollar – 0.8815 : Initial support at 0.8781 (Feb 2 low) followed by the 0.8735 (Dec 23 low). Initial resistance is now at 0.8928 (Feb 2 high) followed by 0.8962 (Jan 29 high).

Gold (XAU)

Gold – 1111 : Initial support at 1100 (Big figure) followed by 1070 (Oct 14 low). Initial resistance is now at 1128 (0.618 of 1161.80-1073.85) followed by 1141 (0.764 of 1161.80-1073.85).

Oil

Oil – 76.90 : Initial support at 75.00 (Intraday support) followed by 74.00 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).

Reserve Bank of Australia surprises the Market

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was weaker in general as stock markets remained positive and commodities continued to rally off recent lows. December Pending Home Sales rose 1% as forecast. In US stocks DJIA +111 points closing at 10286, S&P +14 points closing at 1103 and NASDAQ +18 points closing at 2190. Looking ahead, January ISM services are forecast at 51 vs. 49.8 previously. Also released, January ADP employment report forecast at -30k vs. -84k previously.

European Euro

The Euro (EUR) continued edging higher as sentiment and investor confidence improved. EUR/JPY rallied towards resistance at 126.60. The Key 1.4000 level will come back into focus if the rebound can continue and will closely watched by technical traders. Overall the EUR/USD traded with a low of 1.3885 and a high of 1.3978 before closing at 1.3960. Looking ahead, December Retail Sales forecast at 0.4% vs. -1.2% m/m.

Japanese Yen (JPY)

The Japanese Yen (JPY) was slightly stronger against the USD but most crosses were buoyed by improved risk appetite. USD/JPY found solid resistance once again at the Y91 level but is being well support on dips. Overall the USDJPY traded with a low of 90.25 and a high of 90.93 before closing the day around 90.40 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) tracked higher on the weaker USD to test the Psychological 1.6000 level late in the US session but sentiment is still very fragile. Talk of a possible Hung Parliament after the coming elections is one cause for concern as the Debt laden country will need to pass stringent austerity measures. Overall the GBP/USD traded with a low of 1.5901 and a high of 1.5998 before closing the day at 1.5980 in the New York session. UPDATE January Consumer Confidence forecast at 73 vs. 70R previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) gapped lower after the RBA shocked the market by pausing at yesterday's meeting. Economist's were predicting a 0.25% rise as recent data suggested the loose monetary policy was no longer necessary. The bank noted Greece debt and China tightening concerns in the released statement as justification for the pause. The Aussie recovered some of the losses later in the day as commodities rallied. Overall the AUD/USD traded with a low of 0.8778 and a high of 0.8926 before closing the US session at 0.8865. Update December Trade Balance at -2.25bn vs. -2.4bn previously.

Oil & Gold

Oil & Gold (XAU) continued the impressive move higher to gain another $10 an ounce throughout the day. Overall trading with a low of USD$1098 and high of USD$1119 before ending the New York session at USD$1115 an ounce. Accelerated the rally seen from Monday to gain another $2 a barrel. Crude Oil was up +$2.65 ending the New York session at $77.10.

Technical Analysis: AUD Gapped Lower

Euro (EUR)

Euro – 1.3960 : Initial support at 1.3853 (Jul 8 low) followed by 1.3833 (Jun 8 low). Initial resistance is now located at 1.3988 (Jan 29 high) followed by 1.4053 (Jan 28 high).

Yen (JPY)

Yen – 90.40 : Initial support is located at 89.59 (Jan 29 low) followed by 89.14 (Jan 27 low). Initial resistance is now at 90.92 (Jan 22 high) followed by 91.87 (Jan 21 high).

Pound Sterling (GBP)

Pound – 1.5980 : Initial support at 1.5833 (Dec 30 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.5994 (0.236 of 1.6458-1.5851) followed by 1.6083 (0.382 of 1.6458-1.5851).

Australian Dollar (AUD)

Australian Dollar – 0.8860 : Initial support at 0.8793 (Dec 24 low) followed by the 0.8735 (Dec 23 low). Initial resistance is now at 0.8962 (Jan 29 high) followed by 0.9048 (Jan 28 high).

Gold (XAU)

Gold – 1115 : Initial support at 1100 (Big figure) followed by 1070 (Oct 14 low). Initial resistance is now at 1117 (Jan 21 high) followed by 1128 (0.618 of 1161.80-1073.85).

Oil

Oil – 76.80 : Initial support at 75.00 (Intraday support) followed by 74.00 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).

Relief Rally Halts Decline

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) opened the week strong in Asia but lost ground gradually across the day as sentiment improved and stocks rallied off lows around the world. Helping sentiment was the large jump in January ISM Manufacturing to 58.2 vs. 55.2 previously. DJIA +118 points closing at 10185, S&P +15 points closing at 1089 and NASDAQ +23 points closing at 2171. Looking ahead, December Pending Home Sales are forecast at 1% vs. -16% previously.

European Euro

The Euro (EUR) bounced away from 1.3850 support to reclaim 1.3900 in the US session as EUR/JPY and EUR/GBP continued to rebound. Jan Manufacturing PMI was revised higher to 52.4 vs. 52.0 previously. Sentiment towards the Euro will be directly linked with the ongoing Greece saga. Overall the EUR/USD traded with a low of 1.3850 and a high of 1.3940 before closing at 1.3920.

Japanese Yen (JPY)

The Japanese Yen (JPY) like the Dollar the Yen weakened across the board as risk appetite picked up off lows and USD/JPY ground higher. AUD/JPY reclaimed Y80 ahead of the RBA meeting today and was helped out by Chinese PMI remaining as fast expansionary pace. Overall the USDJPY traded with a low of 89.76 and a high of 90.97 before closing the day around 90.60 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) trailed the recovery as Europe sold the pair below 1.5900 before strong US data and stocks helped the pair rebound. GBP/JPY tested Y143 but rallied in the US session to close just under the key Y145 level. January PMI forecast at 56.7 vs. 54 forecast. Overall the GBP/USD traded with a low of 1.5849 and a high of 1.5982 before closing the day at 1.5960 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) concerns that the RBA may not raise rates hurt the sentiment towards the AUD early in the day but as stocks around the world picked up and commodities staged major rallies the Aussie came back into demand and reclaimed the 0.8900 level. Overall the AUD/USD traded with a low of 0.8876 and a high of 0.8926 before closing the US session at 0.8915. Looking ahead, RBA Rate announcement forecast to hike 0.25% to 4.0% vs. 3.75% previously.

Oil & Gold

Oil & Gold (XAU) rallied sharply above $1000 in a very bullish move after weeks of testing the downside. Overall trading with a low of USD$1076 and high of USD$1108 before ending the New York session at USD$1106 an ounce. Crude Oil jumped $2 a barrel on bargain hunter demand. Crude Oil was up +$1.98 ending the New York session at $74.87.

Technical Analysis: Stocks Rallied Off Lows Around The World

Euro (EUR)

Euro – 1.3920 : Initial support at 1.3833 (Jul 8 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.3988 (Jan 29 high) followed by 1.4053 (Jan 28 high).

Yen (JPY)

Yen – 90.80 : Initial support is located at 89.59 (Jan 29 low) followed by 89.14 (Jan 27 low). Initial resistance is now at 90.92 (Jan 22 high) followed by 91.87 (Jan 21 high).

Pound Sterling (GBP)

Pound – 1.5944 : Initial support at 1.5833 (Dec 30 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.6179 (Jan 29 low) followed by 1.6312 (Jan 21 high).

Australian Dollar (AUD)

Australian Dollar – 0.8920 : Initial support at 0.8793 (Dec 24 low) followed by the 0.8735 (Dec 23 low). Initial resistance is now at 0.8962 (Jan 29 high) followed by 0.9048 (Jan 28 high).

Gold (XAU)

Gold – 1105 : Initial support at 1074 (Dec 22 low) followed by 1070 (Oct 14 low). Initial resistance is now at 1110 (previous support) followed by 1117 (Jan 21 high).

Oil

Oil – 74.8 : Initial support at 74.00 (Intraday support) followed by 72.50 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).

Stock Market Correction Inspires USD Gains

Last week’s Currency Trading Review

The Dollar was very strong as stock markets continued to fall in response to China/Obama/Greece concerns. Safe haven flows were already helping lift the USD against most pairs before Friday's GDP report sent the Greenback to multi-month highs. Q4 GDP at 5.7% vs. 4.6% forecast q/q annualized added to the argument that the US will lead Europe out of the recovery. The FOMC statement stayed broadly the same after holding at 0.25% but the real excitement was one member dissenting from holding rates low for an extended period of time. The Euro broke through the key Psychological level of 1.4000 as Greece Bonds CDS soared on concern the nation may need to be bailed out. Uncertainty and general risk aversion sent the single currency lower against all its major partners. German IFO showed some improvement to 95.8 vs. 95.2 previously. The EUR/USD fell -1.98% closing at 1.3863, after opening the week at 1.4137.

The Japanese Yen was well supported on safe haven flows but lost ground on Friday against the USD as strong data sent US bond yields higher. Traders are wary of further Yen gains as comments from the BOJ may lean towards intervention, especially if the speed of such moves is deemed unstable. BOJ held at 0.1% with a slight improvement in the economic outlook although deflation remains a major point of concern. The USD/JPY gained 0.50% closing at 90.27 after opening the week at 89.81. The GBP was holding up well until S&P downgraded the UK banking sector and EUR/GBP selling reversed on Friday. Adding the Bearish outlook was the Q4 UK GDP growth which was anemic at 0.1% vs. 0.4% forecast. GBP/USD fell -0.82% closing at 1.5980 after opening at 1.6111. The AUD was one of the weakest currencies in play last week as the risk sensitive currency was sold across the board. The Aussie has been well supported for many months and the positioning is such that heavy losses can not be discounted if everyone leaves for the door at once. The AUD/USD fell -1.94% closing at 0.8833 after opening at 0.9004.

For the week starting 02/11/09.

This Forex Trading Week Preview

In the States; on Monday, January ISM manufacturing is forecast at 55.2 vs. 55.9 previously. On Tuesday, Pending Home Sales are forecast at 1.1% vs. -16% previously. On Wednesday ISM non manufacturing is forecast at 50.9 vs. 50.1 previously. On Thursday, Weekly Jobless Claims are forecast at 454k vs. 470k previously. Also released, December Factory Orders forecast at 0.6% vs. 1.1% previously. On Friday, January NonFarm Payrolls forecast at 13k vs. -85k previously. January Unemployment Rate is forecast unchanged at 10.0%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, January PMI manufacturing is forecast at 52. On Tuesday, December German Retail Sales are forecast at -2.5% vs. -2.8% y/y previously. On Wednesday, January PMI services are forecast unchanged at 52.3. December EU Retail forecast at 0.4% vs. -1.2% m/m. On Thursday, German December Factory Orders are forecast 0.0% vs. 2.8% previously. Also, ECB President Trichet speaks. On Friday. German Industrial Production is forecast at 0.5% vs. 0.7% previously. In the UK; On Monday, January PMI Manufacturing is forecast at 54.0 vs. 54.1 previously. On Wednesday, Jan PMI services forecast at 56.5 vs. 56.8 previously. On Thursday, BOE rate decision forecast to hold at 0.5% with the Asset Purchase program remaining at 200bn. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; no major data released this week. In Australia; On Tuesday, RBA Rate Decision forecast to hike 0.25% to 4.0% from 3.75% previously. On Wednesday, December Trade Balance forecast at -2.4bn vs. -1.7bn previously. On Thursday, December Retail Sales are forecast at 0.2% vs. 1.4% previously. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: Strong Data Sent US Bond Yields Higher

Euro (EUR)

Euro – 1.3865 : Initial support at 1.3833 (Jul 8 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4053 (Jan 28 high) followed by 1.4097 (Dec 27 high).

Yen (JPY)

Yen – 90.20 : Initial support is located at 89.14 (Jan 27 low) followed by 88.97 (Dec 18 low). Initial resistance is now at 90.92 (Jan 22 high) followed by 91.87 (Jan 21 high).

Pound Sterling (GBP)

Pound – 1.5960 : Initial support at 1.5897 (Jan 7 low) followed by 1.5833 (Jan 30 low). Initial resistance is now at 1.5982 (Jan 29 low) followed by 1.6000 (Big Figure).

Australian Dollar (AUD)

Australian Dollar – 0.8830 : Initial support at 0.8820 (Dec 25 low) followed by the 0.8783 (Dec 24 low). Initial resistance is now at 0.9048 (Jan 28 high) followed by 0.9093 (Jan 25 high).

Gold (XAU)

Gold – 1081 : Initial support at 1074 (Dec 22 low) followed by 1070 (Oct 14 low). Initial resistance is now at 1104 (Jan 25 high) followed by 1117 (Jan 21 high).

Oil

Oil – 72.80 : Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday Support). Initial resistance is now at 74.00 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

US Q4 GDP Soars

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) Gained across the board on solid Q4 GDP and fresh risk aversion as US stocks continued to fall. Q4 GDP came in at 5.7% vs. 4.6% forecast. Also strong, UoM Consumer Sentiment at 74.4 vs. 73 expected. DJIA -53 points closing at 10067, S&P -10 points closing at 1073 and NASDAQ -31 points closing at 2147. Looking ahead, ISM Manufacturing Forecast at 55.5 vs. 54.9 previously. Also, Treasury Secretary Geithner Speaks.

European Euro

The Euro (EUR) the downtrend continued as risk aversion and USD strength pushed the EURO to fresh multimonth lows below 1.3900. EUR/JPY managed to rally off multi month lows under Y125 as the USD/JPY pushed higher. January Inflation came in at 1.0% vs. 1.2% y/y forecast. Overall the EUR/USD traded with a low of 1.3863 and a high of 1.3989 before closing at 1.3867.

Japanese Yen (JPY)

The Japanese Yen (JPY) had another volatile day as cross selling on risk aversion was countered by strong USD/JPY buying after US GDP data. EUR/JPY finished just above Y125 while AUD/JPY and GBP/JPY slumped below supports at Y80 and Y145 respectively. Overall the USDJPY traded with a low of 89.59 and a high of 90.92 before closing the day around 89.59 in the New York session. Update January Chinese PMI at 55.8 vs. 56.6.

Pound Sterling (GBP)

The Sterling (GBP) was crushed lower after support gave way to continued risk aversion and the pair slipped below 1.6000 late in the US session. EUR/GBP buying and the collapse in GBP/JPY added to downside pressure. The lackluster UK recovery is hampering the medium term outlook for the GBP. Overall the GBP/USD traded with a low of 1.5987 and a high of 1.6179 before closing the day at 1.6000 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) made fresh monthly lows on the back of rising risk aversion and weak commodities as the Global recovery stalled and investors grew more cautious. AUD/JPY slipped below the key Y80 level and the RBA rate rise on Tuesday has been called into contention. Overall the AUD/USD traded with a low of 0.8849 and a high of 0.8961 before closing the US session at 0.8856.

Oil & Gold

Oil & Gold (XAU) tested support below $1080 again but held up well closing above the key level. Overall trading with a low of USD$1074 and high of USD$1091 before ending the New York session at USD$1081 an ounce. The Oil downtrend continued as global investor sentiment soured. Crude Oil was up -$1.00 ending the New York session at $72.89.

Technical Analysis: US Stocks Continued To Fall

Euro (EUR)

Euro – 1.3865 : Initial support at 1.3833 (Jul 8 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4053 (Jan 28 high) followed by 1.4097 (Dec 27 high).

Yen (JPY)

Yen – 90.20 : Initial support is located at 89.14 (Jan 27 low) followed by 88.97 (Dec 18 low). Initial resistance is now at 90.92 (Jan 22 high) followed by 91.87 (Jan 21 high).

Pound Sterling (GBP)

Pound – 1.5960 : Initial support at 1.5897 (Jan 7 low) followed by 1.5833 (Jan 30 low). Initial resistance is now at 1.5982 (Jan 29 low) followed by 1.6000 (Big Figure).

Australian Dollar (AUD)

Australian Dollar – 0.8830 : Initial support at 0.8820 (Dec 25 low) followed by the 0.8783 (Dec 24 low). Initial resistance is now at 0.9048 (Jan 28 high) followed by 0.9093 (Jan 25 high).

Gold (XAU)

Gold – 1081 : Initial support at 1074 (Dec 22 low) followed by 1070 (Oct 14 low). Initial resistance is now at 1104 (Jan 25 high) followed by 1117 (Jan 21 high).

Oil

Oil – 72.80 : Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday Support). Initial resistance is now at 74.00 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

'Risk Off' as Stock Fall Continues

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) spent most of the day on the back foot until weak US stocks sent the Dollar rallying against most pairs on renewed risk aversion. December Durable Goods missed at 0.3% vs. 2.0% forecast and Weekly Jobless Claims were at 470k vs. 450k forecast. DJIA -115 points closing at 10120, S&P -12 points closing at 1084 and NASDAQ -42 points closing at 2179. Looking ahead, Q4 GDP forecast at 4.6% vs. 2.2% Q/Q Annualized.

European Euro

The Euro (EUR) continued to come under pressure as Greece debt returned to focus and EUR/JPY slumped in the US session. The Euro fell decisively through the 1.4000 level later in the day to test support at 1.3950. EUR/GBP rallied off fresh lows as Cable came under pressure on S&P banking downgrade news. Overall the EUR/USD traded with a low of 1.3936 and a high of 1.4054 before closing at 1.3950. Looking ahead, January Inflation forecast at 1.2% vs. 0.9% y/y.

Japanese Yen (JPY)

The Japanese Yen (JPY) was weak on short covering in Asia before strength returned in New York on soft US data and safe haven flows. GBP/JPY fell over 2 Yen from Highs and EUR/JPY came close to Y125 supports. December Retail Sales -0.3% vs. 0.2% y/y. Overall the USDJPY traded with a low of 89.32 and a high of 90.57 before closing the day around 89.95 in the New York session. Update December Nationwide CPI at -1.7% vs. -1.9% previously y/y.

Pound Sterling (GBP)

The Sterling (GBP) was strong until S&P stated they no longer classify UK among the most stable and low risk banking systems which sent Cable over 100 pips lower. Risk aversion then kept the pair under pressure with GBP/JPY selling constant. Overall the GBP/USD traded with a low of 1.6111 and a high of 1.6279 before closing the day at 1.6130 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) fortunes waxed and waned with investor sentiment with a major rally in Asia reversing quite aggressively in the US session. AUD/JPY was especially volatile as the pair rally off Y80 support to Y81.70 before giving up most of the gains. Overall the AUD/USD traded with a low of 0.8913 and a high of 0.9050 before closing the US session at 0.8925.

Oil & Gold

Oil & Gold (XAU) broke through support at $1080 only to reverses losses quickly late in the day. Overall trading with a low of USD$1074 and high of USD$1096 before ending the New York session at USD$1085 an ounce. Oil was lower but not as aggressively as the rest of the commodity space. Crude Oil was up -$0.30 ending the New York session at $73.70.

Technical Analysis: Stock Fall Continues

Euro (EUR)

Euro – 1.3940 : Initial support at 1.3833 (Jul 8 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4097 (Jan 25 high) followed by 1.4218 (Dec 22 high).

Yen (JPY)

Yen – 89.95 : Initial support is located at 89.14 (Jan 27 low) followed by 88.97 (Dec 18 low). Initial resistance is now at 90.56 (Jan 22 high) followed by 91.87 (Jan 21 high).

Pound Sterling (GBP)

Pound – 1.6145 : Initial support at 1.6108 (Jan 27 low) followed by 1.6078 (Jan 11 low). Initial resistance is now at 1.6296 (Jan 26 high) followed by 1.6312 (Jan 21 high).

Australian Dollar (AUD)

Australian Dollar – 0.8930 : Initial support at 0.8902 (Dec 30 low) followed by the 0.8857 (Dec 29 low). Initial resistance is now at 0.9093 (Jan 25 high) followed by 0.9146 (Jan 21 high).

Gold (XAU)

Gold – 1083 : Initial support at 1074 (Dec 22 low) followed by 1070 (Oct 14 low). Initial resistance is now at 1104 (Jan 25 high) followed by 1117 (Jan 21 high).

Oil

Oil – 73.70 : Initial support at 73.00 (Intraday support) followed by 72.50 (Intraday Support). Initial resistance is now at 74.00 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

US FOMC Hold Rates at 0.25%

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was strong for most of the day with stocks markets under pressure in Asia and Europe. The US Session managed a late stock rally after the FOMC held rates at 0.25% and left the statement broadly the same. The USD did gain however as one member Thomas Hoenig dissented in a hawkish turn of events. DJIA +41 points closing at 10236, S&P +5 points closing at 1097 and NASDAQ +17 points closing at 2221. Looking ahead, December Durable Goods Orders forecast at 2% vs. -0.7%. Also released, Weekly Jobless Claims forecast at 450k vs. 482k previously.

European Euro

The Euro (EUR) broke through 1.4000 for the first time since July as the USD strengthened across the board. The Post FOMC USD strength sent the pair to 1.3993. With stocks off lows and EUR/JPY rallying higher the EUR/USD finished just above the key 1.4000 level. Overall the EUR/USD traded with a low of 1.3993 and a high of 1.4098 before closing at 1.4025.

Japanese Yen (JPY)

The Japanese Yen (JPY) was the strongest currency in the market before the FOMC inspired USD/JPY move higher lifted the crosses. EUR/JPY traded at fresh 9 month lows near Y125 before bouncing along with GBP/JPY and AUD/JPY. December Japanese Trade Balance at Y545bn. Overall the USDJPY traded with a low of 89.32 and a high of 90.57 before closing the day around 89.95 in the New York session. UPDATE December Retail Sales -0.3% vs. 0.2% y/y.

Pound Sterling (GBP)

The Sterling (GBP) held up better than most in the face of USD strength as EUR/GBP selling and GBP/JPY buying propelled cable back above 1.6200. January CBI Distributive Trades slipped to -8 vs. 13 previously but this overlooked. Overall the GBP/USD traded with a low of 1.6105 and a high of 1.6247 before closing the day at 1.6170 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) hit fresh month lows before bouncing as stocks and AUD/JPY rallied late in the US session. The downside has been in focus recently as Yen and USD strength take its toll due to falling stock markets. Also adding to downside pressure is concerns about Chinese monetary tightening. Overall the AUD/USD traded with a low of 0.8908 and a high of 0.9048 before closing the US session at 0.8960.

Oil & Gold

Oil & Gold (XAU) tested lower $1080 support before rebounding. Overall trading with a low of USD$1083 and high of USD$1102 before ending the New York session at USD$1088 an ounce. Continued to slide as sentiment remain weak breaking through $74 support. Crude Oil was up -$0.70 ending the New York session at $74.00.

Technical Analysis: Stocks Markets Under Pressure In Asia And Europe

Euro (EUR)

Euro – 1.4040 : Initial support at 1.3936 (Jan 27 low) followed by 1.3900 (big figure). Initial resistance is now located at 1.4194 (Jan 25 high) followed by 1.4218 (Dec 22 high).

Yen (JPY)

Yen – 90.40 : Initial support is located at 89.30 (0.500 of 84.83 - 93.77) followed by 88.97 (Dec 18 low). Initial resistance is now at 90.56 (Jan 22 high) followed by 91.87 (Jan 14 high).

Pound Sterling (GBP)

Pound – 1.6270 : Initial support at 1.6078 (Jan 22 low) followed by 1.6038 (Jan 11 low). Initial resistance is now at 1.6312 (Jan 21 high) followed by 1.6372 (Jan 20 high).

Australian Dollar (AUD)

Australian Dollar – 0.9030 : Initial support at 0.8939 (Jan 21 low) followed by the 0.8902 (Dec 30 low). Initial resistance is now at 0.9093 (Jan 25 high) followed by 0.9146 (Jan 21 high).

Gold (XAU)

Gold – 1092 : Initial support at 1082 (Jan 22 low) followed by 1074 (Dec 22 low). Initial resistance is now at 1104 (Jan 25 high) followed by 1117 (Jan 21 high).

Oil

Oil – 74.10 : Initial support at 74.00 (Intraday support) followed by 72.50 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).