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Focus on US data filled week

25/02/08

last week’s currency trading review

The Dollar had a quiet week in terms of data, although the little data was made public was initially dollar supportive; the US dollar did trade to 2-week lows against a number of major currencies after a string of weak data prompted investors to expect further Federal Reserve rate cuts. The Euro was on the other side of the coin stable data a cause for investors to scale back expectations the next move by the ECB would in fact be a rate cut. The EUR closed the week at 1.4804 having started at 1.4680. The Japanese Yen was boosted earlier in the week on risk aversion, and speculation the People Bank of China was poised to hike rates to counter an overheating economy an inflation rising to an 11 year high. Although the there was no move by the PBoC and BoJ minutes citing low inflationary concerns in Japan the main reason for a 9 to 0 vote in holding rates this month. The JPY ended the week at 107.37 having opened at 107.82. The GBP began the week under considerable pressure but returned on the back of stronger than expected UK data, prompting markets to reassess how aggressively the Bank of England will continue to ease rates this year. The GBPUSD closed last week at 1.9588 having started the week at 1.9606. The AUD was boosted by record high gold and oil prices and growing expectations of another rate hike by the RBA on the 4^th of March. The AUD closed last week at 0.9210 having closed at 0.9042.  

The forex trading week preview

In the States; a heavy scheduled week awaits the US markets, with figures key to continuing slowing of growth, housing correction, softer consumer sentiment and tighter lending conditions. Hence attention is expected to surround the Bernanke semi annual policy report on Wednesday, whilst Durable Goods (Wednesday), GDP on Thursday, and Core PCE and Michigan Sentiment round off the week on Friday. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; main focus will be on the German IFO and Consumer Confidence released on Tuesday, whilst CPI figures close the week in the EZ. In the UK; a light data week is expected where house prices and UK GDP the main focus. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; significantly more data is expected then recent weeks, with industrial production and Retail sales on Thursday, before a heavy Friday with Household spending, CPI Unemployment Rate, and Housing Starts. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; very little data is expected leading into the March 4^th RBA meeting. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY                           

·         Euro – 1.4835

Initial support at 1.4702 (Feb 21 low) followed by 1.4611 (Feb 18 low). Initial resistance is now located at 1.4863 (Feb 22 low) followed by 1.4956 (Feb 1 high).

·         Yen – 107.20

Initial support is located at 106.73 (Feb 22 low) followed by 106.35 (Feb 11 low). Initial resistance is now at 107.57 (Feb 22 high) followed by 108.67 (38.2% retracement of the 114.66 to 104.97 decline)

·         Pound – 1.9690

Initial support at 1.9611 (Feb 22 low) followed by 1.9363 (Feb 20 low). Initial resistance is now at 1.9709 (Feb 22 high) followed by 1.9738 (Feb 14 high)

·         Australian Dollar – 0.9235

Initial support a 0.9113 (Feb 20 low) followed by 0.9005 (Feb 15 low). Initial resistance is now at 0.9252 (Feb 22 high) followed by 0.9331 (Nov 8, 2007 high)

·         Gold – 944.70

Initial support at 906.1 (Feb 19 low) followed by 896.50 (Feb 7 low). Initial resistance is now at 954.60 (Feb 21 high) followed by 970.73 (Bull channel resistance)  

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