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A week filled with Central Bank Announcements

10/03/08

last week’s currency trading review

The Dollar ended the week sharply lower on intensifying views the U.S was headed into a recession. No single piece of data highlighted the concerns as much as Non-Farm Payrolls on Friday which confirmed a decline in -63k jobs for the month of February, with future markets fully pricing in 75bp rate cut on March 18. Both ISM indices showed further contraction with ISM manufacturing index deteriorated once more with a reading of 48.3 in February lowest reading since April 2003. ISM non-manufacturing index rebounded strongly from 44.6 to 49.3 in February yet remained below the 50 level still indicating a contraction.  The Euro saw the ECB keep it call rate on hold at 4.00% as widely expected.  The Euro rallied after the ECB downplayed any prospects of an interest rate cut, reaching all time highs of 1.5378 against the US dollar, and set new levels of 1.5465 in the lead up to NFP on Friday. The Euro closed last week at week at 1.5335 having opened at 1.5184. The Japanese Yen the BoJ also left rates unchanged at 0.50% in a week where stock prices were key once again. The Japanese Yen was able to trade at 101.41, its lowest level since January 2000. The Japanese Yen closed last week at 103.09 having started at 103.88. The GBP also saw the BoE hold rates at 5.25% sterling traded above the $2 mark for a second straight day following the decision. The Sterling Pound closed last week at 2.0173 having opened at 1.9886. The AUD had the RBA hike rates by 25 bps to sit at 7.25% a twelve year high although headed lower on profit taking and less hawkish stance from policymakers. The Australian Dollar closed last week at 0.9324 having opened at 0.9453. 

The forex trading week preview

In the States; is largely expected to continue its recent recession like data, with Retail Sales on Thursday followed by Michigan Sentiment and Core CPI figures on Friday.  We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; is viewed to continue it recent rally in setting new record highs. Data will be key in downgrading economic slowdown forecasts with the German ZEW out on Tuesday, Industrial Production on Wednesday, whilst CPI figures are out on Friday. In the UK; Wednesday's budget should be the highlight this week. Also released are January’s industrial production and February input prices on Monday, the BRC retail sales survey for February, RICS and DCLG house price surveys. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; is expected to be exposed to risk aversion and equity markets, whilst GDP and Trade Balance data on Wednesday well cause some interest. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; Consumer confidence (Tuesday) and Unemployment figures (Thursday) are released set for release this week. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

·         Euro – 1.5365

Initial support at 1.5262 (Mar 6 low) followed by 1.5146 (Mar 5 low). Initial resistance is now located at 1.5463 (Mar 7 high) followed by 1.5500 (1.4311 plus 0.618 of 1.3361 to 1.4967).

·         Yen – 102.50

Initial support is located at 101.42 (Mar 7 low) followed by 101.26 (Nov 1999 low). Initial resistance is now at 104.19 (Mar 5 high) followed by 104.97 (Jan 23 high)

·         Pound – 2.0165

Initial support at 1.9975 (Feb 27 low) followed by 1.9896 (Mar 6 low). Initial resistance is now at 2.0216 (Mar 7 high) followed by 2.0250 (50% retracement of the 2.1161 – 1.9338)

·         Australian Dollar – 0.9265

Initial support a 0.9219 (Mar 4 low) followed by 0.9122 (38.2% retracement of the 0.8513 to 0.9499 advance). Initial resistance is now at 0.9421 (Mar 3 high) followed by 0.9499 (Feb 28 high)

·         Gold – 972.90

Initial support at 957.20 (Mar 4 low) followed by 949.00 (Feb 27 low). Initial resistance is now at 991.00 (Mar 5 high) followed by 1000.00 (Round Number)  

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