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Daily outlook – 21st August 2012 (00:30GMT)

August 21, 2012

Currency Updates:

U.S. Dollar Trading (USD) not much movement on the markets overnight with little economic news out traders were focusing on the ECB bond buying proposal reported in a German Newspaper over the weekend. The ECB issued a rare denial Monday on the report stating ‘it is misleading to report on decisions that have not been made yet’. The German Central bank (BUPA) is still critical of the whole concept of ECB Bond buying worried it will create a moral hazard for reforming debt ridden EU countries. Looking ahead, no economic data today.

The Euro (EUR) the EUR/USD dipped to 1.2300 in Europe but murmurs of ECB bond buying in some form have helped lift the pair in the US session back to 1.2350. Strong resistance has been registered between 1.2380-1.2500 over the past few weeks so concrete ECB news will be needed to get the single currency moving higher.

The Japanese Yen (JPY) profit takers emerged as the USD/JPY rally stalled near Y79.60 and we fell slowly back to Y79.30 during roughly the same time the USD was weakening against the EUR/USD. The Yen crosses are important especially the EUR/JPY which will help dictate the direction of the major. EUR/JPY has risen from Y95 to 98 in recent weeks but is stalling at this level in recent sessions.

The Sterling (GBP) was extremely quiet pivoting the 1.5700 level tracking the ups and downs of the EUR/USD. Major resistance is just above near 1.5750. Looking ahead, July UK Public Sector Net Borrowing forecast at -2.7bn vs. 12.1bn previously. August CBI Orders at -8 vs. -6 previously.

Australian Dollar (AUD) had a slightly positive day rising up to 1.0470 before consolidating in quiet trade. The heavy selling on Friday has spooked the bulls and we could struggle to get back above 1.0500 in the current environment waiting for fresh direction. AUD/JPY is stalling at Y83 but is still well supported for now. Looking ahead, RBA Meeting minutes from the August meeting.

Oil & Gold (XAU) XAU/USD broke above $1620 but topside was limited above closed just under the figure. OIL/USD consolidated the recent gains finding support on a dip towards $95 a barrel.

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2288

1.2320

1.2350

1.2369

1.2402

USD/JPY

78.92

79.24

79.40

79.60

79.97

GBP/USD

1.5636

1.5671

1.5710

1.5739

1.5778

AUD/USD

1.0380

1.0410

1.0455

1.0475

1.0541

XAU/USD

1600.00

1611

1620

1625

1633

OIL/USD

94.50

95.00

96.10

98.00

100.00

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