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Weekly Outlook - 26th December 2011
General Commentary
Last week’s currency trading review
The Dollar was the strongest currency in the market as the Euro fell heavily on concerns the EU summit had not done enough to address the EU Debt crisis. Downgrades of most of Europe to negative rating watch sent the Euro below 1.300 for the first time since January. Stocks were under heavy selling pressure and so was Crude Oil which collapsed when OPEC increased their production quota. Gold also fell heavy down over $100 an ounce as EU banks faced a liquidity crisis and investors sold their gold investments to free up some cash. The US FED kept rates low at 0.25% and highlighted Europe as a risk to the US economy. The Euro the heavy selling was market wide with EUR/CHF and EUR/GBP also falling back with fear that the debt crisis was not contained. This week is a critical test of the ECB as the LTRO operations offer banks a major lifeline for funds. Data showed some improvement with most PMI’s beating estimates. The EU Services PMI improved to 48.3 vs. 47.5 previously. Manufacturing PMI to 46.9 vs. 46.4 previously. The EUR/USD is down -2.65% currently at 1.3037, after opening the week at 1.3383.
The Japanese Yen USD/JPY was the calm in the storm as the pair stayed inside a 50 pip trading range but dollar did gain as the outlook for the Japanese economy weakened relative to the US. Japan Tankan dropped to -4 vs. 2 previously as the Thai floods hurt large Japanese companies. The EUR/JPY is approaching Y100 and could prompt the BOJ to intervene in the largest Yen cross. The USD/JPY is up 0.19% currently at 77.78, after opening at 77.63. The GBP weakened but only slightly compared to the Euro with EUR/GBP breaking through long term support at 0.8500 and falling to 0.8400 on the debt crisis concerns. Some UK Data was better than expected with the Unemployment rate remaining at 8.3% vs. 8.4% forecasted in October. Retail Sales though slumped -0.4% vs. 1.0% forecast in November. The GBP/USD is down -0.79% currently at 1.5543 after opening at 1.5666. The AUD the risk currency was hammered tracking stocks and the Euro lower and breaking through 1.0000. October Trade Balance fell to 1.6b vs. 2bn forecast. The outlook is weakening for the once loved Aussie as the Chinese economy slows and the EU debt crisis takes it toll on investors risk appetite. The AUD/USD is up -2.48% currently at 0.9968 after opening at 1.0215.
The Forex Trading Economic Data Ahead Preview
In the States; On Tuesday, November Housing Starts forecast at 0.3% vs. -0.3%m/m previously. On Wednesday, November Existing Home Sales forecast at 1.1% vs. 1.4% previously. On Thursday, Q3 GDP forecast at 2.0% vs. 2.0% initially printed. Weekly Jobless Claims forecast at 376k vs. 366k previously. On Friday, November Durable Goods Orders forecast at 2.1% vs. -0.5% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone; On Tuesday, December German IFO forecast at 106 vs. 106.6 previously. On Wednesday, EU Consumer confidence forecast at -21 vs. -20.4 previously. In the UK, on Wednesday, BOE Minutes from December Meeting Released. On Thursday, Q3 Final GDP forecast to remain at 0.5% Q/Q. We will provide our previews and reviews of these data releases in the daily summary.
In Japan; On Wednesday, BOJ Rate meeting forecast to hold at 0.1%. In Australia; On Tuesday, RBA minutes released. On Thursday, Q3 GDP forecast at 0.6% vs. 0.1% Q/Q previously. We will provide our previews and reviews of these data releases in the daily summary.
Technical Commentary
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2867 |
1.2946 |
1.3025 |
1.3065 |
1.3237 |
|
USD/JPY |
76.84 |
77.49 |
77.90 |
78.29 |
78.98 |
|
GBP/USD |
1.5272 |
1.5409 |
1.5500 |
1.5662 |
1.5735 |
|
AUD/USD |
0.9833 |
0.9920 |
0.9940 |
1.0031 |
1.0225 |
|
XAU/USD |
1500.00 |
1563 |
1599 |
1622 |
1677 |
|
OIL/USD |
91.00
|
92.50 |
93.35 |
95.00 |
96.00 |
Euro – 1.3025
Initial support at 1.2946 (Dec 14 low) followed by 1.2867 (Jan 10 low). Initial resistance is now located at 1.3065 (Dec 14 high) followed by 1.3237 (Dec 5 high)
Yen – 77.90
Initial support is located at 77.49 (Dec 9 low) followed by 76.84 (Nov 22 low). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.42 (Nov 2 high).
Pound – 1.5500
Initial support at 1.5409 (Dec 14 low) followed by 1.5272 (Oct 6 low). Initial resistance is now at 1.5662 (Dec 12 high) followed by 1.5735 (Dec 9 high).
Australian Dollar – 0.9940
Initial support at 0.9920 (Dec 12 high) followed by the 0.9833 (76.4% retrace of 0.9664-1.0380). Initial resistance is now at 1.0031 (Dec 13 low) followed by 1.0225 (Dec 9 high).
Gold – 1599
Initial support at 1563 (Dec 14 high) followed by 1500 (Oct 4 low). Initial resistance is now at 1622 (Dec 13 low) followed by 1677 (Dec 13 high).
Oil – 93.35
Initial support at 92.50 (Intraday Support) followed by 91.00 (Intraday Support). Initial resistance is now at 95.00 (Intraday resistance) followed by 96.00 (Intraday Resistance).