Lehman Brothers Rock Markets. Oil below $100

Last week’s Currency Trading Review

For the week starting 15/09/08.

This Forex Trading Week Preview

In the States; the FOMC meeting is the highlight with markets mostly expecting a hold at 2.00%. On Monday we have the August Industrial Production expected at -0.3 and the September Empire State Manufacturing Index is expected at 1.5 down slightly from 2.8. On Tuesday with have August CPI is expected at 2.6% Y/Y up slightly from 2.5% in July. Also the FOMC decision is expected to remain at 2.00% with a chance of a .25% cut given ongoing Stock weakness. On Wednesday we have the August Housing starts seen at 950K. On Thursday we have Weekly Jobless Claims seen at 440K. Also we have Philly Fed seen at -10 in September slightly better than -12.7. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; Tuesday is the highlight with Final AUG CPI expected seen falling to 3.8% from 4.0% in July. Also on Tuesday we have September Zew Economic Sentiment survey seen slightly better at -53 vs. -55 previously. On Friday we have Aug PPI expected to fall -0.5%. In the UK; On Tuesday we have the August CPI expected to rise to 4.6% Y/Y from 4.4% previously. A BoE inflation letter is expected as the inflation rate is expected to remain above the target rate. On Wednesday we have the MPC meeting minutes and the Claimant Count Change expected at 22.5K. Finally on Thursday we have August Retail Sales expected at -0.4%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; Light data week with Wednesday’s BOJ interest rate announcement widely expected to remain at 0.5% and be accompanied by a press conference. On Thursday have the Tertiary Industry Index for July seen at 0.40%. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; light data week with Tuesday’s RBA minutes the highlight. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: Lehman Brothers Rock Markets

Euro (EUR)

Euro – 1.4410 : Initial support at 1.4200 (Sep 5 low) followed by 1.4310 (Sept 8 low). Initial resistance is now located at 1.4535 (10 Day SMA) at followed by 1.4599 (Sept 2 high).

Yen (JPY)

Yen – 108.45 : Initial support is located at 107.70 (Sep 8 hourly low) followed by 106.75 (Cloud Top). Initial resistance is now at 109.05 (Sep 8 hourly high) followed by 109.55 (Sep 3 high).

Pound Sterling (GBP)

Pound – 1.7905 : Initial support at 1.7745 (Sept 5 high) followed by 1.7540 (Sept 5 low). Initial resistance is now at 1.7930 (Sep 8 hourly high) followed by 1.8005 (10 day SMA).

Australian Dollar (AUD)

Australian Dollar – 0.8315 : Initial support at 0.8160 (Sept 8 hourly low) followed by 0.8030 (Sep 5 low). Initial resistance is now at 0.8340 (Sept 8 hourly High) followed by 0.8400 (Sept 3 high).

Gold (XAU)

Gold – 815 : Initial support at 789.74 (Sept 3 low) followed by 783.35 (Aug 15 low). Initial resistance is now at 819.65 (Sep 5 high) followed by 836.5 (Sep 1 high).

Stocks Tumble, Gold Shines, USD hurting.

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) came under severe pressure as US equities fell and US data was weak. The bailout of AIG did offer a brief stabilization to the markets but equities turned negative as interbank lending and liquidity dried up. Housing starts for August were weak at -6.2% m/m at the figure of 895K. Also weak, Oil inventories showed a -6.3M drop and initiated a significant oil rally. By far the biggest gainer last night was Gold, which surges over $80 a ounce as investors poured into the safe haven metal. In the U.S. share markets, the NASDAQ was down 109 points (-4.94%) and the Dow Jones was down 449 points (4.06%). Crude Oil closed up $6.01 ending the New York session at $97.16 per barrel. Looking Ahead, Weekly Jobless Claims are seen slightly better at 440K. Also released, Philly Fed seen down -10 in September.

European Euro

The Euro (EUR) surged higher as oil rallied after the drop in Oil inventories. The Euro was also able to benefit from the continued to fallout in the US banking sector. Liquidity is thin and is exaggerating the moves. Overall the EUR/USD traded with a low of 1.4075 and a high of 1.4384 before closing the day at 1.4350 in the New York session.

Japanese Yen (JPY)

The Japanese Yen (JPY) benefited from heightened risk aversion and USD weakness trading near lows for the week but finding support around the 104 level. Was volatile receiving a major boost from AIG news but coming off highs as stocks plummeted. The Bank of Japan held rates at 0.5%. Overall the USDJPY traded with a low of 104.38 and a high of 106.72 before closing the day around 104.60 in the New York session. Looking ahead, July Tertiary seen up 0.4%.

Pound Sterling (GBP)

The Sterling (GBP) bounced higher with the euro on the back of USD weakness. UK data was weak with the Claimant Count Change at 32.5K vs. expectations 22.2K. The MPC minutes showed a change to 0-1-8 from 1-1-7 as the member calling for a hike relented. Overall the GDP/USD traded with a low of 1.7786 and a high of 1.8240 before closing the day at 1.8210 in the New York session. Looking ahead, August Retail Sales seen -0.5% vs. -0.8% drop in July.

Australian Dollar (AUD)

The Australian Dollar (AUD) came under pressure as risk aversion spiked higher, dragged down by AUD/JPY sales. Staged a rally as gold and oil surged higher but was unable to maintain gains as stocks weakened again into the US close. Overall the AUD/USD traded with a low of 0.7800 and a high of 0.8075 before closing the US session at 0.7900.

Gold

Gold (XAU staged its biggest one day rally in 9 years as investors bought the precious metal as safe haven against inflation and deteriorating asset values. Overall trading with a low of USD$776 and high of USD$768 before ending the New York session at USD$864 an ounce.

Technical Analysis: Stocks Tumble

Euro (EUR)

Euro – 1.4350 : Initial support at 1.4074 (Sept 16 low) followed by 1.3973 (Sept 12 low). Initial resistance is now located at 1.4481 (Sept 15 high) at followed by 1.4544 (Sept 4 high).

Yen (JPY)

Yen – 104.35 : Initial support is located at 103.54 (Sept 16 low) followed by 102.74 (May 22 low). Initial resistance is now at 106.91 (Sep 15 high) followed by 107.99 (Sept 12 high).

Pound Sterling (GBP)

Pound – 1.8180 : Initial support at 1.7733 (Sept 16 low) followed by 1.7533 (Sept 12 low). Initial resistance is now at 1.8244 (Sept 17 high) followed by 1.8509 (Aug 15 high).

Australian Dollar (AUD)

Australian Dollar – 0.7920 : Initial support at 0.7803 (Sept 17 low) followed by the 0.7675 (Aug 17, 2007 low). Initial resistance is now at 0.8076 (Sept 16 high) followed by 0.8243 (Sept 12 high).

Gold (XAU)

Gold – 855 : Initial support at 850 (Key level) followed by 830 (Key level). Initial resistance is now at 867

Sep 17 high) trend line resistance followed by 892 (0.618 of 877.02-736.70).