Citibank to Cut 50 000 Jobs, Economic Worries Persist

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was broadly weaker as most majors led by the Pound were able to rebound as US stocks initially rallied. Ongoing Economic concerns and fears of a deep recession lead to a late sell off and Dollar losses were pared. Supporting the USD was ongoing commodity weakness. October Industrial Production surprised to the upside recovering from a -2.8% plunge last month to post a +1.3% rise. In U.S. share markets, the NASDAQ was down 34.8 points (-2.29%) and the Dow Jones was down 223.73 points (-2.63%). Crude Oil closed down $2.09 ending the New York session at $54.95 per barrel. Looking ahead, October PPI is seen falling -1.8% m/m vs. -0.4% previously.

European Euro

The Euro (EUR) was generally well supported during the Asian and European sessions, extending these gains as US stocks turned positive. The late Dow sell off pared gains but the pair was still well supported at 1.2650. EUR/GBP was one pair that gave up a lot of ground as the market bought the beaten down pound. The September EU trade balance expectations coming at -5.6Bn vs. -7.3Bn forecast. Overall the EUR/USD traded with a low of 1.2515 and a high of 1.2741 before closing the day at 1.2650 in the New York session.

Japanese Yen (JPY)

The Japanese Yen (JPY) initially supported as the market opened after the G20 meeting over the weekend. The meeting was viewed as rather underwhelming response to the market crisis. As Asian stocks turned around most crosses and USD/JPY steadily rose. Overall the USDJPY traded with a low of 96.04 and a high of 97.54 before closing the day around 96.70 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) rebounded most of the day as the buyers swooped on levels not seen since 2003 and technically was oversold. The bearish backdrop of the UK economy continues to cast a dark shadow on the Pound as it struggled past 1.5000. EUR/GBP selling helped to underpin the gains. Overall the GDP/USD traded with a low of 1.4661 and a high of 1.45081 before closing the day at 1.5000 in the New York session. Looking ahead, October CPI is seen at 0.1% vs. 0.5% previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) was relatively buoyant after a steep sell off at the open as Asian stocks lifted off lows. Q3 Retail Sales were weak at 0.1% vs. 0.5% forecast. Capping gains were weak commodities and a late Dow sell off. Traders are weary of speculation that the RBA is buying around the 0.6350 area and this is helping to dampen speculator interest to the downside. Overall the AUD/USD traded with a low of 0.6382 and a high of 0.6597 before closing the US session at 0.6490. Looking ahead, RBA Minutes are released today from the November Meeting in which they cut 0.75%.

Gold

Gold (XAU) was on the back foot as Oil continued to slide. The market is unsure of the future direction with predictions varying from $600 to $1200 an ounce over the next year. Overall trading with a low of USD$731.65 and high of USD$748.95 before ending the New York session at USD$738 an ounce.

Technical Analysis: Economic Worries Persist

Euro (EUR)

Euro – 1.2650 : Initial support at 1.2513 (Nov 17 low) followed by 1.2389 (Nov 13 low). Initial resistance is now located at 1.2742 (Nov 17 low) at followed by 1.2855 (Nov 13 high)

Yen (JPY)

Yen – 96.45 : Initial support is located at 95.88 (Nov 17 low) followed by 94.48 (Nov 12 low). Initial resistance is now at 97.55 (Nov 17 high) followed by 98.19 (Nov 13 high).

Pound Sterling (GBP)

Pound – 1.5000 : Initial support at 1.4647 (Nov 17 low) followed by 1.4558 (Nov 13 low). Initial resistance is now at 1.5083 (Nov 17 high) followed by 1.5366 (38.2% retrace 1.6672 to 1.4558).

Australian Dollar (AUD)

Australian Dollar – 0.6510 : Initial support at 0.6339 (Oct 29 low) followed by the 0.6246 (76.4% retracement of 0.6009-0.7015 rally). Initial resistance is now at 0.6596 (Nov 17 high) followed by 0.6696 (Nov 14 high).

Gold (XAU)

Gold – 737 : Initial support at 725.40 (Nov 14 low) followed by 700 (Nov 13 low). Initial resistance is now at 754.55 (Nov 14 high) followed by 768.21 (Nov 10 high).

Recession in Europe, Weak US Retail Figures

Last week’s Currency Trading Review

The Dollar had a volatile week but gained against most currencies as the world economic picture continued to deteriorate. The sharp fall in October Retail Sales by 2.8% was worse than the market was expecting and confirmed that the US is heading into a recession. Also in the news Treasury Secretary Paulson modified the TARP $700 Billion program away from toxic assets and more towards freeing up consumer credit. The G20 met over the weekend and released a statement that endorsed further domestic stimulus plans but was very little on actually substance. The Euro tracked stocks lower while also being weighed by weak economic data. German GDP slipped 0.5% in the Q3 dragging the Euro zone into a recession. The German Economic Sentiment Survey did bounce though to -54 from -63 as rate cuts improved consumer sentiment. The EUR/USD lost 0.9% closing at 1.2602, after opening the week at 1.2719. The Japanese Yen strengthened as stock losses mounted before the dramatic 900 point Dow rally on Thursday sent the USD/JPY and crosses significantly higher. The USD/JPY lost -1.18% closing at 97.08 after opening at 98.23. The GBP was the weakest currency last week as testimony from Governor King stated that the BoE is prepared to cut if is necessary. Inflation is expected to drop significantly and may fall into deflationary territory next year. GDP forecasts were also slashed but are not expected to turn negative. The GBP/USD lost -6.14% closing at 1.4734 after opening at 1.5638. The AUD was hurt by falling Oil and a rise in risk aversion. The RBA released its quarterly Monetary Policy Statement and expected Inflation to fall back to its target range of 2-3% by mid 2011. Also weighing the record drop in the Business Survey to -29 its lowest level on record. The AUD/USD closed down -4.01% at 0.6476 after opening at 0.6736.

For the week starting 17/11/08.

This Forex Trading Week Preview

In the States; Inflation data will be in the spotlight this week. On Tuesday we have October PPI expected at -1.8%m/m vs. -0.4% previously. On Wednesday we have October CPI seen at 4.1% y/y vs. 4.9% previously. Also on Wednesday we have October Housing starts expected to fall to 780K vs. 817K previously. Finally the FOMC delivers it Minutes form the Oct meeting. On Thursday we have weekly Jobless claims seen at 508K vs. 516K last week. Treasury’s Paulson is scheduled to speak on the economy. On Friday we have Fed’s Bullard, Lacker, Plosser and Evans expected to speak. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; light data week with the PMI surveys the most important. On Friday we have November German Services PMI expected at 42 vs. 42.9 previously. Also released the German Manufacturing PMI expected at 47.8 vs. 48.3 previously. Also released later on Firday the Eurozone PMI’s for services and manufacturing expected at 45.2 and 40.5 respectively. During the week there are multiple officials speaking. On Tuesday Trichet is speaking and on Friday Weber and Gonzalez are scheduled to speak. In the UK; On Tuesday the October CPI is released expected to drop to 4.9% vs. 5.2% previously. On Wednesday the Bank of England releases the minutes from there last meeting were they cut rates by 1.5%. Finally on Thursday we have October Retail Sales expected at -0.8% vs. -0.4% last month. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Monday Q3 Preliminary GDP is seen at 0.0 vs. -0.7% previously. On Friday the BoJ meets to discuss rates and are widely expected to hold at 0.3%. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; On Monday Real Retail Sales for Q3 are expected at 0.5% vs. -0.6% previously. On Tuesday the RBA minutes from November meeting were they cut 0.75%. On Wednesday RBA Governor Stevens is scheduled to speak. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: Weak US Retail Figures

Euro (EUR)

Euro – 1.2540 : Initial support at 1.2389 (Nov 13 low) followed by 1.2333 (Oct 28 low). Initial resistance is now located at 1.2855 (Nov 13 low) at followed by 1.2930 (Nov 10 high)

Yen (JPY)

Yen – 95.95 : Initial support is located at 94.48 (Nov 12 low) followed by 93.20 (76.4% retracement of 90.92-100.57 rally). Initial resistance is now at 98.19 (Nov 13 high) followed by 99.48 (Nov 10 high).

Pound Sterling (GBP)

Pound – 1.4660 : Initial support at 1.4558 (Nov 13 low) followed by 1.4393 (Range protection). Initial resistance is now at 1.4992 (Nov 14 high) followed by 1.5481 (Nov 12 high).

Australian Dollar (AUD)

Australian Dollar – 0.6375 : Initial support at 0.6339 (Oct 29 low) followed by the 0.6246 (76.4% retracement of 0.6009-0.7015 rally). Initial resistance is now at 0.6484 (Nov 14 low) followed by 0.6696 (Nov 14 high).

Gold (XAU)

Gold – 743 : Initial support at 700 (Nov 13 low) followed by 682 (Oct 24 low). Initial resistance is now at 753 (Nov 12 high) followed by 768.21 (Nov 10 high).