Citigroup Earnings Aid Dollar

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) had a relatively quiet trading day with little economic data out, equities and commodities directed the market. Citigroup’s earning came in better than expected leading to an overall buoyant mood on the equities markets and dollar. Cooling Middle Eastern tensions allowed Oil to slip again slightly, also helping dollar sentiment. In the U.S. share markets, the NASDAQ was down 29 points (1.28%) and the Dow Jones was up 49 points (0.44%). Crude Oil closed down $0.41 ending the New York session at $128.88 per barrel. Looking ahead, June National Activity Index is released along with the June Leading indicators seen at -0.1%.

European Euro

The Euro (EUR) traded at day highs after June German PPI came in stronger at 0.9% vs. expectations of 0.7%. The Euro was unable to hold these gains in the face of general USD strength but regained the 169 level on the EUR/JPY. Overall the EUR/USD traded with a low of 1.5807 and a high of 1.5886 before closing the day at 1.5845 in the New York session.

Japanese Yen (JPY)

The Japanese Yen (JPY) lost ground against most currencies as investors sought to take advantage of renewed risk appetite as US banks reported better than expected results. Overall the USDJPY traded with a low of 105.97 and a high of 106.94 before closing the day around 106.91 in the New York session. Looking ahead, Public holiday in Japan Today.

Pound Sterling (GBP)

The Sterling (GBP) traded in a slightly offered tone due to Dollar strength and rumors of a relaxing of Government Public debt guidelines. Strong buying of GBP/JPY supported. Overall the GBP/USD traded with a low of 1.9909 and a high of 2.0020 before closing the day at 1.9985 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) lost ground as Gold and Oil continued to retrace gains but was supported buy continued demand for the high yielder especially against the JPY. Overall the AUD/USD traded with a low of 0.9702 and a high of 0.9739 before closing the day at 0.9705. Looking ahead, 2nd Quarter PPI is seen at 1.6% slightly lower than 1.9% in the first Quarter.

Gold

Technical Analysis: Foreign Exchange News Today

Euro (EUR)

Euro – 1.5845 : Initial support at 1.5765 (July 11 low) followed by 1.5612 (July 7 low). Initial resistance is now located 1.5948 (July 16 high) at followed by 1.6038 (July 15 High).

Yen (JPY)

Yen – 106.85 : Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.09 (July 17 high) followed by 107.76 (July 7 high).

Pound Sterling (GBP)

Pound – 1.9935 : Initial support at 1.9907 (July 18 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).

Australian Dollar (AUD)

Australian Dollar – 0.9725 : Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High)

Gold (XAU)

Gold – 958 : Initial support at 950.50 (Jul 18 low) followed by 947.88 (Tread line support). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).

US banks turn from Villain to Savior

Last week’s Currency Trading Review

The Dollar had an extremely volatile week as multiple trading themes took hold. Doubts about the government’s ability to backstop GSE’s such as Freddie Mac and Fannie May saw shares touch year lows and the Dollar hit all time lows against the EURO and AUD. The second half of the week was lead by falling Oil, rising stocks and positive US banking reports. This combination proved a major catalyst for reducing fear in the market and renewing risk appetite. On the Data front we had June CPI surging 1.1% m/m the strongest rate since 1982 along with year on year at 5%. PPI also jumped to 9.2% year on year confirming inflation is a major problem for the US economy. Fed chief Bernanke spoke twice before Congress and reiterated his concerns on slowing growth and increasing inflation outlooks. June Retail Sales were weak at 0.1% m/m vs. expectations of 0.5%. The Euro surged to record highs on Tuesday as banking fears gripped the market. US banks reported better than expected 2nd quarter earnings which combined with sliding Oil let the Euro ease substantially into the weeks close. Euro data continue to deteriorate with the German ZEW economic sentiment survey dropping to -63.9 in July vs. forecasts of -55. June HICP was confirmed at 4.0% y/y and German PPI surged to 0.9% m/m and 6.7% y/y. The Euro closed down 0.57% at 1.5847 having opened at 1.5937. The Japanese Yen recovered off multi month highs as equities rebounded and risk aversion subsided. The Bank of Japan left rates at 0.5% but lowered GDP estimates while increasing Inflation forecasts. AUS/JPY and EUR/JPY traded at year highs. The USD/JPY gained 0.64% closing at 106.95, after opening the week at 106.30. The GBP traded to multi month highs at the height of USD weakness above the key 2.00 level for the first time since April. UK data was mixed for the GBP with CPI and PPI both beating expectations at 3.8% and 4.8% y/y respectively but on the downside BRC retail sales were down 0.4% in June and June Claimant count jumped 15.5K, its biggest rise in 15 years. The GBP/USD gained 0.52% closing at 1.9988 after opening at 1.9884. The AUD made new post float highs again this week surging to 0.9850 but was unable to maintain these levels as stocks recovered and Gold came off highs. The RBA minutes from the July meeting were fairly neutral commenting that demand is slowing and that current rates are adequate to control inflation. The AUD/USD closed up 0.39% at 0.9699 after opening at 0.9661.

For the week starting 21/07/08.

This Forex Trading Week Preview

In the States; June Leading Indicators on Monday are expected at -0.1%. Treasury’s Paulson speaks on the US economy Tuesday along with FOMC member Plosser. On Wednesday the Fed’s Beige book is released. Thursday sees Weekly Jobless claims at 379K and June Existing Home Sales expected at 4.94 Million. On Friday June’s Core Durable goods are seen flat at 0.0% after falling -0.9% in May. New Home Sales are expected at 505K in June. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; A host of survey data this week lead by the German IFO Business Climate Index on Thursday expected at 100.2. Also on Thursday we have July Eurozone Manufacturing PMI seen at 48.7 and Services PMI forecast at 48.9. In the UK on Tuesday BoE Governor King speaks on banking reform at the Parliamentary Treasury Committee. On Wednesday we have the BoE minutes from the July Meeting and CBI Industrial Trends forecast at -5. Thursday sees June Retail sales weakening -2.5% from May’s surprise 3.5% jump. Finally Preliminary 2nd quarter GDP is seen down at 0.2% from 0.3% in the previous. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; with a holiday on Monday Focus will be on Wednesday Trade Balance seen at 506 billion Yen. Thursday we focus on CPI data for July seen at 1.9%y/y nationally and 1.6% in Tokyo. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; Focus will be on Mondays 2nd Quarter PPI seen at 1.6%. UPDATE 2nd Q PPI 1.0%. Wednesday sees the 2nd Quarter CPI at 1.2% Q/Q and 4.3% Y/Y. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: Foreign Exchange Weekly Preview

Euro (EUR)

Euro – 1.5845 : Initial support at 1.5765 (July 11 low) followed by 1.5612 (July 7 low). Initial resistance is now located 1.5948 (July 16 high) at followed by 1.6038 (July 15 High).

Yen (JPY)

Yen – 106.85 : Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.09 (July 17 high) followed by 107.76 (July 7 high).

Pound Sterling (GBP)

Pound – 1.9935 : Initial support at 1.9907 (July 18 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).

Australian Dollar (AUD)

Australian Dollar – 0.9725 : Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High).

Gold (XAU)

Gold – 958 : Initial support at 950.50 (Jul 18 low) followed by 947.88 (Tread line support). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).

Oil advances on Hurricane watch, Dollar down.

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) experienced a slow start to the week with Japan away for Ocean day and little economic data out. The Greenback lost some ground as Oil advanced on news of hurricane Dolly in the Gulf. Bank of America results offered the Dollar and Stocks some support but enthusiasm waned and both lost ground into the US session close. After market earning reports from American Express has put extra pressure on the USD and stock futures for Tuesday. June leading Indicators came in as expected at -0.1%. In the U.S. share markets, the NASDAQ was down 3 points (0.14%) and the Dow Jones was down 29 points (0.25%). Crude Oil closed up $2.16 ending the New York session at $131.04 per barrel. Looking ahead, Treasury Secretary Paulson speaks tonight. The July Richmond Fed Index which is also released came in at -12 in June.

European Euro

The Euro (EUR) gained against most currencies as Oil rebounded and the equity rally stalled. New all time records of 169.92 traded in the EUR/JPY just below the critical 170 level. Overall the EUR/USD traded with a low of 1.5830 and a high of 1.5909 before closing the day at 1.5900 in the New York session.

Japanese Yen (JPY)

The Japanese Yen (JPY) was sold heavily after Bank of Americas results were positive with the USD/JPY trading briefly above the 107 level before easing as market sentiment reversed. The crosses were lead by the EURO and AUD which made new year highs. Overall the USDJPY traded with a low of 106.37 and a high of 107.15 before closing the day around 106.65 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) was able to rebound off the lows of the day as markets digested comments from ultra dove MPC member Blanchflower that the UK was already in recession and news that HBOS share offering was severely undersubscribed. Strong buying of GBP/JPY supported. Overall the GBP/USD traded with a low of 1.9908 and a high of 1.9990 before closing the day at 1.9984 in the New York session. Looking ahead, Bank of England Governor King speaks.

Australian Dollar (AUD)

The Australian Dollar (AUD) shrugged off lower than expected (1.6%) 2nd Quarter PPI of 1.0% as Gold and Oil made solid gains. Diverging economic outlooks sent the AUD/NZD to year highs above 1.2800. Overall the AUD/USD traded with a low of 0.9707 and a high of 0.9767 before closing the day at 0.9754.

Gold

Gold (XAU) gained in sympathy with Oil and soft equities. Overall trading with a low of USD$956.55 and high of USD$968.25 ending the New York session at USD$965 an ounce.

Technical Analysis: Dollar Down

Euro (EUR)

Euro – 1.5915 : Initial support at 1.5784 (July 17 low) followed by 1.5692 (July 10 low). Initial resistance is now located 1.5948 (July 16 high) at followed by 1.6038 (July 15 High).

Yen (JPY)

Yen – 106.55 : Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.16 (July 21 high) followed by 107.76 (July 7 high).

Pound Sterling (GBP)

Pound – 2.0015 : Initial support at 1.9907 (July 18 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).

Australian Dollar (AUD)

Australian Dollar – 0.9765 : Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High).

Gold (XAU)

Gold – 967 : Initial support at 950.50 (Jul 18 low) followed by 942 (July 11 low). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).