Euro Rallies, Gold Plummets

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) had a mixed day of trading as strength in Europe was once again reversed in the US session with the notable exception of Gold. Crude Oil Inventories where at 1.6m and helped Oil to small gains. In US stocks, DJIA +3 points closing at 10567, S&P +5 points closing at 1145 and NASDAQ +18 points closing at 2358. Looking ahead, Weekly Jobless Claims forecast at 460k vs. 469k previously. Also released, January International Trade forecast at 41bn vs. 40bn previously.

European Euro

The Euro (EUR) was supported from heavy EUR/JPY buying throughout the day pushing EUR/USD to the mid 1.3650 area. January's German Trade Balance slumped to 8.7 vs. 16.4bn forecast at exports fell heavily even as the Euro weakened. Overall the EUR/USD traded with a low of 1.3543 and a high of 1.3682 before closing at 1.3645. Looking ahead, Swiss Libor Rate Decision forecast to remain at 0.25% vs. 0.25%.

Japanese Yen (JPY)

The Japanese Yen (JPY) volatility continued with a major day of Yen weakness with USD/JPY pushing into the mid to high Y90 region. Yen Crosses all shot higher with EUR/JPY closing above the Y123 level. Overall the USDJPY traded with a low of 89.92 and a high of 90.84 before closing the day around 90.50 in the New York session. Update Q4 GDP revised to 3.8% vs. 4.6% y/y.

Pound Sterling (GBP)

The Sterling (GBP) came under pressure in early Europe on weak economic data and struggled to rebound with the Euro later in the day. January Industrial Production slipped to -0.4% vs. 0.2% forecast. EUR/GBP broke above 0.9100 and is continuing to be well supported. Overall the GBP/USD traded with a low of 1.4871 and a high of 1.5017 before closing the day at 1.4970 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) shrugged off some weak housing finance data (-8% January) to test 0.9180 resistance before falling back ahead of today's Jobs data. AUD/JPY pushed above Y83 briefly but was pulled down by the large slump in Gold. Overall the AUD/USD traded with a low of 0.9125 and a high of 0.9195 before closing the US session at 0.9145. Looking ahead, February Jobs Change forecast at 15k vs. 52k previously.

Oil & Gold

Oil & Gold (XAU) slumped over $15 an ounce in the US session as Sovereign debt Credit default spreads continued to tighten. Overall trading with a low of USD$1103 and high of USD$1128 before ending the New York session at USD$1108 an ounce. Crude Oil gained on strong inventory numbers. Crude Oil was up $0.42 ending the New York session at $81.91.

Technical Analysis: Euro Rallies

Euro (EUR)

Euro – 1.3650 : Initial support at 1.3531 (Mar 5 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3705 (Mar 8 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 90.45 : Initial support is located at 88.98 (Mar 5 low) followed by 88.14 (Mar 4 low). Initial resistance is now at 90.68 (Mar 8 high) followed by 91.29 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.4975 : Initial support at 1.4855 (Mar 2 low) followed by 1.4784 (Mar 2 low). Initial resistance is now at 1.5196 (Mar 8 high) followed by 1.5317 (Feb 26 low).

Australian Dollar (AUD)

Australian Dollar – 0.9145 : Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9211 (Jan 20 high) followed by 0.9243 (Jan 20 high).

Gold (XAU)

Gold – 1108 : Initial support at 1104 (Feb 26 low) followed by 1088 (Feb 25 low). Initial resistance is now at 1137 (Mar 8 high) followed by 1144 (Mar 3 high).

Oil

Oil – 81.80 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Yen Strength Returns

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was able to make solid gains in Europe as the Greece fears resurfaced on news Fitch may still downgrade the embattled country. US stocks turned positive however and the market pared back some of the Dollars gains. In US stocks, DJIA +11 points closing at 10564, S&P +1 points closing at 1140 and NASDAQ +8 points closing at 2340. Looking ahead,Crude Oil Inventories are forecast at 2.1mn vs. 4.1mn previously.

European Euro

The Euro (EUR) slumped in Europe through the 1.3600 level on heavy EUR/JPY selling but the downside pressure did not last and the single currency finished at the 1.3600 level. EUR/GBP continued to grind higher as the Pound suffered the most of the majors. Overall the EUR/USD traded with a low of 1.3536 and a high of 1.3637 before closing at 1.3600. Looking ahead, January German Trade Balance is forecast at 16bn vs. 16.7bn previously.

Japanese Yen (JPY)

The Japanese Yen (JPY) was strong as the major slipped below the key Y90 level in Europe and heavy crosses led by the GBP/JPY made the Yen the best performer of the day. Friday's big sell off in the Yen has nearly been fully retraced and the market is looking for a new catalyst before new direction can be found. Overall the USDJPY traded with a low of 89.62 and a high of 90.33 before closing the day around 89.95 in the New York session. Update January Machine Orders -3.7% vs. -4.1% forecast.

Pound Sterling (GBP)

The Sterling (GBP) broke below 1.5000 in Early Europe and remained heavy for the rest of the day as markets continue to take a dim view of the political situation and economic data weakened. January Trade Balance was at -8bn vs. -6.9bn forecast as exports deteriorated. Overall the GBP/USD traded with a low of 1.4934 and a high of 1.5046 before closing the day at 1.4995 in the New York session. Looking ahead, January Industrial Output is forecast at 0.3% vs. 0.5% previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) did well to end in the black as the market reacted to extremely positive jobs data. February Jobs ads increased 20% vs. January. GBP/AUD trade at fresh 25 year lows under 1.64 and EUR/AUD slumped to under 1.4900. Overall the AUD/USD traded with a low of 0.9054 and a high of 0.9165 before closing the US session at 0.9145. Update February Consumer Sentiment 0.2% vs. -2.6% previously.

Oil & Gold

Oil & Gold (XAU) was heavy as the market digest news that China was not as bullish on gold as first thought at current levels. $1111 held well and the market bounced in the US session back above the $1120. Overall trading with a low of USD$1108 and high of USD$1124 before ending the New York session at USD$1121 an ounce. Crude Oil dipped early and then recovered later in the day as US stocks extended gains. Crude Oil was up -$0.31 ending the New York session at $81.20.

Technical Analysis: US Stocks Turned Positive

Euro (EUR)

Euro – 1.3595 : Initial support at 1.3531 (Mar 5 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 90.00 : Initial support is located at 88.98 (Mar 5 low) followed by 88.14 (Mar 4 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound Sterling (GBP)

Pound – 1.4970 : Initial support at 1.4855 (Mar 2 low) followed by 1.4784 (Mar 2 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5422 (Feb 25 low).

Australian Dollar (AUD)

Australian Dollar – 0.9145 : Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9211 (Jan 20 high) followed by 0.9243 (Jan 20 high).

Gold (XAU)

Gold – 1122 : Initial support at 1104 (Feb 26 low) followed by 1088 (Feb 25 low). Initial resistance is now at 1137 (Mar 8 high) followed by 1144 (Mar 3 high).

Oil

Oil – 81.20 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Global Stocks Resume Uptrend

Last week’s Currency Trading Review

The Dollar remained on the back-foot as global stocks rallied and US data improved investor sentiment. The big news was the better than expected February Non Farm Payrolls at -36k vs. -56k forecast released on Friday which saw Global stocks rally to fresh 2010 highs. February Services PMI came in at 56.5 vs. 57.7 forecast whilst Manufacturing PMI was solid at 53 vs. 51 forecast. The Euro was beholden to the news flow relating to the Greece debt situation. Concerns early in the week pushed the pair to fresh lows under 1.3450 before good Greece bond auctions and political support from its European neighbors allowed the Euro to bounce. The ECB rate meeting saw the rate left at 1.0% as expected. January German Factory Orders surged 4.3% vs. 1.6% m/m forecast. The EUR/USD fell -0.03% closing at 1.3624, after opening the week at 1.3628.

The Japanese Yen the volatility continued with fresh lows seen on GBP/JPY and USD/JPY before direction dramatically reversed later in the week after the US jobs numbers. The Commodity Currencies did the best as gold and oil surged with CAD/JPY and AUD/JPY both gaining +3%. The GBP had a dramatic week with the first day of trading seeing a 400 pip drop on concerns that UK elections would see a hung parliament for the first time in decades. The rest of week saw the pair stage a solid rebound and closed just under where it opened but sentiment is fragile and the downside is still in focus. The BOE held at 0.5% and the Asset purchase Program was maintained at 200bn. On a positive note the February Services PMI surged to 58.4 vs. 54.5 previously. GBP/USD fell -0.66% closing at 1.5135 after opening at 1.5235. The AUD was supported on multiple fronts but the gains were quite contained given the news. The RBA raised rates to 4.00% and Q4 GDP was +0.9% Q/Q. Solid commodity rallies and strong risk appetite also underpinned the move higher. AUD/NZD broke above 1.3000 for the first time in over a decade. The AUD/USD gained +1.33% closing at 0.9076 after opening at 0.8955.

For the week starting 08/03/10.

This Forex Trading Week Preview

In the States; On Thursday, January Trade Balance forecast at -41bn vs. -40.2bn previously. Also released, Weekly Jobless Claims forecast at 450k vs. 469l previously. On Friday, February Retail Sales are forecast at -0.2% vs. 0.5% previously. Also released, UoM Consumer Confidence forecast at 74 vs. 73.6 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, German Industrial production is forecast at 1.0% vs. 4.7% previously. On Wednesday, German CPI is forecast at 0.4% y/y. Also ECB President Trichet speaks. On Thursday, SNB 3-month Libor is forecast at to remain unchanged 0.25%. On Friday, January EU industrial Production is forecast at 0.7% vs. -1.7% m/m. In the UK; On Tuesday, January Trade Balance forecast at -3.05bn vs. -3.26bn previously. On Wednesday, January Manufacturing Production is forecast at 0.2% vs. 0.9% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q4 Final GDP is forecast at 1.0% vs. 1.1% initially. In Australia; On Wednesday, RBNZ is forecast to remain at 2.5%. On Thursday, February Employment change is forecast at 15k vs. 52k previously. The February Unemployment rate is forecast to remain at 5.3%. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: US Data Improved Investor Sentiment

Euro (EUR)

Euro – 1.3630 : Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 90.40 : Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound Sterling (GBP)

Pound – 1.5130 : Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar (AUD)

Australian Dollar – 0.9070 : Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold (XAU)

Gold – 1135 : Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil

Oil – 81.80 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Profit taking Helps USD

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) gained across the board as profit taking hit the majors after stock markets stalled and Gold slipped back on decreasing sovereign credit risk. US stocks stayed in a very tight range but ended slightly weak. In US stocks, DJIA -13 points closing at 10552, S&P -1 points closing at 1138 and NASDAQ +5 points closing at 2332.

European Euro

The Euro (EUR) tested 1.3700 in Asia after weekend reports from French President Sarkozy that Greece would be given financial support if it needed it. The pair was weak for the rest of the day as profit taking set in and support at 1.3620 was tested. March Sentix was -7.5 vs. -8.2 in February. Overall the EUR/USD traded with a low of 1.3604 and a high of 1.3706 before closing at 1.3625.

Japanese Yen (JPY)

The Japanese Yen (JPY) was unchanged against the USD trading sideways in a 30 pip range but most of the crosses slipped back in US trading. GBP/JPY and EUR/JPY were the biggest losers as the pairs tracked their majors lower. Overall the USDJPY traded with a low of 90.13 and a high of 90.68 before closing the day around 90.25 in the New York session. Looking ahead, January Leading Indicators previously at 3.

Pound Sterling (GBP)

The Sterling (GBP) traded up to just under the 1.5200 level in the European session but then heavy EUR/GBP buying and general USD strength sent the pair skidding towards the key 1.500 level once again. Overall the GBP/USD traded with a low of 1.5029 and a high of 1.5198 before closing the day at 1.5040 in the New York session. Looking ahead, January Trade Balance forecast at -7bn vs. -7.28bn previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) tapped out at 0.9130 on multiple occasions before slipping back to 0.9080 support as the Dollar strengthened in the US session. Hurting the pair was the falls in Gold, AUD/JPY and the AUD/NZD which slipped below 1.3000. Overall the AUD/USD traded with a low of 0.9073 and a high of 0.9135 before closing the US session at 0.9090. Looking ahead, February Business Confidence previously at 15.

Oil & Gold

Oil & Gold (XAU) slipped back on USD strength and tightening Sovereign CDS. Overall trading with a low of USD$1118 and high of USD$1138 before ending the New York session at USD$1122 an ounce. Crude Oil finished roughly flat after testing both the resistance and support throughout the day. Crude Oil was up +$0.10 ending the New York session at $81.80.

Technical Analysis: Stock Markets Stalled

Euro (EUR)

Euro – 1.3630 : Initial support at 1.3531 (Mar 5 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 90.30 : Initial support is located at 88.98 (Mar 5 low) followed by 88.14 (Mar 4 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound Sterling (GBP)

Pound – 1.5065 : Initial support at 1.4994 (Mar 5 low) followed by 1.4959 (Mar 3 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5422 (Feb 25 low).

Australian Dollar (AUD)

Australian Dollar – 0.9090 : Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9147 (Jan 21high) followed by 0.9211 (Jan 20 high).

Gold (XAU)

Gold – 1125 : Initial support at 1118 (Mar 8 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil

Oil – 81.80 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

US Jobs bring upside surprise

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was strong initially after the February Payrolls beat expectations at -36k vs. -56k forecast. The gains were short lived however as stock markets extended gains and yen crosses staged major short covering rallies. Also of note, February Consumer Credit turned positive at 5bn vs. -4.2bn forecast. In US stocks, DJIA +122 points closing at 10566, S&P +15 points closing at 1138 and NASDAQ +34 points closing at 2326.

European Euro

The Euro (EUR) tested the lower 1.35 region immediately after the Jobs figures were released before rebounding in the US close on EUR/JPY buying and a strong rally in Oil. January Factory orders jumped 1.7% vs. 1.4% forecast. Overall the EUR/USD traded with a low of 1.3529 and a high of 1.3629 before closing at 1.3624. Looking ahead, March Sentix forecast at -9 vs. -8.2 previously.

Japanese Yen (JPY)

The Japanese Yen (JPY) was the major loser in the post NFP rally as the market heavily long the Yen liquidated positions. GBP/JPY led the crosses higher as USD/JPY reclaimed the key Y90 level and US stock markets rose to fresh year highs. Overall the USDJPY traded with a low of 88.99 and a high of 90.58 before closing the day around 90.30 in the New York session. Looking ahead, January Current account forecast at 1.25T vs. 1.1T previously.

Pound Sterling (GBP)

The Sterling (GBP) like the Euro tested the downside after the NFP figures although support under the 1.5000 proved solid and GBP/JPY soared. EUR/GBP tested the Key 0.9000 level and closed just below the figure but the GBP outlook is quite uncertain as ongoing hung elections fears remain in play. Overall the GBP/USD traded with a low of 1.4994 and a high of 1.5166 before closing the day at 1.5144 in the New York session. Looking ahead, MPC member Barker speaks.

Australian Dollar (AUD)

The Australian Dollar (AUD) did well in the 'risk on' environment but stalled at the 0.9080 resistance area as AUD/NZD selling capped the Aussies gains. NZD/USD outperformed the major currencies gaining 3% against the Yen. Overall the AUD/USD traded with a low of 0.8986 and a high of 0.9092 before closing the US session at 0.9080.

Oil & Gold

Oil & Gold (XAU) kept inside Thursday's range tracking the USD strength and weakness. Some analysts are uncertain as to whether a rebound in the Euro on calming Greece fears will play out well for gold as recent gains have been attributed in part to sovereign risk. Overall trading with a low of USD$1127 and high of USD$1141 before ending the New York session at USD$1135 an ounce. Crude Oil rallied with improvement in global economic outlook. Crude Oil was up +$1.58 ending the New York session at $81.70.

Technical Analysis: February Payrolls Beat Expectations

Euro (EUR)

Euro – 1.3630 : Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 90.40 : Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound Sterling (GBP)

Pound – 1.5130 : Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar (AUD)

Australian Dollar – 0.9070 : Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold (XAU)

Gold – 1135 : Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil

Gold – 1135 : Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

US Non Farm Payrolls Ahead

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was strong even as stock markets remained positive as the EUR/USD slumped after the ECB announcement and USD/JPY rallied on increasing US Bond Yields. Weekly Jobless Claims improved to 469k vs. 496k. January Pending Home Sales fell -7.2% tracking a broad set of weak housing data in January. In US stocks, DJIA +47 points closing at 10396, S&P +4 points closing at 1122 and NASDAQ +11 points closing at 2292. Looking ahead, February NonFarm Payrolls forecast at -50k vs. -20k previously and the Unemployment rate is forecast at 9.8% vs. 9.7%.

European Euro

The Euro (EUR) lost ground after the ECB held rates at 1.0% and described the current levels as appropriate with economic growth uneven. EUR/JPY held its own as stock markets improved but EUR/AUD slumped back close to the key 1.50 handle. Also released, Q4 GDP confirmed at 0.1%. Overall the EUR/USD traded with a low of 1.3551 and a high of 1.3714 before closing at 1.3570. Looking ahead, January Factory Orders are forecast at 1.5% vs. -2.3% m/m.

Japanese Yen (JPY)

The Japanese Yen (JPY) suffered a major reversal of fortune against the USD with the 3 month Libor turning to the dollars favor for the first time since August 2009. General USD strength and solid crosses also underpinned. GBP/JPY is beginning to rally from 9 month lows at Y132. Overall the USDJPY traded with a low of 88.12 and a high of 89.27 before closing the day around 89.10 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) rallied on heavy GBP/JPY buying in New York to trade above 1.5100 but this was short lived as the Euro fell back late in the day and the pair ended on a slightly weakish footing. EUR/GBP moved lower but is still contained inside the 90-91 range. The BOE held at 0.5% and kept the Asset Purchase Program at 200bn. Overall the GBP/USD traded with a low of 1.5004 and a high of 1.5139 before closing the day at 1.5040 in the New York session. Looking ahead, February PPI input is forecast at 0.25 vs. 2% previously m/m.

Australian Dollar (AUD)

The Australian Dollar (AUD) tracked the EURO lower as AUD/JPY broke down through Y80 in early Europe before heavy buying emerged later in New York to keep the AUD/USD near the 0.9000 level. January Trade Balance was at -1.2bn vs. -1.5bn forecast. Overall the AUD/USD traded with a low of 0.8977 and a high of 0.9056 before closing the US session at 0.9040.

Oil & Gold

Oil & Gold (XAU) fell back as the strong USD discouraged commodity buying. Overall trading with a low of USD$1125 and high of USD$1142 before ending the New York session at USD$1132 an ounce. Held ground as the improving sentiment countered the stronger dollar. Crude Oil was down -$0.30 ending the New York session at $80.60.

Technical Analysis: AUD Tracked The EURO Lower

Euro (EUR)

Euro – 1.3580 : Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3732 (Mar 3 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 89.10 : Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 89.50 (Feb 26 high) followed by 90.36 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.5030 : Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar (AUD)

Australian Dollar – 0.8995 : Initial support at 0.8936 (Mar 1 low) followed by the 0.8863 (Feb 26 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold (XAU)

Gold – 1132 : Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil

Oil – 80.50 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Greece Austerity Measures Help Euro

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) the market reacted well to the new Greece Austerity measures in Europe and the Euro led the majors higher against the greenback. Adding to the positive sentiment was the February ISM Services PMI at 53 vs. 51 forecast. February ADP Employment report was a relief at -20k as forecast. In US stocks, DJIA -9 points closing at 10396, S&P +1 points closing at 1118 and NASDAQ -1 points closing at 2280. Looking ahead, Weekly Jobless Claims are forecast at 470k vs. 496k previously. January Factory Orders are forecast at 1.8% vs. 1.0% previously. Finally, January Pending Home Sales are forecast at 1%.

European Euro

The Euro (EUR) with over $6bn in new budget cuts announced from Greece the market took another leg higher breaking above resistance at 1.3700. EUR/GBP was volatile as the market rejected 0.9100 and Pound found strength on good data. Overall the EUR/USD traded with a low of 1.3591 and a high of 1.3737 before closing at 1.3700. Looking ahead, ECB Rate Announcement forecast to remain at 1.0%.

Japanese Yen (JPY)

The Japanese Yen (JPY) Euro inspired USD weakness hurt the major as it broke below support at 88.50 and the gradual decline continued. Crosses held their ground and most finished with small gains. AUD/JPY continues to hold above Y80 and is one of the most closely watch trades for overall investor risk appetite. Overall the USDJPY traded with a low of 88.30 and a high of 89.02 before closing the day around 88.45 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) broke above 1.5000 in Asia as the recovery continued and Europe continued with the theme as Economic data impressed. February Services PMI jumped to 58 vs 55. Also strong, February Nationwide Consumer Confidence at 80 vs. 71 previously. Overall the GBP/USD traded with a low of 1.4974 and a high of 1.5134 before closing the day at 1.5100 in the New York session. Looking ahead, BOE rate Announcement.

Australian Dollar (AUD)

The Australian Dollar (AUD) was quiet as profit taking on the major in the high 0.90's capped gains and traders looked to the crosses for action. AUD/NZD broke to fresh decade highs above 1.3000 and quickly ran up to the 1.31 level. Q4 GDP came in at 0.9% q/q as forecast. Overall the AUD/USD traded with a low of 0.9007 and a high of 0.9088 before closing the US session at 0.9035. Looking ahead, January Trade Balance is forecast at -1.5bn vs. -2.25bn.

Oil & Gold

Oil & Gold (XAU) took advantage of USD weakness to trade above $1140 for the first time since January. Overall trading with a low of USD$1131 and high of USD$1145 before ending the New York session at USD$1139 an ounce. Crude Oil broke above $80 on Bullish US inventories data. Crude Oil was up +$1.27 ending the New York session at $80.95.

Technical Analysis: Euro Led The Majors Higher Against The Greenback

Euro (EUR)

Euro – 1.3705 : Initial support at 1.3436 (Mar 2 low) followed by 1.3424 (may 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 88.45 : Initial support is located at 88.25 (0.618 of 84.83-93.77) followed by 87.37 (Dec 9 low). Initial resistance is now at 89.50 (Feb 26 high) followed by 90.36 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.5100 : Initial support at 1.4855 (Mar 2 low) followed by 1.4784 (Mar 1 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5317 (Feb 26 low).

Australian Dollar (AUD)

Australian Dollar – 0.9055 : Initial support at 0.8936 (Mar 1 low) followed by the 0.8863 (Feb 26 low). Initial resistance is now at 0.9093 (Jan 25 high) followed by 0.9147 (Jan 21 high).

Gold (XAU)

Gold – 1139 : Initial support at 1111 (Mar 1low) followed by 1104 (Feb 26 low). Initial resistance is now at 1146 (Jan 14 high) followed by 1161 (Jan 11 high).

Oil

Oil – 80.80 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

GOLD hits record high against EURO and GBP

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was softer across the board after downside action on the Euro and GBP abated and commodities rallied in the US session. Stock markets struggled to hold gains but the damage to the USD was already done and fresh weakness can not be ruled out as positive sentiment prevails. In US stocks, DJIA +2 points closing at 10405, S&P +2 points closing at 1118 and NASDAQ +7 points closing at 2280. Looking ahead, February ADP employment forecast at -15k vs. -22k previously. Also released, February ISM Services PMI rose to 51 vs. 50.5 previously.

European Euro

The Euro (EUR) hit new year lows under 1.3450 but then was bought for the rest of the day on positive developments from Greece. The Greece PM looking to sure up support for fresh Greek debt issuance stated he would be making 'Brave Decisions'. Overall the EUR/USD traded with a low of 1.3459 and a high of 1.3659 before closing at 1.3610. Looking ahead, German Retail Sales are forecast at -0.5% vs. 0.9% previously.

Japanese Yen (JPY)

The Japanese Yen (JPY) crosses did well in the 'risk on' environment but late USD weakness saw the the USD/JPY break down to fresh 2010 lows near 88.60. EUR/JPY found solid support under Y120 and could retrace if the Eurozone Sentiment improves again today. Overall the USDJPY traded with a low of 88.54 and a high of 89.39 before closing the day around 88.75 in the New York session.

Pound Sterling (GBP)

The Sterling (GBP) encountered weakness at the start of Europe but this was contained and the pair rallied with the Euro up to 1.5000 resistance. EUR/GBP resumed its uptrend and closed at the 0.9100 level. Overall the GBP/USD traded with a low of 1.4852 and a high of 1.4992 before closing the day at 1.4980 in the New York session. Looking ahead, Service PMI is forecast at 55 vs. 54.5 previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) found support from the rise in Interest Rates from the RBA meeting yesterday as the central bank increased by 0.25% to 4.0%. Some traders were quick to take profit however as the statement declined to comment on the pace of further rate hikes this year. Strength was seen in the US session on the back of Gold's move higher. Overall the AUD/USD traded with a low of 0.8957 and a high of 0.9060 before closing the US session at 0.9035. Looking ahead, Q4 GDP is forecast at 0.9% vs. 0.2% previously.

Oil & Gold

Oil & Gold (XAU) broke through resistance at $1130 as the bulls took control once again. Overall trading with a low of USD$1114 and high of USD$1138 before ending the New York session at USD$1114 an ounce. Crude Oil toyed with the $80 a barrel level as the Dollar weakened. Crude Oil was up +$0.91 ending the New York session at $79.68.

Technical Analysis: Gold Broke Through Resistance At $1130

Euro (EUR)

Euro – 1.3610 : Initial support at 1.3424 (May 18 low) followed by 1.3405 (0.618 of 1.2330-1.5144). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 88.75 : Initial support is located at 88.56 (Feb 4 low) followed by 88.25 (0.618 of 1.2330-1.5144). Initial resistance is now at 89.50 (Feb 26 high) followed by 90.36 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.4960 : Initial support at 1.4784 (Mar 1 low) followed by 1.4704 (April 30 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5317 (Feb 26 low).

Australian Dollar (AUD)

Australian Dollar – 0.9035 : Initial support at 0.8936 (Mar 1 low) followed by the 0.8863 (Feb 26 low). Initial resistance is now at 0.9071 (Feb 23 high) followed by 0.9093 (Jan 25 high).

Gold (XAU)

Gold – 1133 : Initial support at 1111 (Mar 1low) followed by 1104 (Feb 26 low). Initial resistance is now at 1137 (Mar 2 high) followed by 1141.78 (Jan 20 high).

Oil

Oil – 79.60 : Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Yen in Demand as Risks

Last week’s Currency Trading Review

The Dollar was generally strong even as risk appetite got a boost from strong commodities and rising equities. Bernanke spoke before congress and reiterated that he will be holding rates low for an extended period of time and this helped improve investor sentiment. Economic data was weak with Consumer Confidence slumping to 46 vs. 56 previously. January Housing data disappointed with Existing Home Sales falling -7.2% m/m. The Euro tested 1.3450 support as the markets focus returned to Greece debt concerns. The market was able to bounce well on Friday as rumors spread that Germany may provide loan support for Greek debt. German Unemployment Change beat forecasts at 7k vs. 18 forecast and December Industrial Orders rose +0.8% vs. -1.1% previously. The EUR/USD gained +0.12% closing at 1.3628, after opening the week at 1.3611.

The Japanese Yen reversed all of last weeks gains as the crosses broke key support and the major dropped below Y90. EUR/JPY tested Y120 and is looking very heavy along with GBP/JPY which broke through to 9 month lows at Y135. January Retail Sales gained 2.6% vs. -0.1% y/y. The USD/JPY fell -2.92% closing at 88.91 after opening the week at 91.51. The GBP was the weakest of the major currencies as data underperformed with January Mortgage approvals dipping to 35k vs. 45k previously. BoE Governor King in his inflation report stated that high inflation was not a medium term issue and that QE may remain open. Concern is also being generated by the prospect of a hung parliament after the coming election and that this will create problems in passing critical budget saving reforms. GBP/USD fell -1.55% closing at 1.5235 after opening at 1.5471. The AUD held up well as Gold remained strong and Oil reclaimed $80 a barrel level. Q4 Capex surged 5.5% vs. 1.5% forecast and underpinned the argument for a rate rise in March. The AUD/USD fell -0.35% closing at 0.8955 after opening at 0.8985.

For the week starting 02/03/2010.

This Forex Trading Week Preview

In the States; On Tuesday, Bank of Canada Rate Announcement forecast to hold at 0.25%. On Wednesday, February Services ISM is forecast at 51.0 vs. 50.5 previously. FED beige Book Economic report also released. On Thursday, Weekly Jobless Claims are forecast at 475k vs. 496k previously. January Pending Home Sales are forecast at 1.5% vs. 1.0% previously. February Non Farm Payrolls is forecast at -50k vs. -20k previously. February Unemployment rate is forecast at 9.8% vs. 9.7% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, February CPI is forecast at 1.0% y/y. On Wednesday, German Retail Sales are forecast are forecast at -0.7% vs. 0.85 previously. On Thursday, Q4 EU GDP is forecast at 0.1% vs. 0.1% previously. Also, ECB Rate Announcement is forecast unchanged at 1.0%. On Friday, January German Factory Orders is forecast at 1.3% vs. -2.3% m/m. In the UK; On Tuesday, February Construction PMI is forecast at 48.8 vs. 48.6 previously. On Wednesday, February PMI services is forecast at 54.9 vs. 54.5 previously. On Thursday, BoE Rate Announcement is forecast unchanged at 0.5% and the BOE Asset Purchase Program is forecast to remain unchanged at 200bn. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q4 CAPEX is forecast at -18.4% vs. -24.85 previously. In Australia; On Tuesday, RBA is forecast to Raise Rates 0.25% to 4.0%. On Wednesday, Q4 GDP is forecast at 0.9% vs. 0.2% previously. On Thursday, January Trade Balance is forecast at -1.6bn vs. -2.25bn previously. We will provide our previews and reviews of these data releases in the daily summary.

Technical Analysis: Yen Reversed All Of Last Weeks Gains

Euro (EUR)

Euro – 1.3605 : Initial support at 1.3451 (Feb 25 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 89.15 : Initial support is located at 88.75 (Feb 26 low) followed by 88.56 (Feb 4 low). Initial resistance is now at 90.36 (Feb 24 high) followed by 91.29 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.5160 : Initial support at 1.5153 (Feb 26 low) followed by 1.5117 (May 18 low). Initial resistance is now at 1.5422 (Feb 25 high) followed by 1.5577 (Feb 24 low).

Australian Dollar (AUD)

Australian Dollar – 0.8960 : Initial support at 0.8801 (Feb 25 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.8979 (Feb 26 high) followed by 0.9071 (Feb 23 high).

Gold (XAU)

Gold – 1116 : Initial support at 1088 (Feb 25 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1121 (Feb 23 high) followed by 1131 (Feb 22 high).

Oil

Oil – 80.10 : Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

Pound Skids to 10 Month Low

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) had a mixed day with strength against the Pound and Euro not being replicated against risk currencies such as CAD and AUD which tracked stock markets higher. February ISM manufacturing slipped to 56.5 vs. 57.5 forecast. In US stocks DJIA +78 points closing at 10400, S&P +11 points closing at 1115 and NASDAQ +35 points closing at 2273. Looking ahead, Weekly Redbook previously at 1.6% m/m.

European Euro

The Euro (EUR) enjoyed support in Asia on the back of proposed debt bailout of Greece but there was little follow through in Europe when no new information was released. The pair was subsequently pulled lower from heavy Cable Sales. Overall the EUR/USD traded with a low of 1.3459 and a high of 1.3659 before closing at 1.3570. Looking ahead, January PPI is forecast at 0.6% vs. 0.1% m/m previously.

Japanese Yen (JPY)

The Japanese Yen (JPY) stayed within Friday's range with most of the action kept to the crosses with GBP/JPY slumping to 10 month lows near Y132. AUD/JPY outperformed closing above the key Y80 level. Overall the USDJPY traded with a low of 88.71 and a high of 89.50 before closing the day around 89.10 in the New York session. Looking ahead, January Unemployment is forecast at 5.2% vs. 5.1% previously.

Pound Sterling (GBP)

The Sterling (GBP) crashed as key supports were broken and buyers capitulated in a stoploss fueled 400 pip fall. GBP/AUD hit 25 year lows below 1.66 and EUR/GBP soared over 0.9000 to touch 0.9150 in major moves across the board. GBP/USD recovered during the US session but the sentiment is still very bearish. Overall the GBP/USD traded with a low of 1.4781 and a high of 1.5206 before closing the day at 1.4990 in the New York session.

Australian Dollar (AUD)

The Australian Dollar (AUD) stayed close to the key 0.9000 level on AUD/USD supported on dips by strong Gold and risk appetite. Traders stayed on the sidelines ahead of the RBA meeting today and January Retail Sales. Overall the AUD/USD traded with a low of 0.8933 and a high of 0.9018 before closing the US session at 0.9005. January Retail Sales are forecast at 0.5% vs. -0.7% m/m. Also released, March RBA Meeting forecast to hike 0.25%.

Oil & Gold

Oil & Gold (XAU) kept to a quiet range tracking the broader changes in USD strength. Overall trading with a low of USD$1111 and high of USD$1124 before ending the New York session at USD$1117 an ounce. Fell back on weak US manufacturing data and the stronger Dollar. Crude Oil was down -$1.24 ending the New York session at $78.42.

Technical Analysis: GBP Crashed

Euro (EUR)

Euro – 1.3555 : Initial support at 1.3451 (Feb 25 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high).

Yen (JPY)

Yen – 89.05 : Initial support is located at 88.75 (Feb 26 low) followed by 88.56 (Feb 4 low). Initial resistance is now at 90.36 (Feb 24 high) followed by 91.29 (Feb 23 high).

Pound Sterling (GBP)

Pound – 1.4980 : Initial support at 1.4704 (Apr 30 low) followed by 1.4610 (April 29 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5317 (Feb 26 low).

Australian Dollar (AUD)

Australian Dollar – 0.8995 : Initial support at 0.8863 (Feb 26 low) followed by the 0.8801 (Feb 25 low). Initial resistance is now at 0.9071 (Feb 23 high) followed by 0.9093 (Jan 25 high).

Gold (XAU)

Gold – 1117 : Initial support at 1104 (Feb 26 low) followed by 1088 (Feb 25 low). Initial resistance is now at 1131 (Feb 22 high) followed by 1141 (Jan 20 high).

Oil

Oil – 78.70 : Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).