Big pull back in Global stocks

CURRENCY TRADING SUMMARY – 20th November (00:30GMT)

U.S. Dollar Trading (USD) was very strong for most of the day as stocks around the world suffered from heavy profit taking and concerns of new bubbles in assets. Weekly Jobless claims were at forecasts of 505k whilst the November Philly Fed was stronger at 16 vs. 11.5 previously. In US Stocks, DJIA -93 points closing at 10332, S&P -15 points closing at 1094 and NASDAQ -36 points closing at 2156.

The Euro (EUR) was very heavy as USD strength and EUR/JPY selling that continued for much of the day. A slight reprieve at the end of the US session allowed the pair to reclaim the 1.4900 level. A much touted 1.48-1.51 DNT option is though to expire today which could allow for a break of the recent range next week. Overall the EUR/USD traded with a low of 1.4842 and a high of 1.4958 before closing at 1.4900. Looking ahead, October German PPI is forecast at 0.1% vs. -0.5% previously.

The Japanese Yen (JPY) was the strongest currency yesterday on risk aversion demand. Liquidation of AUD/JPY and GBP/JPY guided the USD/JPY below 89 Yen. Stock markets and US bond yields are the main factors affecting the Yen at the moment. Overall the USDJPY traded with a low of 88.63 and a high of 89.46 before closing the day around 88.95 in the New York session. Looking ahead, BOJ meeting today.

The Sterling (GBP) was under pressure on most pairs as the risk sensitive currency struggled in a souring global market. Oil was under pressure and continued bad press about UK banks weighed on the Pound. October Retail Sales were at 0.4% vs. 0.5% forecast. Overall the GBP/USD traded with a low of 1.6604 and a high of 1.6744 before closing the day at 1.6640 in the New York session.

The Australian Dollar (AUD) slumped for the second day as traders booked profit from the recent rally and commodities apart were very weak. AUD/JPY selling and a mixed technical outlook are beginning to weigh although should sentiment improve the Aussie is prone to bounce first. Overall the AUD/USD traded with a low of 0.9130 and a high of 0.9285 before closing the US session at 0.9180.

Oil & Gold (XAU) held up well as safe haven flows offset gains in the USD. Overall trading with a low of USD$1130 and high of USD$1146 before ending the New York session at USD$1141 an ounce. Weakened as investor sentiment turned 'risk off'. Crude Oil was down -$2.12 ending the New York session at $77.46.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4786	1.4808	1.4920	1.5016	1.5048
USD/JPY	88.36	88.64	89.00	89.75	90.60
GBP/USD	1.6516	1.6572	1.6640	1.6878	1.7043
AUD/USD	0.8971	0.9092	0.9180	0.9406	0.9476
XAU/USD	1118.00	1127	1141.00	1152.00	1165.00
OIL/USD	76.00	78.00	78.30	80.00	82.00

Euro – 1.4920

Initial support at 1.4808 (Nov 17 low) followed by 1.4786 (0.618 of 1.4624-1.5049). Initial resistance is now located at 1.5016 (Nov 16 high) followed by 1.5048 (Nov 11 high)

Yen – 89.00

Initial support is located at 88.64 (Nov 19 low) followed by 88.36 (Oct 9 low). Initial resistance is now at 89.75 (Nov 16 high) followed by 90.60 (Nov 16 high).

Pound – 1.6640

Initial support at 1.6572 (Nov 13 low) followed by 1.6516 (Nov 12 low). Initial resistance is now at 1.6878 (Nov 16 high) followed by 1.7043 (Aug 5 high).

Australian Dollar – 0.9180

Initial support at 0.9092 (Nov 6 low) followed by the 0.8971 (Nov 4 low). Initial resistance is now at 0.9337 (Nov 18 high) followed by 0.9406 (Nov 16 high).

Gold – 1141

Initial support at 1127 (Nov 17 low) followed by 1118 (Nov 16 high). Initial resistance is now at 1152 (Nov 18 high) followed by 1165 (1.618 of 985 - 1070.80 from 1026.60).

Oil – 78.30

Initial support at 78.00 (Intraday support) followed by 76 (Intraday support). Initial resistance is now at 80 (key level) followed by 82 (October high).

 

Fresh Risk Appetite hurts USD

Last week’s currency trading review

The Dollar continued to lose ground as US stocks markets soared to year highs and Gold traded to fresh all time highs. Economic data was light but multiple FED speakers all re-emphasized that US rates will remain low for some time. Weekly Jobless Claims improved to 502k vs. 512k forecast. Trade Balance -36.5bn vs. -31.8bn forecast. UoM consumer Sentiment fell to 66 vs. 71.1 previously. The Euro was volatile but ended higher as stocks helped to lift whilst weak Oil contained gains. Solid resistance above 1.5000 is proving hard to break for the time being. German ZEW Economic Sentiment slumped to 51.1 vs. 55.2 forecast and 56 previously. Preliminary EU Q3 GDP was weaker than expected at 0.4% vs. 0.6% forecast. The EUR/USD gained 0.41% closing at 1.4906, after opening the week at 1.4845.

The Japanese Yen once again kept to tight ranges against the USD but weakened across most other pairs as improving risk appetite caused high yielding pairs such as the AUD/JPY to be bought. September Core Machinery Orders improved 10.5% vs. 3.4% forecast. The USD/JPY fell -0.25% closing at 89.66 after opening the week at 90.88. The GBP continued to shrug off the best efforts of the BoE to keep the Pound under pressure. BoE Governor King in the Inflation report once again talked of the weak GBP helping the UK economy to recover via exports. Claimant Count Change was strong at 12.9k vs. 20.2k forecast. GBP/USD gained 0.42% closing at 1.6681 after opening at 1.6611. The AUD gained heavily on the back of gold and US stocks rallying but was also aided by strong economic data. October Employment improved by +24.5k vs. -10.1k forecast and September Home loans improved by 5% vs. 3% forecast. The AUD/USD gained 1.52% at 0.9328 after opening at 0.9186.

The forex trading week preview

In the States; On Tuesday, October Industrial Production is forecast at 0.4% vs. 0.7% previously. Also released, Oct PPI forecast at -1.7% vs. -4.8% y/y. On Wednesday, October CPI is forecast at 0.3% vs. -0.9% previously. Also released, October Building Permits are forecast at 580k vs. 573k previously. On Thursday, Weekly Jobless Claims are forecast at 504K vs. 502k previously. On Friday, Philly Fed is forecast at 12 vs. 11.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, ECB President Trichet Speaks. On Wednesday, EU September Current account is released previously at -1.3bn. On Friday, October German PPI is forecast at -7.5% vs. -7.6% previously. In the UK; On Tuesday, October CPI is forecast at 1.4% vs. 1.1% previously y/y. On Wednesday, BoE minutes are forecast to show 9-0 vote. On Thursday, October Retail Sales are forecast at 2.9% vs. 2.4% previously y/y. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, BOJ meet to discuss rates and are expected to hold at 0.1%. In Australia; On Tuesday, RBA minutes. On Wednesday, Q3 Wage Cost index forecast at 0.7% vs. 0.8% previously Q/Q. 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	1.4786	1.4822	1.493	1.5048	1.5063
USD/JPY	89.2	89.46	89.6	90.6	90.86
GBP/USD	1.6519	1.6532	1.671	1.6843	1.7043
AUD/USD	0.9196	0.9211	0.934	0.937	0.9476
XAU/USD	1087	1095	1125	1129	1136
OIL/USD	74	75	76.8	78	80

Euro – 1.4930

Initial support at 1.4822 (Nov 12 low) followed by 1.4786 (0.618 OF 1.4624-1.5049). Initial resistance is now located at 1.5048 (Nov 11 high) followed by 1.5063 (Oct 26 high)

Yen – 89.60

Initial support is located at 89.46 (Nov 13 low) followed by 89.20 (Nov 2 low). Initial resistance is now at 90.60 (Nov 12 high) followed by 91.32 (Oct 29 high).

Pound – 1.6710

Initial support at 1.6516 (Nov 12 low) followed by 1.6402 (Nov 4 low). Initial resistance is now at 1.6843 (Nov 9 high) followed by 1.7043 (Aug 5 high).

Australian Dollar – 0.9340

Initial support at 0.9211 (Nov 12 low) followed by the 0.9196 (Nov 9 low). Initial resistance is now at 0.9370 (Nov 12 High) followed by 0.9476 (Jul 31 ' 08 high).

Gold – 1125

Initial support at 1095 (Nov 9 low) followed by 1087 (Nov 6 high). Initial resistance is now at 1129 (1026.60 plus 0.618 of 905.10-1070.80) followed by 1136 (1.618 retrace 930.34 - 1024.28 through 985).

Oil – 76.80

Initial support at 75.00 (Key level) followed by 74 (Intraday support). Initial resistance is now at 78 (Intraday resistance) followed by 80 (Key Level).