Markets Recover lead by GE surge
CURRENCY TRADING SUMMARY – 3rd December 2008 (00:30GMT)
· U.S. Dollar Trading (USD) the market responded well to comments from Fed Chief Bernanke that if US rates could not be cut further than other more unconventional methods may be considered to support the economy. Stocks rebounded lead by GE which kept its dividend intact. US automakers made their second pitch for US help while November Autosales dropped 30%. In U.S. share markets, the NASDAQ was up 51 points (3.7%) and the Dow Jones was up 270 points (3.31%). Crude Oil closed down $2.32 ending the New York session at $46.96 per barrel. Looking ahead, November ADP employment report is expected at -200K vs. -157K previously. November ISM non-manufacturing is expected at 42 vs. 44.4.
· The Euro (EUR) enjoyed a good bounce as US stocks rebounded and the market failed to break support at 1.2600. Traders are now looking to the ECB decision tomorrow and trading is expected to be light before the event. Eurozone PPI showed a dramatic drop of -0.8% in October. Overall the EUR/USD traded with a low of 1.2565 and a high of 1.2767 before closing the day at 1.2715. Looking ahead, October Retails Sales are seen at -0.4% vs. -0.2% previously.
· The Japanese Yen (JPY) strong buy orders in the 92’s discouraged attempts lower yesterday and as US stocks rebounded the USD/JPY found some support going forward. The crosses were able to pair losses as most majors made gains. Overall the USDJPY traded with a low of 92.65 and a high of 93.82 before closing the day around 93.30 in the New York session.
· The Sterling (GBP) the pound bounced off supports at 1.4800 but the foray above 1.5000 was short lived as traders focused on the coming BoE rate announcement. UK Construction PMI fell to 31.8 in November as the downturn continued. Overall the GDP/USD traded with a low of 1.4778 and a high of 1.5068 before closing the day at 1.4910 in the New York session. Looking ahead, November PMI services seen at 41.2 vs. 42.4. Update Nationwide Consumer Confidence at 50 vs. 54 previously.
· The Australian Dollar (AUD) found support even as the RBA cut rates by 100bps as the market bought the struggling Aussie on speculation that the proactive response will avert a recession. Retail Sales beat expectations at 0.7% vs. -0.4% expected. The recovery in US equities lead the AUD back to resistance at .6500. Overall the AUD/USD traded with a low of 0.6344 and a high of 0.6496 before closing the US session at 0.6430. UPDATE Australia Q3 GDP at 0.1% vs. 0.2% forecast.
· Gold (XAU) gained after heavy falls on Tuesday as the market still has demand for the precious metal. Overall trading with a low of USD$762 and high of USD$787 before ending the New York session at USD$782 an ounce.
TECHNICAL COMMENTARY
| Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
| EUR/USD |
1.2423 |
1.2563 |
1.2715 |
1.2766 |
1.2968 |
| USD/JPY |
91.90 |
92.49 |
93.30 |
93.82 |
95.95 |
| GBP/USD |
1.4703 |
1.4776 |
1.4920 |
1.5070 |
1.4398 |
| AUD/USD |
0.6232 |
0.6333 |
0.6430 |
0.6544 |
0.6618 |
| XAU/USD |
743.00 |
769.00 |
782.00 |
830.50 |
856.00 |
· Euro – 1.2715
Initial support at 1.2563 (Nov 28 low) followed by 1.2423 (Nov 21 low). Initial resistance is now located at 1.2766 (Dec 2 low) at followed by 1.2968 (Nov 27 high)
· Yen – 93.30
Initial support is located at 92.49 (Nov 28 low) followed by 91.9 (Oct 27 low). Initial resistance is now at 93.82 (Dec 2 high) followed by 95.95 (Nov 26 high).
· Pound – 1.4920
Initial support at 1.4776 (Dec 2 low) followed by 1.4703 (Nov 21 low). Initial resistance is now at 1.5070 (Dec 1 high) followed by 1.5398 (Dec 1 high).
· Australian Dollar – 0.6430
Initial support at 0.6333 (Nov 25 low) followed by the 0.6232 (Nov 24 low). Initial resistance is now at 0.6544 (Dec 1 high) followed by 0.6618 (Nov 25 high).
· Gold – 782
Initial support at 743 (Nov 21 low) followed by 725.4 (Nov 14 low). Initial resistance is now at 830.5 (Nov 25 high) followed by 856 (Oct 15 high).
Record rally in US stocks underpins market mood.
01/12/08
last week’s currency trading review
The Dollar gave up ground as stocks staged a 12% weekly gain the most since 1974. Higher yielding currencies such as the AUD and GBP were able to take advantage as safe haven flows were put on hold for the moment. Oil and other commodities also rebounded. The markets drew optimism from Obama’s economic team and the Fed’s announcement of a new $800 billion plan to free up spending. US Q3 GDP showed a -0.5% decline deeper than the -0.35 first thought. Of concern was the large drop in consumer spending in October dropping -1%. The Euro ended slightly up but was unable to take full advantage of the USD weakness as economic data out of the Eurozone matched US bleakness. November Eurozone Inflation posted a stunning fall to 2.1% from 3.2% in October. Also concerning was the large jump in EU unemployment to 7.7% from 7.5% previously. The EUR/USD gained 0.79% closing at 1.2689, after opening the week at 1.2589. The Japanese Yen was mixed with higher yielding pairs such as the GBP and AUD gaining well but the USD/JPY remaining slightly weak unable to take advantage of the rise US stocks. The BoJ monthly report showed weakening economic fundamentals. The USD/JPY fell 0.42% closing at 95.51 after opening at 95.91. The GBP staged a recovery as the equity rally allowed risk taking to reenter the market. PM Brown talked of a new stimulus package to help the economy as it enters a recession. BoE Governor King spoke of downside inflation risks as cheaper commodities filter through the economy. The GBP/USD gained 2.95% closing at 1.5370 after opening at 1.4920. The AUD gained on improved risk sentiment and commodities prices following equity prices higher. Little data was released but there was much speculation on the size of the RBA rate cut on Tuesday. The AUD/USD closed up 3.42% at 0.6544 after opening at 0.6320.
The forex trading week preview
In the States; On Monday we have November Manufacturing ISM seen at 37.5 vs. 38.9 previously. Also on Monday Fed Chief Bernanke and Treasury’s Paulson Speaks. On Wednesday we have the November ADP Employment report expected to fall -195K vs. -157K previously. On Thursday weekly jobless claims are expected at 540k vs. 529K previously and Bernanke speaks on Housing. On Friday the market eagerly awaits the November Nonfarm Payrolls are expected to show a fall to -325K vs. -240K previously. The Unemployment rate is expected to tick higher to 6.8% vs. 6.5% previously. We will provide our previews and reviews of these data releases in the daily summary.
In the Eurozone; On Monday October German Retail Sales are seen rebounding to +0.5% vs. -2.3% and Eurozone November PMI manufacturing is expected to be confirmed at 36.2. On Wednesday Eurozone November Services are seen confirmed at 43.3 and October retail sales falling -0.4% vs. -0.2% previously. The market attention will be on the ECB on Thursday where the market expects a 0.5% cut to 2.75% from 3.25% and Trichet will be speaking. On Friday German Factory Orders for October are seen falling -0.5% vs. -8% previously. In the UK; On Monday November PMI manufacturing is seen at 39.5 vs. 41.5 previously. On Wednesday Consumer Confidence is expected to fall to 54 vs. 55. On Thursday the BoE expects to announce a 1% rate cut to 2.0% vs. 3.0% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Japan; light data week with the Q3 Capex expected to fall -9.9% vs. -6.5% previously. We will provide our previews and reviews of these data releases in the daily summary.
In Australia; Both the RBA and RBNZ are expected to cut aggressively this week. On Tuesday the RBA is seen cutting .75% to 4.5% and on Wednesday the RBNZ is seen slashing by 1.5% to 5.0% from 6.50% previously. Also released on Tuesday October Retail sales see falling 0.2% in October. On Thursday the October Trade balance is seen at 1.41Bn vs. 1.46Bn previously. 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 |
1.2568 |
1.2645 |
1.2695 |
1.2968 |
1.3081 |
| USD/JPY |
93.56 |
94.61 |
95.45 |
97.43 |
97.55 |
| GBP/USD |
1.5176 |
1.5258 |
1.5375 |
1.5449 |
1.5534 |
| AUD/USD |
0.6333 |
0.6430 |
0.6530 |
0.6618 |
0.6696 |
| XAU/USD |
743.00 |
786.00 |
818.00 |
830.50 |
856.00 |
· Euro – 1.2695
Initial support at 1.2645 (Nov 28 low) followed by 1.2568 (Nov 24 low). Initial resistance is now located at 1.2968 (Nov 27 low) at followed by 1.3081 (Nov 25 high)
· Yen – 95.45
Initial support is located at 94.61 (Nov 26 low) followed by 93.56 (Nov 20 low). Initial resistance is now at 97.43 (Nov 25 high) followed by 97.55 (Nov 17 high).
· Pound – 1.5375
Initial support at 1.5258 (Nov 28 low) followed by 1.5176 (Nov 26 low). Initial resistance is now at 1.5449 (Nov 28 level) followed by 1.5534 (Nov 25 high).
· Australian Dollar – 0.6530
Initial support at 0.6430 (Nov 26 low) followed by the 0.6333 (Nov 25 low). Initial resistance is now at 0.6618 (Nov 25 high) followed by 0.6696 (Nov 14 high).
· Gold – 818
Initial support at 786 (Nov 24 low) followed by 743 (Nov 21 low). Initial resistance is now at 830.5 (Nov 25 high) followed by 856 (Oct 15 high).
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