USD strengthens against majors. German ZEW index impresses together with UK data. Oil drops again overnight. CURRENCY TRADING SUMMARY – 17 JANUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) while initially weaker rallied against the majors in the overnight forex session despite poor NY manufacturing index and stronger Eurozone data as investors sought to take profits ahead of market moving data this week. The New York Empire State manufacturing index fell from 22.19 to 9.13 in January from an expected level of 20. In other markets, the Dow Jones index climbed 26pts and the NASDAQ fell by 5pts as earnings on blue chip stocks were expected to post good results, however, the drop in crude overnight capped any broad gains as energy stocks plummeted. Crude oil fell US$1.77 to US$51.22 a barrel as Saudi Arabia said there was no need for an emergency OPEC meeting and that current output cuts were working well. Looking ahead, PPI, industrial production, and the Beige book are due out tonight.
- The Euro (EUR) traded within a low of 1.2909 and a high of 1.2988, before closing at 1.2922 in the New York session. On the data front, the German ZEW index came in at -3.6 from a -10 estimate. Looking ahead, Eurozone CPI is due out today.
- The Japanese Yen (JPY) traded within a low of 120.24 and a high of 120.75 versus the dollar, before closing at 120.60 in the New York session. On the data front, Japanese news agency Kyodo reported the BoJ may not increase interest rates tomorrow citing “sources familiar with the matter”. Current account data showed a surplus increase of 25.5% where the market was expecting 33.6%. Looking ahead, the BoJ announces its interest rate decision tomorrow.
- The Sterling (GBP) traded within a low of 1.9592 and a high of 1.9705, before closing at 1.9624 in the New York session. On the data front, UK CPI for December came in at 0.6% from a 0.4% estimate. Looking ahead, unemployment is due out today.
- The Australian Dollar (AUD) traded within a low of 0.7823 and a high of 0.7853, before closing at 0.7834 in the New York session.
- Gold (XAU) fell by US$1.40 to US$625.50 an ounce in response to weaker oil.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.2821 | 1.2865 | 1.2920 | 1.3016 | 1.3054 | | USD/JPY | 119.14 | 119.70 | 120.85 | 120.78 | 121.07 | | GBP/USD | 1.9426 | 1.9571 | 1.9610 | 1.9710 | 1.9753 | | AUD/USD | 0.7732 | 0.7759 | 0.7825 | 0.7871 | 0.7897 | | XAU/USD | 602.20 | 610.00 | 625.00 | 628.38 | 645.00 |
Initial support at 1.2865 (Jan 12 low) followed by 1.2821 (61.8% retracement of the 1.2483 to 1.3368 advance). Initial resistance is now located at 1.3016 (Jan 11 reaction high) followed by 1.3054 (Jan 9 high and key intraday resistance). Initial support is located at 119.7 (Former resistance from Jan 3) followed by 119.14 (Jan 10 low). Initial resistance is now at 120.78 (Jan 16 trend high) followed by 121.07 (Dec 12, 2005 high). Initial support at 1.9571 (Jan 15 low) followed by 1.9426 (Jan 12 low). Initial resistance is now at 1.971 (76.4% retracement of the 1.9849-1.9261 decline) followed by 1.9753 (Jan 3 reaction high). - Australian Dollar – 0.7825
Initial support at 0.7759 (Jan 10 low) followed by 0.7732 (Nov 24, 2006 low). Initial resistance is now at 0.7871 (50% retracement of the 0.7982-0.7759 decline) followed by 0.7897 (61.8% retracement of the 0.7982-0.7759 decline). Initial support at 610.0 (Jan 12 low) followed by 602.2 (Jan 5 corrective low). Initial resistance is now at 628.38 (Jan 16 high) followed by 645.0 (Jan 3 reaction high). 
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