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USD steady despite stronger than expected data. All eyes on the BoJ interest rate announcement. CURRENCY TRADING SUMMARY – 18 JANUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) overall traded within a narrow range against all other majors in the overnight forex session. US PPI came in stronger than the expected 0.5%, actual was at 0.9%. The Feds Beige Book was consistent with recent data; economy growing and prices to rise steadily, labour markets tightening. Manufacturing indications are good apart from auto and housing. With the market expecting the Fed to keep interest rates steady, rates are expected to remain unchanged at 5.25% at the Federal reserve’s January and March meetings. In other markets, the Dow Jones index dropped 5pts and the NASDAQ fell by 18pts. Blue chip stocks remained steady whereas technology shares showed significant decline as Intel shares dropped 5.65%. In other news crude oil rallied from a 20 month low overnight ending US$1.00 higher at US$52.21 a barrel. Looking ahead CPI and Housing Starts are set to be released later on today.
- The Euro (EUR) traded within a low of 1.2898 and a high of 1.2949, before closing at 1.2938 during the New York Session. On the data front, the Euro Zone Trade Balance was released at 3.1 billion significantly higher than that of the estimated 2 billion. Whilst the CPI was also released with the result being an increase of 0.4% as expected.
- The Japanese Yen (JPY) traded within a low of 120.36 and a high of 120.86 versus the dollar, before closing at 120.66 in the New York session. Looking ahead, the market eagerly awaits the decision on interest rates, with the monthly release of the BoJ. As the market’s expectations are mixed as to whether the BoJ will hike rates or keep them on hold, as seen by the USD/JPY trading within a significantly narrow range yesterday.
- The Sterling (GBP) traded within a low of 1.9605 and a high of 1.9722, before closing at 1.9697 in the New York session. Overall, the GBP traded up 0.4% against the USD. On the data front, unemployment rate were released, unchanged at 5.5%.
- The Australian Dollar (AUD) traded within a low of 0.7818 and a high of 0.7871, before closing at 0.7866 in the New York session.
- Gold (XAU) rose by US$7.30 to US$633.20 an ounce in response to the rise in commodities in particular, oil. As well as better than expected producer prices in the US is the market perceives as fuelling inflationary pressures in the future.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.2821 | 1.2865 | 1.2940 | 1.2990 | 1.3016 | | USD/JPY | 119.14 | 119.70 | 120.65 | 120.89 | 121.07 | | GBP/USD | 1.9426 | 1.9571 | 1.9705 | 1.9725 | 1.9753 | | AUD/USD | 0.7732 | 0.7759 | 0.7875 | 0.7874 | 0.7897 | | XAU/USD | 610.00 | 620.17 | 633.00 | 634.14 | 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 1.2990 (Jan 16 reaction high) followed by 1.3016 (Jan 11 high). Initial support is located at 119.7 (Former resistance from Jan 3) followed by 119.14 (Jan 10 low). Initial resistance is now at 120.89 (Jan 17 trend high) followed by 121.41 (Dec 5, 2005 high). Initial support at 1.9571 (Jan 15 low) followed by 1.9426 (Jan 12 low). Initial resistance is now at 1.9725 (Jan 17 high) followed by 1.9753 (Jan 3 reaction high). - Australian Dollar – 0.7875
Initial support at 0.7759 (Jan 10 low) followed by 0.7732 (Nov 24, 2006 low). Initial resistance is now at 0.7874 (Jan 17 high) followed by 0.7897 (61.8% retracement of the 0.7982-0.7759 decline). Initial support at 620.17 (Jan 17 low) followed by 610.00 (Jan 12 low). Initial resistance is now at 634.14 (Jan 17 high) followed by 645.0 (Jan 3 reaction high). 
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| This article provides an overview of the factors affecting the the leading currency pair: Euro-Dollar exchange, commonly expressed as EUR/USD. The Euro to Dollar exchange rate is the
price at which the world demand for US Dollar equals the world supply for Euro. Regardless of geographical origin, a rise in the world demand for Euros leads to an appreciation of the Euro. |
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Technical analysis is built on three essential principles:
1. Market action discounts everything This means that the actual price is a reflection of everything that is known to the market that could affect it, for example,
supply and demand, political factors and market sentiment. The pure technical analyst is only concerned with price movements, not with the reasons for any changes.
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