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Bank of Japan keep interest rates unchanged. UK retail sales set to be released. CURRENCY TRADING SUMMARY – 19 JANUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) overall saw strong data with the CPI reaching its highest rates in 8 months at 0.5% higher than the expected 0.4%, whilst the pace of US Housing starts climbed a further 4.5% at 1.642 million. Leading to expectations that the Fed will not have to cut rates anytime soon. The USD strengthened immediately after the release of the data, but lost its gains towards the end of the US session. With Fed Reserve Chairman Bernanke addressing the Senate Budget committee, as the topic of his outlook on interest rates were avoided his remarks left little impact on the market. In other markets, the Dow Jones index dropped 9pts and the NASDAQ fell by 36pts. Technology stocks dropped largely due to Apple computers dropping 5.1pct. In other news, crude oil fell US$1.74 to US$50.50 a barrel. Looking ahead Consumer Sentiment from the University of Michigan data is set to be released later on today
- The Euro (EUR) traded higher than expected despite strong US data, trading within a low of 1.2897 and a high of 1.2978, before closing at 1.2958 at the end of the New York Session. With the Bank of Japan keeping rates on hold, the Euro was bought against the Japanese Yen which flowed on to EURUSD.
- The Japanese Yen (JPY) with great interest surrounding the release of the BoJ monthly report, following a 6 – 3 vote, it was decided that interest rates will remain unchanged at 0.25% (lowest level in industrialized world). This led to the Japanese Yen trading significantly lower against all other majors in the late Asian session. Governor Fukui said the Bank of Japan judged it practical to wait for more data, given indicators have been mixed. Overall, the JPY traded within a low of 120.48 and a high of 121.60 (highest level seen since March 2003) versus the dollar, before closing at 121.24 in the New York session.
- The Sterling (GBP) experienced a fluctuating day trading within a low of 1.9636 and a high of 1.9780, before closing at 1.9732 in the New York session. Due to the Bank of Japan keeping interest rates on hold, GBPJPY reached 240.01, the highest level in over 8 years. Key data regarding retail sales is due to be released on Friday with the market predicting a 0.5% increase, higher than the previous 0.3%.
- The Australian Dollar (AUD) reached a 9 year high against the Japanese Yen. The AUD continues to firm trading within a low of 0.7858 and a high of 0.7896, before closing at 0.7886 in the New York session.
- Gold (XAU) fell by US$6.40 to US$627.40 an ounce as the US dollar firmed.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.2821 | 1.2865 | 1.2960 | 1.2990 | 1.3016 | | USD/JPY | 120.06 | 120.47 | 121.30 | 121.60 | 122.38 | | GBP/USD | 1.9571 | 1.9636 | 1.9740 | 1.9780 | 1.9849 | | AUD/USD | 0.7759 | 0.7812 | 0.7895 | 0.7897 | 0.7922 | | XAU/USD | 610.00 | 620.40 | 628.15 | 636.75 | 649.95 |
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 120.47 (Jan 18 low) followed by 120.06 (Jan 15 corrective low). Initial resistance is now at 121.60 (Jan 18 trend high) followed by 122.38 (61.8% retracement of the 135.18 to 101.67 decline). Initial support at 1.9636 (Jan 18 low) followed by 1.9571 (Jan 15 low). Initial resistance is now at 1.9780 (Jan 18 high) followed by 1.9849 (Dec 1 2006 high). - Australian Dollar – 0.7895
Initial support at 0.7812 (Jan 17 corrective low) followed by 0.7759 (Jan 10 low). Initial resistance is now at 0.7897 (61.8% retracement of the 0.7982-0.7759 decline) followed by 0.7922 (Jan 4 high). Initial support at 620.4 (Jan 17 corrective low) followed by 610.00 (Jan 12 low). Initial resistance is now at 636.75 (Jan 18 high) followed by 649.95 (Dec 1 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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