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Japanese Yen slips despite better than expected Retail Sales. Interest surrounds German CPI and Japanese Unemployment Rate, Household Spending data. CURRENCY TRADING SUMMARY – 30 JANUARY 07 (23:30GMT)
- U.S. Dollar Trading (USD) experienced a mixed day against all other major currencies, as investors await the Federal Reserve’s decision on interest rates. This was supported by the USD dropping against the Euro and strengthening against the AUD. As the current rate stands at 5.25% and is not expected to change, markets will be watching for any hint on the course of the US monetary policy due out on Wednesday. In other markets the NASDAQ was up 5.60 points (0.23%) whilst the Dow Jones was also up at 3.76 points (0.03%). With OPEC oil nations indicating that supply will be more plentiful in March, oil prices fell by US$1.39 (2.5%) to US$54.03 a barrel. Looking ahead, although key economic data is due for release on Wednesday, Tuesday finds the index for consumer confidence being made public with market expecting 110.0 higher than the previous 109.0.
- The Euro (EUR) strengthened against the USD as a result of markets awaiting the release of the Federal Reserve interest rate decision out on Wednesday. The EURUSD traded within a low of 1.2899 and a high of 1.2968 before closing the day at 1.2954 in the New York session around day highs. Looking ahead, key data out of the Eurozone is due for release in the form of the German CPI, with market expectations at 2.0% higher than the previous 1.4%
- The Japanese Yen (JPY) hit a four year low against the USD despite a better than expected retail sales figure being released with actual figures coming in at -0.3% rather than the expected -0.5%. Doubt also surrounded the weakness of the JPY being addressed at the next G7 summit on Feb 9-10 with Japanese Vice Finance Minister Hideto Fujii stating he had not heard that it would be a key point of discussion. USDJPY traded within a low of 121.44 and a high of 122.20 before closing the day at 121.94 in the New York session. Looking ahead, key economic data continues to be released from Japan with Unemployment Rate expected to remain unchanged for the month of December at 4.0%. Furthermore Industrial production due for release today is expected to come out at 0.3% (December) less than the previous 0.8% and Overall Household Spending expecting to come in at -1.2% less than the previous -0.7% for the month of December. UPDATE: Unemployment Rate 4.1%, Overall Household Spending -1.9%, Industrial Production 0.7%.
- The Sterling (GBP) fell slightly against the dollar, below 14 year highs reached last week, despite stronger than expected CBI data. The GBPUSD traded within a low of 1.9548 and a high 1.9617 before closing at 1.9592 in the New York session.
- The Australian Dollar (AUD) continued to slide trading within a range of 0.7709 (low) to 0.7745 (high) before closing out the day at 0.7713 in the New York session.
- Gold (XAU) remained steady on Monday with investors awaiting the FOMC rate decision on Wednesday. Gold fell by US$2.30 an ounce to US$642.40.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.2865 | 1.2876 | 1.2960 | 1.3054 | 1.3117 | | USD/JPY | 120.19 | 121.21 | 121.80 | 122.38 | 122.88 | | GBP/USD | 1.9512 | 1.9549 | 1.9615 | 1.9683 | 1.9833 | | AUD/USD | 0.7698 | 0.7708 | 0.7730 | 0.7821 | 0.7940 | | XAU/USD | 639.25 | 641.10 | 643.50 | 654.60 | 656..20 |
Initial support at 1.2876 (Jan 26 low) followed by 1.2865 (Jan 12 reaction low). Initial resistance is now located at 1.3054 (Jan 9 high and 38.2% of 1.3368 to 1.2865) followed by 1.3117 (50% retracement of the 1.3368 to 1.2865 decline). Initial support is located at 121.21 (Jan 26 low) followed by 120.19 (Jan 25 low). Initial resistance is now at 122.38 (61.8% retracement of the 135.18 to 101.67 decline) followed by 122.88 (Dec 13, 2002 high) Initial support at 1.9549 (Jan 29 low) followed by 1.9512 (61.8% retracement of the 1.9262 to 1.9917 advance). Initial resistance is now at 1.9683 (Jan 26 high) followed by 1.9833 (Jan 24 high) - Australian Dollar – 0.7730
Initial support at 0.7708 (Jan 29 low) followed by 0.7698 (50% retracement of the 0.7414 -0.7982 rally). Initial resistance is now at 0.7821 (Jan 25 high) followed by 0.7940 (Jan 23 high). Initial support at 641.10 (Jan 26 low) followed by 639.25 (Jan 24 corrective low). Initial resistance is now at 654.60 (Jan 25 high) followed by 656.20 (Aug2, 2006 reaction high) Forex trading involves substantial risk of loss, and may not be suitable for everyone. 
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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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