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Strong data out of Japan added to unwinding of carry trades a cause for Yen strength. US Retail Sales and German ZEW survey set for release. CURRENCY TRADING SUMMARY – 13 MARCH 07 (23:30GMT)
- U.S. Dollar Trading (USD) softened against all other majors on Monday as the confident Non-farm payrolls figure of last Friday began to lose its appeal amongst investors, who continued to weigh recent volatile conditions where global stocks tumbled and the yen rallied sharply. In US share markets, the NASDAQ rose by 14.74 points (0.62%) whilst the Dow Jones, 42.3 points (0.34%). Crude oil rose by US$0.05 a barrel to US$58.96. Looking ahead, Retail Sales (core) is set for release later on today with expectations of 0.3% same as the previous month.
- The Euro (EUR) strengthened against the Dollar on the back of poor economic data expected out of the US later on this week, as well as the EURJPY continuing to push higher. Overall, the Euro traded with a low of 1.3110 and a high 1.3202 before closing at 1.3188 in the New York session. Looking ahead, key data in the form of the German ZEW survey is scheduled for release today with markets expecting a figure of 3.3 for the month of March up on the previous 2.9.
- The Japanese Yen (JPY) strengthened on Tuesday against the USD. The yen rose as government bond yields fell on Monday, a sign that investors comfort with being in riskier, higher-yielding trades remained erratic ahead of U.S. economic data this week. Further more, relatively strong data out of Japan aided to the rally with GDP (Q4) confirmed at 1.3% and the Current Account Balance slightly higher at 49%. Overall, the JPY traded with a low of 117.27 and a high of 118.50 before closing the day at 117.61 in the New York session
- The Sterling (GBP) fell against the yen and Euro on Monday as appetite for risk evaporated and fresh concerns on the health of the U.S. housing market caused investors to exit sterling supportive carry trades. Following a strong PPI number (highest monthly increase since July 2006 in February at 1.3 percent, well above the 0.6 percent consensus forecast) the GBP rallied to a high of 1.9433 but surrendered gains following a GBPJPY sell off reaching lows of 1.9253 before closing the day at 1.9317 in the New York session. Looking ahead, RICS House Prices Balance (Feb) with expectations at 25 down on the previous 28, whilst Trade Balance is also out with expectations at -6.9 bln stronger than the previous -7.14 bln.
- The Australian Dollar (AUD) continued to strengthen on Monday despite investors looking to exit high yielding carry trades. Overall the AUD traded with a low of 0.7798 and a high of 0.7856 before closing at near day highs of 0.7853 in the New York session.
- Gold (XAU) traded in a wide and volatile range trading with a low 645.80 and a high of 654.00. Overall, the gold dropped by US$0.50 to US$651.50 an ounce.
- The South African Rand (ZAR) Solid U.S. jobs data had rejuvenated carry-trades on Friday, but currencies like the Euro, which the rand closely tracks given South Africa's close trading links with the European Union, retreated against the yen on Monday in a sign that investors remained somewhat risk-averse. After rallying in the first half of the day, the USDZAR retreated in the second half to European market opening level. Overall the ZAR traded with a low of 7.2865 and a high of 7.3785
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3072 | 1.3108 | 1.3185 | 1.3213 | 1.3261 | | USD/JPY | 115.55 | 117.08 | 117.65 | 118.50 | 118.68 | | GBP/USD | 1.9184 | 1.9252 | 1.9315 | 1.9435 | 1.9450 | | AUD/USD | 0.7739 | 0.7768 | 0.7855 | 0.7868 | 0.7885 | | XAU/USD | 633.00 | 643.00 | 648.55 | 658.10 | 659.65 |
Initial support at 1.3108 (Mar 12 low) followed by 1.3072 (Mar 5 low). Initial resistance is now located at 1.3213 (Mar 5 high) followed by 1.3261 (Feb 27 high). Initial support is located at 117.08 (Mar 9 low) followed by 115.55 (Mar 8 low). Initial resistance is now at 118.50 (Mar 12 high) followed by 118.68 (50% retracement of the 122.2 to 115.15 decline) Initial support at 1.9252 (Mar 12 low) followed by 1.9184 (Mar 5 low). Initial resistance is now at 1.9435 (Mar 12 high) followed by 1.9450 (Mar 5 high) - Australian Dollar – 0.7855
Initial support at 0.7768 (Mar 9 low) followed by 0.7739 (Mar 7 low). Initial resistance is now at 0.7868 (Mar 12 high) followed by 0.7885 (61.8% retracement of the 0.7948 to 0.7680 decline) Initial support at 643.00 (Mar 7 low) followed by 633.00 (Mar 6 low). Initial resistance is now at 658.10 (Mar 9 high) followed by 659.65 (Feb 27 low). 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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