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Poor US retail sales causes the dollar to drop. Investors return to risk approach over uncertainty in US sub-prime mortgage industry. CURRENCY TRADING SUMMARY – 14 MARCH 07 (23:30GMT)
- U.S. Dollar Trading (USD) slid against most other majors on Tuesday, following soft retail sales (Actual: -0.1, Forecast: 0.3) added with concerns over the housing sector. Concerns about a rising number of defaults in the U.S. sub-prime mortgage and their potential impact on the economy have weighed on the U.S. equities and treasury yields. In US share markets, the NASDAQ dropped by 51.72 (-2.15%) whilst the Dow Jones 242.66 (-1.97%). Crude Oil rose by US$0.25 a barrel to US$58.18. Looking ahead the Current Account Balance for the fourth quarter is sure to generate some interest with markets expected a figure of -203 bln better than the previous -225.6 bln.
- The Euro (EUR) strengthened against the Dollar on the back of a relatively poor figure for US retail sales, and a better than expected indication of economic sentiment in the form of the ZEW survey. With markets expected a figure of 3.3 the actual came in higher at 5.8. Overall, the Euro traded with a range of a low 1.3155 and a high of 1.3222 before closing out at 1.3198 in the New York session. Looking ahead. ECB President Trichet is scheduled to speak in London with investors sure to pay attention. Industrial Production is also set for release with markets expecting a figure of 0.4%
- The Japanese Yen (JPY) continued to strengthen against all other majors as poor economic US data, and uncertainty over the housing markets led to investors avoiding risk. The JPY for the last several weeks has been tied to moves in global equity indexes, as weak stocks have meant a stronger Yen and vice versa. Overall, the JPY traded within a range of a low 116.21 and a high of 117.78 before closing at 116.23 near day lows in the New York session.
- The Sterling (GBP) traded initially higher following a stronger Trade Balance prior to the resumption of carry trade unwinding. Overall, the GBP traded within a low of 1.9274 and a high of 1.9353 before closing at 1.9281 in the New York session. Looking ahead, further data is expected out of the UK on Wednesday in the shape of Jobless claims (Forecast: -8.0K, Previous: -13.5K) and Average Earnings (Forecast: 4.1%, Previous: 4%)
- The Australian Dollar (AUD) weakened as investors cut loose carry trade positions. Overall the AUD traded within a range of a low 0.7810 and a high 0.7884 before closing the day at 0.7812 in the New York session.
- Gold (XAU) traded in a tight range before surrendering gains. Gold dropped last night by US$3.80 an ounce to US$646.50
- The South African Rand (ZAR) fell sharply against the dollar, knocked by renewed jitters over the U.S. economy and a flight from high-yielding currencies. The trend also hit local stocks with the JSE Securities exchange’s Top-40 index falling 0.7% on the day. The rand given away all those gains in past couple of days on nerves on emerging markets. Overall, the ZAR traded with a low 7.3400 and a high 7.4800
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3072 | 1.3108 | 1.3190 | 1.3223 | 1.3261 | | USD/JPY | 115.55 | 116.21 | 116.20 | 118.50 | 118.68 | | GBP/USD | 1.9184 | 1.9252 | 1.9285 | 1.9435 | 1.9450 | | AUD/USD | 0.7739 | 0.7768 | 0.7820 | 0.7886 | 0.7948 | | XAU/USD | 633.00 | 643.00 | 643.05 | 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 1.3223 (Mar 5 high) followed by 1.3261 (Feb 27 high). Initial support is located at 116.21 (Mar 9 low) followed by 115.55 (Mar 8 low). Initial resistance is now at 118.50 (Mar 13 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 – 0.7820
Initial support at 0.7768 (Mar 9 low) followed by 0.7739 (Mar 7 low). Initial resistance is now at 0.7888 (Mar 13 high) followed by 0.7948 (Feb 27 high) 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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