Yen slides on the back of equity market confidence. BoJ interest rate announcement, with focus on comments made by Governor Fukui. CURRENCY TRADING SUMMARY – 20 MARCH 07 (23:30GMT)
- U.S. Dollar Trading (USD) once again was hampered by the US sub-prime mortgage market spreading to the wider economy, hence prompt the Fed to cut interest rates. This conception sent the Dollar down to a tree month low against a basket of currencies during the day. In other news, housing prices came in at 36 down on the expected 38, yet did not have an effect on market. In US share markets, the NASDAQ was up 21.75 points (0.92%) whilst the Dow Jones also jumped 115.76 points (0.95%). Crude oil rose by US$0.17 to US$59.87 a barrel. Looking ahead Housing starts are out of the US for the month of February with markets expecting a figure of 1445k higher than the previous 1408k.
- The Euro (EUR) continued to remain steady against the Dollar before surrendering Friday gains towards the end of the trading day. Due to minimal data out of the Eurozone and the US, the Euro was subject to a narrow range governed by technical trading. Overall, the Euro traded with a low of 1.3280 and a high of 1.3325 before closing the day at 1.3299 in the New York session.
- The Japanese Yen (JPY) the Yen eased violently during Monday’s Asian session of trading on the back of the Nikkei index opening higher at 1% with markets sourcing more confidence in equity markets. This led to a sharp sell off in the Yen (especially against the GBP) as investors were willing to re-enter risky carry trades. Overall, the JPY traded with a low of 116.25 and a high of 117.17 before closing at 117.77 in the New York session. Looking ahead the BoJ will make an announcement on interest rates today. With markets expecting the rate to remain unchanged, it will be comments made by Gov Fukui that will generate most interest.
- The Sterling (GBP) was subject to plenty of technical trading due to a lack of event risk. The GBP strengthened against the Yen rising from 227.30 to 229.00. Overall, the GBP traded with a low of 1.9400 and a high of 1.9473 before closing the day at 1.9438 in New York.
- The Australian Dollar (AUD) continued to look bullish following last weeks. Overall the AUD traded within a range of a low 0.7937 and a high of 0.8004 before closing at 0.7993 in the New York session. The Aussie dollar broke through key resistance level on the back RBA interest rate hike speculation.
- Gold (XAU) traded within a narrow range rising by US$0.30 an ounce to US$654.20.
- The Turkish Lira (TRY) saw stock market in Istanbul up 0.2%. Economic analysts said that markets were waiting for the Fed rate announcement on Wednesday. The Lira ended the day at 1.3970 against the dollar on the inter-bank market, firmer than Fridays close of 1.4040.
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3187 | 1.3229 | 1.3310 | 1.3342 | 1.3368 | | USD/JPY | 115.76 | 116.51 | 117.80 | 117.78 | 118.50 | | GBP/USD | 1.9307 | 1.9357 | 1.9455 | 1.9506 | 1.9551 | | AUD/USD | 0.7876 | 0.7943 | 0.8005 | 0.8005 | 0.8050 | | XAU/USD | 637.00 | 646.20 | 656.10 | 656.40 | 658.10 |
Initial support at 1.3229 (Mar 16 low) followed by 1.3187 (Former resistance of Mar 7 low). Initial resistance is now located at 1.3342 (High Day’s close on Dec 4) followed by 1.3368 (Dec 4 trend high). Initial support is located at 116.51 (Mar 16 low) followed by 115.76 (Mar 14 low). Initial resistance is now at 117.78 (Mar 15 high) followed by 118.50 (Mar 12 high) Initial support at 1.9357 (Mar 16 low) followed by 1.9307 (Mar 15 low). Initial resistance is now at 1.9506 (Mar 16 high) followed by 1.9551 (50% retracement of the 1.9919 to 1.9184 decline) - Australian Dollar – 0.8005
Initial support a 0.7943 (Mar 19 low) followed by 0.7876 (Mar 16 low). Initial resistance is now at 0.8005 (Feb 18, 2004 trend high) followed by 0.8005 (Feb 18, 2004 high) Initial support at 646.20 (Mar 16 low) followed by 637.00 (Mar 14 low). Initial resistance is now at 656.40 (Mar 19 high) followed by 658.10 (Mar 9 high). Forex trading involves substantial risk of loss, and may not be suitable for everyone. 
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