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Talk of US and China Protectionism causes dollar to slide further despite positive Core PCE and Chicago PMI. First release of Japanese Tankan Survey for 2007. CURRENCY TRADING SUMMARY – 02 APRIL 07 (23:30GMT)
- U.S. Dollar Trading (USD) ended the week sliding against all other majors following comments made by the US government, which may impose duties to subsidized goods from China, causing concern over a trade imbalance. Rumors also circulated that Washington had advised American citizens situated in Bahrain that it would be wise to leave, yet its importance faded as the Government denied any such reports. The Dollar did find support on the back of a better than expected Core PCE release (0.3%) and a robust Midwest manufacturing index (61.7). In other news, the Dollar did well to shrug off US Consumer Sentiment data (88.4) which fell to its lowest levels in six months amid worries about inflation and slowing gains in income. In US share markets, the NASDAQ gained 3.76 points (+0.16%) and the Dow Jones also gained 5.60 points (+0.05%). Crude oil fell by US$0.30 a barrel to US$65.73. Looking ahead, Manufacturing ISM is scheduled for release today with markets expecting an unchanged figure of 51.0.
- The Euro (EUR) gained 0.3% against the Dollar following comments made by the US government which could hinder their trade agreement with non-market economy, China. Key data was released on Friday in the form of CPI coming in as expected at 1.9, Unemployment rate better than expected at 7.0%, and Consumer Confidence at -4 on consensus. Overall the Euro traded with a range of a low 1.3288 and a high of 1.3401 before closing at 1.3354 in the New York session. Looking ahead Manufacturing PMI is made public with markets expecting a figure of 55.7 slightly better than the previous 55.6.
- The Japanese Yen (JPY) strengthened against the USD on Friday by 0.4%, raising fears of protectionism between the two economic superpowers (US and China). Overall, the JPY traded with a range of a low 117.21 and a high of 118.38 before closing at 117.78 in the New York session. Looking ahead, the quarterly Tankan survey is released for the first time on 2007 with markets expecting a slightly weaker figure of 24 than the previous 25.
- The Sterling (GBP) strengthened against the Dollar following the comments made by US government officials. Although the sterling initially took a dive during the early part of Friday trading on the back of strong US data, this was before the GBP rallied to end stronger. Consumer confidence in Britain held steady for the month of March. Overall, the GBP traded with a range of low 1.9548 and a high of 1.9717 before closing the day at 1.9672 in the New York session of trading. Looking ahead, the Manufacturing PMI is scheduled for release out of the UK on Monday with markets expecting a figure of 55.1 (Previous: 55.4)
- The Australian Dollar (AUD) remained steady trading on technical with little economic data out. The AUD found strength on comments made by US government officials that protectionism may arise between US and China. Overall the AUD traded with a low 0.8059 and a high of 0.8126 before closing the day at 0.8093 in the New York session. With minimal data out of Australia for the past fortnight, a heavy week of data begins with the release of Retail Sales. Markets are expecting a figure of 0.4% down on the previous month 0.9%.
- The Czech Crown (CZK) remained in its week-old-range of approximately 28 per Euro on Friday. However, a number of foreign market watchers have taken a bearish view for the near-term, due to the currency’s deep yield disadvantage. Overall the EURCZK traded with a range of a low 27.978 and a high of 28.045.
- Gold (XAU) rose despite a drop in oil which prompted investors to take profits. Gold rose by US$1.40 an ounce to US$669.00
.TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3187 | 1.3252 | 1.3375 | 1.3402 | 1.3412 | | USD/JPY | 116.25 | 116.37 | 117.45 | 118.44 | 118.50 | | GBP/USD | 1.9431 | 1.9544 | 1.9690 | 1.9728 | 1.9749 | | AUD/USD | 0.8000 | 0.8027 | 0.8095 | 0.8128 | 0.8212 | | XAU/USD | 646.20 | 652.40 | 663.60 | 669.69 | 677.75 | | | | | | |
Initial support at 1.3252 (March 26 low) followed by 1.3187 (Former resistance of Mar 7 low). Initial resistance is now located at 1.3402 (March 30 high) followed by 1.3412 (Mar 22 high) Initial support is located at 116.37 (Mar 21 low) followed by 116.25 (Mar 19 low). Initial resistance is now at 118.44 (Mar 26 high) followed by 118.50 (Mar 12 high) Initial support at 1.9544 (Mar 21 reaction low) followed by 1.9431 (Mar 20 low). Initial resistance is now at 1.9728 (Mar 22 high) followed by 1.9749 (Feb 2 reaction high) - Australian Dollar – 0.8095
Initial support a 0.8027 (March 26 low) followed by 0.8000 (Mar 19 low). Initial resistance is now at 0.8128 (Mar 27 trend high) followed by 0.8212 (Dec 2, 1996 reaction high) Initial support at 652.40 (Mar 19 low) followed by 646.20 (Mar 16 low). Initial resistance is now at 669.69 (Mar 28 high) followed by 677.75 (Feb 28 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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