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RBA keep rates unchanged does nothing to hinder Aussie dollar strength. Weak US ISM services data add further cause to rate cut. BoE interest rate announcement and Non- Farm payrolls released on Good Friday. CURRENCY TRADING SUMMARY – 05 APRIL 07 (23:30GMT)
- U.S. Dollar Trading (USD) slid on Wednesday against most other majors. On the data front, fundamental trading was largely attributed to weaker than expected non-Manufacturing ISM being released at 52.4 (the lowest in four years) with most economists expecting a figure of 55. With such a poor figure, concerns were raised over a further slowing of economic growth, increasing prospects of lower interest rates. In US share markets, the NASDAQ rose by 8.36 points (0.34%) whilst the Dow Jones also rose by 19.75 points (0.16%). Crude oil, eased yesterday with conflict in the Middle-East subsiding on reports that Iran was set to release the 15 British soldiers. Crude fell by US$0.16 a barrel to US$64.22. Looking ahead, Thursday finds the release of the Initial Jobless claims with markets awaiting a slightly higher figure of 315k (Previous: 308k). As plenty of markets will be subject to a holiday on Friday (Good Friday), Non-Farm Payrolls will be sure to cause plenty if interest as focus lies on a slowing labour market. Economists expect a strong figure of 130k with the previous released at 97k. Unemployment Rate on Friday will add further focus to the labour market as 4.6% slightly higher than the previous figure 4.5%.
- The Euro (EUR) gained against the greenback, as poor data out of the US added to further dollar weakness. Overall, the Euro traded with a range of a low 1.3318 and a high of 1.3382 before closing the day at 1.3368 in the New York session.
- The Japanese Yen (JPY) rallied against the USD on the back of poor ISM services report, after reaching five-week lows of 119.09. Overall the JPY traded with a range of a low 118.60 and a high of 119.09 before closing the day at 118.66.
- The Sterling (GBP) remained relatively steady as the BoE began its two day meeting with an announcement expected later today. Overall, the Sterling traded with a low of 1.9719 and a high of 1.9774 before closing the day at 1.9753 in the New York session. With a 40% chance priced in for a rate hike by the BoE plenty of market interest will surround the announcement at 11:00GMT.
- The Australian Dollar (AUD) was subject to a sharp plunge on the back of RBA cash rate remaining unchanged at 6.25%. Upon the dust settling focus immediately shifted on May meeting with markets even more confident, pricing in a 80% chance that the 0.25% rate increase will materialize. Overall the AUD traded with a range of a low 0.8066 and a high of 0.8194 before closing the day at 0.8184 in the New York session.
- The South African Rand (ZAR) firmed slightly against the dollar on Wednesday on improved appetite for risk, yet gains were capped. The rand has benefited from renewed investor interest in riskier assets over the past week that has boosted most high-yielding currencies. Overall, the ZAR traded with a low of 7.1460 and a high of 7.1962.
- The Turkish Lira (TRY) firmed as much as 1 percent against the Dollar on Wednesday, reaching near 1 year highs following softer than expected inflation data. The lira strengthened to 1.3680 against the dollar, a peak not seen since May 2006, before easing back to close at 1.3715, still stronger than Tuesday's close of 1.3820.
- Gold (XAU) rose on Wednesday in response to weaker USD. Gold rose by US$1.20 an ounce to US$678.60
TECHNICAL COMMENTARY | Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 | | EUR/USD | 1.3288 | 1.3318 | 1.3375 | 1.3402 | 1.3412 | | USD/JPY | 117.20 | 117.72 | 118.65 | 119.10 | 119.51 | | GBP/USD | 1.9544 | 1.9662 | 1.9765 | 1.9833 | 1.9917 | | AUD/USD | 0.8036 | 0.8064 | 0.8195 | 0.8212 | 0.8300 | | XAU/USD | 646.20 | 652.40 | 672.80 | 677.75 | 682.82 | | | | | | |
Initial support at 1.3318 (Apr 4 low) followed by 1.3288 (Mar 30 low) 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 117.72 (Apr 3 low) followed by 117.20 (Mar 30 low). Initial resistance is now at 119.10 (Apr 4 high) followed by 119.51 (61.8% ret of 122.20 to 115.50 decline) Initial support at 1.9662 (Apr 2 low) followed by 1.9544 (Mar 30 low). Initial resistance is now at 1.9823 (Apr 3 high) followed by 1.9917 (Jan 23 trend high) - Australian Dollar – 0.8195
Initial support a 0.8064 (April 4 low) followed by 0.8036 (Mar 28 low). Initial resistance is now at 0.8212 (Dec 2, 1996 reaction high) followed by 0.8300 (Psychological round number) Initial support at 652.40 (Mar 19 low) followed by 646.20 (Mar 16 low). Initial resistance is now at 677.75 (Mar 28 high) followed by 682.82 (Trend-Line resistance) 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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