Stocks Under pressure on Global Recession fears

23/02/09                                                                       

last week’s currency trading review

The Dollar was mixed against the majors with USD strength on the back of risk aversion being countered by concerns of quantitative easing and possible nationalization of banks. Housing starts plummeted to 25 year lows at 0.47m vs. 0.53m forecast. The FOMC minutes contained the usual gloom reports and CPI dropped to 0%y/y during January. Weekly Jobless claims remained high at 627K. The Euro came under pressure due to mounting concerns about eastern European Banks. German ZEW Economic sentiment improved to -5.8 vs. -26.5 forecast. January PMI’s continued to fall dropping to 33.6 vs. 34 in Manufacturing and 38.9 vs. 42/6 previously for services. The EUR/USD fell -0.27% closing at 1.2862, after opening the week at 1.2942. The Japanese Yen showed signs of losing its safe haven status as extreme stock weakness did little to stop the weakness the pound experienced during the week. The main cause the shocking -12% annualized GDP recorded for the Q4. The BoJ also met and downgraded the economic outlook for the 6^th month in a row. The USD/JPY gained 1.49% closing at 93.31 after opening at 91.92. The GBP gained slightly against the USD but more significantly against the JPY and EUR as the market continued to support the pound. January CPI increased to 3.0% y/y vs. 2.6% forecast. January Retail Sales continued to defy gravity gaining 0.7% vs. 0.0% forecast. The GBP/USD gained 0.49% closing at 1.4422 after opening at 1.4352. The AUD held up well considering the large falls in stocks. The lack of AUD/JPY selling helped the pair to remain very well supported with dips being bought below 0.6400. Q4 Retail Sales came in at 0.8% vs. 1.0% forecast. The AUD/USD closed down -1.78% at 0.6450 after opening at 0.6565.

The forex trading week preview

In the States; Tuesday kicks off the data releases with Richmond Fed Survey forecast at -46 vs. -49 previously. On Wednesday we have January Existing Home sales forecast to raise to 4.8m vs. 4.74m previously. On Thursday, January Durable Goods Orders are forecast to fall -2.5% vs. -2.6% previously. On Friday Q4 GDP is forecast to be downgraded to -5.4% vs. -3.8% initially recorded. Also released Chicago PMI forecast to remain unchanged 33.3. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; German IFO Business climate is released on Tuesday and is forecast to remain at 83. IFO Current Conditions is forecast to fall to 84.8 vs. 86.8 previously. On  Wednesday we have the Q4 German GDP forecast to at -2.1% vs. -0.5% previously. On Thursday we have German CPI forecast at 0.3% vs. -0.5%. On Friday, Eurozone CPI y/y forecast at 1.1%.   In the UK; On Wednesday Revised Q4 GDP forecast at -1.6% vs. -1.5% initially. On Thursday Nationwide HPI forecast -1.2% vs. -1.3%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Wednesday, January Trade Balance forecast at -0.49T vs. -0.21T previously. On Friday we have Nationwide CPI forecast at -0.1% vs. 0.0%. January Retail Sales forecast are -3.1% y/y vs. -2.7% y/y previously. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; light data week with Q4 Capex forecast at -3.0% vs. 0.6% previously. We will provide our previews and reviews of these data releases in the daily summary.

·         Euro – 1.2815

Initial support at 1.2513 (Feb 18 low) followed by 1.2423 (Nov 21 low). Initial resistance is now located at 1.2884 (Feb 20 low) at followed by 1.2891 (Feb 16 high)

·         Yen – 93.55

Initial support is located at 92.52 (Feb 20 low) followed by 92.09 (Feb 18 low). Initial resistance is now at 94.47 (Feb 18 high) followed by 94.64 (Jan 6 high).

·         Pound – 1.4395

Initial support at 1.4052 (Feb 2 low) followed by 1.3929 (Jan 27 low). Initial resistance is now at 1.4484 (Feb 20 high) followed by 1.4605 (Feb 13 High).

·         Australian Dollar – 0.6450

Initial support at 0.6333 (Feb 18 low) followed by the 0.6249 (Feb 2 low). Initial resistance is now at 0.6532 (Feb 17 high) followed by 0.6577 (Feb 16 high).

·         Gold – 993

Initial support at 961.50 (Feb 13 low) followed by 940 (Feb 17 low). Initial resistance is now at 1032 (Mar 17 high) followed by 1068 (Fibonacci Projection).

Stocks Under pressure on Global Recession fears

16/02/09                                                                       

last week’s currency trading review

The Dollar managed small gains during the week as the risk aversion theme remained dominant. Treasury Secretary Geithner’s failure to convince the markets of the revised banking bailout plan and the lack of specific details sent the market into freefall. In data releases, Retail Sales beat expectations in January climbing 1.0%. Of Concern though was the drop in Consumer sentiment falling to 56.2 in Feb vs. 61.2 previously. The Euro kept to a tight range with 1.300 proving the key level. Relentless weak economic data and fears of contagion from Eastern European Debt concerns kept the single currency under pressure. Eurozone December Industrial Output fell 2.6% whilst Q4 GDP fell -1.5% vs. -0.2% previously. The EUR/USD fell -0.62% closing at 1.2862, after opening the week at 1.2942. The Japanese Yen gained heavily during the week as safe haven flows kept carry trades such as AUD/JPY and NZD/JPY under pressure. GBP/JPY also came under pressure with Pound reversing recent gains. USD/JPY has remained very well supported though as the pair holds above key technical levels. The USD/JPY fell 0.02% closing at 91.87 after opening at 91.89. The GBP pulled back to significantly as the rebound off multi-year lows came to an end. Hurting Sentiment was the rise in risk aversion and comments from BoE Governor King stating that the UK was in deep recession expecting a 4% fall in GDP, adding further monetary easing may be required.  The GBP/USD fell -3.03% closing at 1.4785 after opening at 1.4350. The AUD tracked stocks falling heavily off the .6800 level as US equities tumbled. January Unemployment data surprised to the upside though with a gain of 1.2K jobs. The rate climbed to 4.8% vs. 4.5% previously as more people entered the job market. The AUD/USD closed down -2.88% at 0.6565 after opening at 0.6754.

The forex trading week preview

In the States; On Monday we have the President Day Holiday. On Tuesday we have TIC Flows previously at $56.8bn. Also released, Empire Manufacturing forecast at -23.75 vs. -22.3 previously. On Wednesday January Housing Starts forecast to drop to 530K vs. 550K previously. The market is keenly awaiting FOMC minutes from the January meeting for indication on future policies. On Thursday we have January PPI forecast at 0.20% vs. -1.90% previously. Finally on Friday January CPI forecast at -0.1% vs. +0.1% previously.   We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday we have the German Zew Economic Survey forecast at -25 vs. -31 previously. On Friday we have the PMI Manufacturing in Feb forecast at 35 vs. 34.4 previously whilst the Services expected at 42.6 vs. 42.2 previously.  In the UK; On Tuesday CPI in January seen slowing to 2.7% Y/Y. On Wednesday the BoE minutes are released and are seen at 9-0 for the rate cut in January. On Friday, January Retail Sales are forecast to rise +0.1% vs. 1.6% previously.   We will provide our previews and reviews of these data releases in the daily summary.

In Japan; Monday we have Preliminary Q4 GDP forecast to drop -3.1% vs.-0.5% previously. Also released, Revised Dec Industrial Production forecast at -9.5% vs. -9.6% initially. On Friday, BOJ meet to discuss rate and although are widely expected to hold at 0.1% the market will be awaiting the press conference for further commentary.  We will provide our previews and reviews of these data releases in the daily summary.

In Australia; light data week with Tuesday RBA minutes from the February meeting the highlight. On Wednesday, assistant RBA Governor Edey speaks. We will provide our previews and reviews of these data releases in the daily summary.

·         Euro – 1.2810

Initial support at 1.2722 (Feb 12 low) followed by 1.2707 (Feb 2 low). Initial resistance is now located at 1.2821 (Feb 13 low) at followed by 1.2998 (Feb 11 high)

·         Yen – 91.40

Initial support is located at 90.54 (Feb 13 low) followed by 89.71 (Feb 11 low). Initial resistance is now at 92.04 (Feb 13 high) followed by 92.42 (Feb 9 high).

·         Pound – 1.4240

Initial support at 1.4137 (Feb 12 low) followed by 1.3929 (Jan 27 low). Initial resistance is now at 1.4415 (Feb 12 high) followed by 1.4565 (Feb 11 high).

·         Australian Dollar – 0.6535

Initial support at 0.6523 (Feb 13 low) followed by the 0.6432 (Feb 12 low). Initial resistance is now at 0.6643 (Feb 13 high) followed by 0.6798 (Feb 10 high).

·         Gold – 942

Initial support at 911 (Feb 11 low) followed by 889 (Feb 3 low). Initial resistance is now at 950 (Key level) followed by 952 (Feb 12 high).

US Unemployment hits 16 year High

09/02/09                                                                       

last week’s currency trading review

The Dollar came under pressure this week as investor sentiment improved on speculation that the Second Stimulus package would be passed quickly through the Senate. Also helping stocks off lows was rumors that the Financial Rescue Plan being developed by new Treasury Secretary Geithner would create a bad bank to hold toxic assets. These developments overshadowed a record drop in employment of -600k in January brining the Unemployment rate to 7.6%. The Euro took advantage of the weakness in the USD to claw back some of its recent losses but underperformed most currencies with concerns about the deteriorating Eurozone Economy still remaining. The ECB held rates at 2.0% widely as expected but President Trichet noted he was still willing to consider rate cuts if the situation warranted.  The EUR/USD gained 0.97% closing at 1.2937, after opening the week at 1.2811. The Japanese Yen lost ground against all currencies as the USD/JPY cleared the major technical level of 90 Yen and high yielding pairs surged higher. AUD/JPY gained 7.64% while the NZD/JPY gained 6.39%. The USD/JPY gained 2.05% closing at 91.85 after opening at 89.97. The GBP stretched gains for a third week after the BOE cut rates by 0.5% to 1.0% and heavy cross buying supported. January Manufacturing PMI increased to 35.8 vs. 34.4 and Services PMI also rose to 42.5 vs. 40.2 previously.  The GBP/USD gained 1.65% closing at 1.4781 after opening at 1.4537. The AUD experienced major a boost against all currencies after the Reserve Bank of Australia Cut rates by 1.0% and stocks around the world bounced off lows. Also helping the Aussie was the record bounce in retail sales for December to 3.8% vs. 0.4% previously. The AUD/USD closed up 5.73% at 0.6752 after opening at 0.6365.

The forex trading week preview

In the States; On Tuesday we have the keenly awaited Treasury Secretary Geithner speech outlining the new Banking Bailout plan. Also on Tuesday Fed Chief Bernanke Tesitifies on the TARP before the senate. On Wednesday we have December Trade Balance seen at -36.7bn vs. -40.4bn previously. On Thursday, January Retail sales are expected -0.3% vs. -2.7% previously. Finally on Friday we have the University of Michigan Consumer Sentiment forecast to rise slightly to 61.5 vs. 61.2 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday we have the January German CPI is forecast to be confirmed at 0.9%. On Thursday, Eurozone Industrial Production expected to weaken -2.2%. On Friday Q4 German GDP is forecast at -1.8% vs. -0.5%. After this the Eurozone GDP is forecast at -1.2% vs -0.2% previously.  In the UK; On Tuesday the RICS House Price Balance is forecast to fall to -71% vs. -73%. On Wednesday we have ILO Unemployment Rate forecast at 6.3% vs. 6.1% previously. Finally on Wednesday we have the BOE Quarterly Inflation Report.   We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Monday we have Machinery Orders forecast to fall -8.6% in December. Thursday sees the CGPI released forecast at -0.6% in January vs. -1.2% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; light data week with RBA Governor Stevens speaking on Tuesday and Unemployment data on Thursday the Highlight. January Employment Change is seen -18K vs. -1.2K previously. The Unemployment rate is forecast to rise to 4.7% vs. 4.5% previously. We will provide our previews and reviews of these data releases in the daily summary.

·         Euro – 1.2950

Initial support at 1.2748 (Feb 6 low) followed by 1.2707 (Feb 2 low). Initial resistance is now located at 1.3070 (Feb 4 high) at followed by 1.3179 (Jan 29 high)

·         Yen – 91.80

Initial support is located at 90.74 (Feb 6 low) followed by 89.21 (Feb 5 low). Initial resistance is now at 92.25 (Feb 5 high) followed by 92.87 (0.764 of 94.64-87.13).

·         Pound – 1.4780

Initial support at 1.4590 (Feb 6 low) followed by 1.4324 (Feb 4 low). Initial resistance is now at 1.4844 (Feb 6 high) followed by 1.4908 (Jan 19 high).

·         Australian Dollar – 0.6740

Initial support at 0.6476 (Feb 6 low) followed by the 0.6403 (Feb 5 low). Initial resistance is now at 0.6803 (Feb 6 high) followed by 0.6844 (Jan 19 high).

·         Gold – 911

Initial support at 889 (Feb 3 low) followed by 874 (Jan 29 low). Initial resistance is now at 930 (Oct 10 reaction high) followed by 949 (July 23 low).