Weekly Summary - 8th March 2010

Global Stocks Resume Uptrend

Last week’s currency trading review

The Dollar remained on the back-foot as global stocks rallied and US data improved investor sentiment. The big news was the better than expected February Non Farm Payrolls at -36k vs. -56k forecast released on Friday which saw Global stocks rally to fresh 2010 highs. February Services PMI came in at 56.5 vs. 57.7 forecast whilst Manufacturing PMI was solid at 53 vs. 51 forecast.

The Euro was beholden to the news flow relating to the Greece debt situation. Concerns early in the week pushed the pair to fresh lows under 1.3450 before good Greece bond auctions and political support from its European neighbors allowed the Euro to bounce. The ECB rate meeting saw the rate left at 1.0% as expected. January German Factory Orders surged 4.3% vs. 1.6% m/m forecast. The EUR/USD fell -0.03% closing at 1.3624, after opening the week at 1.3628.

The Japanese Yen the volatility continued with fresh lows seen on GBP/JPY and USD/JPY before direction dramatically reversed later in the week after the US jobs numbers. The Commodity Currencies did the best as gold and oil surged with CAD/JPY and AUD/JPY both gaining +3%. The GBP had a dramatic week with the first day of trading seeing a 400 pip drop on concerns that UK elections would see a hung parliament for the first time in decades. The rest of week saw the pair stage a solid rebound and closed just under where it opened but sentiment is fragile and the downside is still in focus. The BOE held at 0.5% and the Asset purchase Program was maintained at 200bn. On a positive note the February Services PMI surged to 58.4 vs. 54.5 previously.

GBP/USD fell -0.66% closing at 1.5135 after opening at 1.5235. The AUD was supported on multiple fronts but the gains were quite contained given the news. The RBA raised rates to 4.00% and Q4 GDP was +0.9% Q/Q. Solid commodity rallies and strong risk appetite also underpinned the move higher. AUD/NZD broke above 1.3000 for the first time in over a decade. The AUD/USD gained +1.33% closing at 0.9076 after opening at 0.8955.

The forex trading week preview

In the States; On Thursday, January Trade Balance forecast at -41bn vs. -40.2bn previously. Also released, Weekly Jobless Claims forecast at 450k vs. 469l previously. On Friday, February Retail Sales are forecast at -0.2% vs. 0.5% previously. Also released, UoM Consumer Confidence forecast at 74 vs. 73.6 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, German Industrial Production is forecast at 1.0% vs. 4.7% previously. On Wednesday, German CPI is forecast at 0.4% y/y. Also ECB President Trichet speaks. On Thursday, SNB 3-month Libor is forecast at to remain unchanged 0.25%. On Friday, January EU industrial Production is forecast at 0.7% vs. -1.7% m/m. In the UK; On Tuesday, January Trade Balance forecast at -3.05bn vs. -3.26bn previously. On Wednesday, January Manufacturing Production is forecast at 0.2% vs. 0.9% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Thursday, Q4 Final GDP is forecast at 1.0% vs. 1.1% initially. In Australia; On Wednesday, RBNZ is forecast to remain at 2.5%. On Thursday, February Employment change is forecast at 15k vs. 52k previously. The February Unemployment rate is forecast to remain at 5.3%. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.3630
Initial support at 1.3552 (Mar 4 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high)

Yen – 90.40
Initial support is located at 87.74 (Dec 10 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound – 1.5130
Initial support at 1.4959 (Mar 3 low) followed by 1.4855 (Mar 2 low). Initial resistance is now at 1.5136 (Mar 4 high) followed by 1.5209 (Mar 1 low).

Australian Dollar – 0.9070
Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9086 (Mar 3 high) followed by 0.9147 (Jan 21 high).

Gold – 1135
Initial support at 1125 (Mar 4 low) followed by 1111 (Mar 1 low). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil – 81.80
Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).

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