Forex Market Update 10/18
Germany Tempers Grand Bailout Talk
U.S. Dollar Trading (USD) markets came under heavy selling pressure across the board overnight as German Official Seibert cautioned the market about expecting a final solution from this weekend’s EC Summit. Adding to this was soft earnings from US companies and we saw US stocks down over -2%. The USD did well gaining against all with the exception of the other safe haven, the Japanese Yen. In US stocks, DJIA -247 points closing at 11397, S&P -23 points closing at 1200 and NASDAQ -52 points closing at 2614. Looking ahead, September PPI forecast at 0.2% vs. 0% m/m previously. Also Fed Chief Bernanke speaks.
The Euro (EUR) was hit hard by the German comments with the overbought EUR/USD reversing from 1.3900 to 1.3750. The market was looking for a reason to correct lower after 9 days of steady gains. The market is still expected quite aggressive news from the Summit on the weekend and the price action today is a warning of what will happen if they fail to deliver. Looking ahead, October German ZEW forecast at -45 vs. -43.3 previously.
The Japanese Yen (JPY) the move above Y77 on USD/JPY was once again reversed after heavy cross selling led by the EUR/JPY. The failure of the USD/JPY to continue higher above Y77 is frustrating longs who have been patiently waiting for intervention back to Y80. Risk appetite is going to remain the key catalyst short term direction but only a change in US monetary policy seen pushing the USD/JPY out of its range.
The Sterling (GBP) hit day highs in Europe at 1.5850 before reversing with the rest of the market on the German comments. The EUR/GBP fell from 0.8770 to 0.8725 as the Euro selling outpaced the Pound. GBP/USD support is seen under 1.5700 with the recent rally being under threat if this support is broken. Looking ahead, September CPI forecast at 0.4% vs. 0.6% previously.
The Australian Dollar (AUD) The Aussie led the market on the way up and when the profit taking started the AUD/USD collapsed from 1.0370 to 1.0180 in sharp selling. The outlook is mixed with speed of the run up keeping buyers cautious to buy aggressively on dips. Looking ahead, October RBA Minutes. Chinese Q3 GDP forecast 9.2% vs. 9.5% previously.
Oil & Gold (XAU) Gold tested new month highs before reversing in the US session to $1670 as daily volatility continued. Oil tested $88 in Europe but failed to hold onto the gains before reversing back to $86 a barrel.
Pairs to watch
AUD/USD China Data to support or hurt?
USD/JPY Range Trading Y76.50 to Y77.50 to continue?
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3566 | 1.3685 | 1.3750 | 1.3937 | 1.4013 |
| USD/JPY | 75.95 | 76.31 | 76.80 | 77.86 | 78.60 |
| GBP/USD | 1.5667 | 1.5722 | 1.5750 | 1.5869 | 1.5991 |
| AUD/USD | 0.9866 | 1.0102 | 1.0180 | 1.0372 | 1.0440 |
| XAU/USD | 1627.00 | 1654 | 1675 | 1704 | 1726 |
| OIL/USD | 83.00
|
85.00 | 86.25 | 88.00 | 90.00 |
Euro – 1.3750
Initial support at 1.3685 (Oct 13 low) followed by 1.3566 (Oct 11 low). Initial resistance is now located at 1.3937 (Sept 15 high) followed by 1.4013 (61.8% retrace of 1.4549-1.3146)
Yen – 76.80
Initial support is located at 76.31 (Oct 12 low) followed by 75.95 (Aug 19 low). Initial resistance is now at 77.86 (Sep 9 high) followed by 78.60 (61.8% retrace of 80.24-75.95).
Pound – 1.5750
Initial support at 1.5722 (Oct 14 low) followed by 1.5667 (Oct 13 low). Initial resistance is now at 1.5869 (Sept 15 high) followed by 1.5991 (Sep 9 low).
Australian Dollar – 1.0180
Initial support at 1.0102 (Oct 13 low) followed by the 0.9866 (Oct 12 low). Initial resistance is now at 1.0372 (Oct 17 high) followed by 1.0440 (76.4% retrace of 1.0765-0.9388).
Gold – 1675
Initial support at 1654 (Oct 11 low) followed by 1627 (Oct 7 low). Initial resistance is now at 1704 (Aug 25 high) followed by 1726 (50% retrace of 1921.15-1532.72).
Oil – 86.25
Initial support at 85.00 (Intraday Support) followed by 83.00 (Intraday Support). Initial resistance is now at 88.00 (Intraday resistance) followed by 90.00 (Intraday Resistance).
Forex Market Update 10/17
U.S. Dollar Trading (USD) the markets consolidated the recent rally overnight pulling back in Europe on profit taking but ending close to the highs in the US as sentiment remained quite positive. Focus as always remains on the Eurozone but there was also some economic data releases from the US. Weekly Jobless Claims remained steady at the 404k vs. 405k. In US stocks, DJIA -40 points closing at 11478, S&P -3 points closing at 1203 and NASDAQ +15 points closing at 2620. Looking ahead, September Retail Sales forecast at 0.5% vs. 0.0% m/m.
The Euro (EUR) fell back to 1.3700 in quiet trade before reversing in the US session back to 1.3800 ahead of the G20 meeting starting today. German CPI forecast at 0.1% vs. 0.1% previously. Banks in Europe continued to come under pressure overnight after downgrades to large banks including UBS. BREAKING NEWS UPDATE Spain downgraded by S&P to AA-.
The Japanese Yen (JPY) the excitement from talk of a floor in the major on Wednesday was unwound easing the USD/JPY back below the key Y77. The market fell back to Y76.60 but found support again and will now be looking ahead to the G20 meeting this weekend where the Japanese FM will be asking for talks on the strength of the Yen.
The Sterling (GBP) the GBP/USD was down then up with the general market moves. August Trade Balance improved to 7.7bn vs. 8.2bn previously. The EUR/GBP has found resistance towards 0.8800 and is easing back below .08750 in gentle selling. The recent cable rally is reaching critical levels near 1.5800 -1.6000 which has proven pivotal in recent months.
The Australian Dollar (AUD) tracked the European stocks lower before rallying back to 1.0200 in the US session as the buyers came in on the dip. Today’s Chinese CPI number will be critical in whether the AUD/USD can extend recent gains with the market now 800 pips off lows seen two weeks ago. AUD/JPY is holding above Y78 and is well supported.
Oil & Gold (XAU) was not interested in extending gains as most majors fell back due to profit taking in Europe. Gold found support eventually at $1650. Oil was under gentle selling pressure most of the day falling back to $83.50 before finding support.
Pairs to watch
AUD/USD China CPI to move the Aussie?
EUR/USD Downgrade of Spain to hurt rally?
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3346 | 1.3566 | 1.3755 | 1.3937 | 1.4013 |
| USD/JPY | 75.95 | 76.11 | 76.95 | 77.86 | 78.60 |
| GBP/USD | 1.5423 | 1.5525 | 1.5750 | 1.5869 | 1.5991 |
| AUD/USD | 0.9728 | 0.9866 | 1.0165 | 1.0239 | 1.0313 |
| XAU/USD | 1627.00 | 1654 | 1666 | 1704 | 1726 |
| OIL/USD | 82.00
|
83.50 | 84.00 | 85.00 | 86.50 |
Euro – 1.3755
Initial support at 1.3566 (Oct 11 low) followed by 1.3346 (Oct 10 low). Initial resistance is now located at 1.3937 (Sept 15 high) followed by 1.4013 (61.8% retrace of 1.4549-1.3146)
Yen – 76.95
Initial support is located at 76.11 (Sep 22 low) followed by 75.95 (Aug 19 low). Initial resistance is now at 77.86 (Sep 9 high) followed by 78.60 (61.8% retrace of 80.24-75.95).
Pound – 1.5750
Initial support at 1.5525 (Oct 10 low) followed by 1.5423 (Oct 7 low). Initial resistance is now at 1.5869 (Sept 15 high) followed by 1.5991 (Sep 9 low).
Australian Dollar – 1.0165
Initial support at 0.9866 (Oct 12 low) followed by the 0.9728 (Oct 7 low). Initial resistance is now at 1.0239 (61.8% retrace of 1.0765-0.9388) followed by 1.0313 (Sept 20 high).
Gold – 1666
Initial support at 1654 (Oct 11 low) followed by 1627 (Oct 7 low). Initial resistance is now at 1704 (Aug 25 high) followed by 1726 (50% retrace of 1921.15-1532.72).
Oil – 84.00
Initial support at 83.50 (Intraday Support) followed by 82.00 (Intraday Support). Initial resistance is now at 85.00 (Intraday resistance) followed by 86.50 (Intraday Resistance).
