CURRENCY TRADING SUMMARY – 23rd June (00:30 GMT)

U.S. Dollar Trading (USD) sentiment turned negative as stocks in the US finished very weak and US existing Home Sales dropped to 5.66mn vs. 6.12mn forecast. The Euro led the risk currencies lower as concerns linger about European Debt remain and European banks were downgraded. In US stocks, DJIA -148 points closing at 10442, S&P -17 points closing at 1095 and NASDAQ -27 points closing at 2261. Looking ahead, FOMC Rate Decision is forecast unchanged at 0.25%. May New Home Sales are forecast at 0.41mn vs. 0.504mn.

The Euro (EUR) some solid German IFO numbers were over looked and market traded in a very cautious tone testing support at 1.2250. June German IFO rose to 101.8 vs. 101.5 previously. EUR/GBP fell below 0.8300 after the UK budget inspired fresh Pound Strength. EUR/CHF finally found support at 1.3580 but the trend is overwhelmingly negative still. EUR/USD traded with a low of 1.2251 and a high of 1.2356 before closing at 1.2275. Looking ahead, June Services PMI forecast at 55.9 vs. 56.2 previously and Manufacturing PMI forecast at 55.3 vs. 55.8 previously.

The Japanese Yen (JPY) strengthened across the board with risk aversion pushing the crosses and the major lower. USD/JPY found support at Y90.30 but is still eying a test of Y90. EUR/JPY fell back below Y111 and is close to the key Y110 level. Overall the USDJPY traded with a low of 90.31 and a high of 91.13 before closing the day around 90.50 in the New York session.

The Sterling (GBP) tested day lows as the UK Budget was released and the market was very impressed with the Austerity measures with the rating agency Fitch ‘praising the intent’. Cable soared over 1.4850 before the easing as risk aversion set in during the US session. Overall the GBP/USD traded with a low of 1.4685 and a high of 1.4862 before closing the day at 1.4810 in the New York session. Looking ahead, June CBI Distributive Trades previously at -18.

The Australian Dollar (AUD) the commodity currency was sold tracking stocks down to 0.8700 on a combination of heavy profit taking and AUD/JPY sales. Support for the Aussie is found at 0.8645 near the 10 DMA. With little economic data this week, direction will be set from movement in global stocks. Overall the AUD/USD traded with a low of 0.8701 and a high of 0.8835 before closing the US session at 0.8720.

Oil & Gold (XAU) Gold gained after safe haven demand pushed the alternative investment higher. Overall trading with a low of USD$1231 and high of USD$1243 before ending the New York session at USD$1239 an ounce. Oil fell with drop in investor confidence. WTI Oil Closed -$0.61 at $77.21 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2265

Initial support at 1.2242 (June 17 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2672 (May 21 high)

Yen – 90.55

Initial support is located at 89.81 (May 27 low) followed by 88.97 (May 20 low). Initial resistance is now at 91.48 (June 21 high) followed by 92.12 (June 14 high).

Pound – 1.4825

Initial support at 1.4646 (Jun 17 low) followed by 1.4505 (Jun 11 low). Initial resistance is now at 1.4918 (May 13 high) followed by 1.5054 (May 10 high).

Australian Dollar – 0.8720

Initial support at 0.8582 (June 16 low) followed by the 0.8506 (June 15 low). Initial resistance is now at 0. 8865 (May 17 high) followed by 0.9027 (May 17 high).

Gold – 1239

Initial support at 1227 (June 16 low) followed by 1210 (June 7 low). Initial resistance is now at 1280 (1241.97 plus 1.618 of 1227.09- 1251.18) followed by 1300 (Round Number).

Oil – 77.50

Initial support at 77.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).

CURRENCY TRADING SUMMARY – 24th June (00:30 GMT)

U.S. Dollar Trading (USD) in an eventful day of trading the USD finished on a weak footing after finding strength earlier in the day on safe haven demand. May Home Sales surprised to the downside at 300k vs. 410k forecast. The FOMC held rates at 0.25% and slightly downgraded the economic outlook citing the weak housing data and European crisis. In US stocks, DJIA +4 points closing at 10446, S&P -3 points closing at 1092 and NASDAQ -7 points closing at 2254. Looking ahead, Weekly Jobless Claims are forecast at 460k vs. 472k previously.

The Euro (EUR) traded at day lows after the US housing data disappointed and EUR/JPY fell briefly below Y110. June Services PMI fell to 55.4 vs. 56.2 previously whilst Manufacturing PMI fell to 55.6 vs. 55.8 previously. Dollar weakness after the FOMC decision to leave rates low for an extended period of time helped propel the Euro to day highs above 1.2300. EUR/USD traded with a low of 1.2208 and a high of 1.2345 before closing at 1.2320. Looking ahead, April Industrial Orders are forecast at 1.6% vs. 5.2% previously.

The Japanese Yen (JPY) found strength against the major with Y90 broken on the downside but there little follow through as crosses found support and lifted into the US close. Japanese Investor reaction will be key with comments from the new PM and Financial Minister closely scrutinized. Overall the USDJPY traded with a low of 89.71 and a high of 90.59 before closing the day around 89.90 in the New York session.

The Sterling (GBP) pressed higher as the Pound gained favor still glowing in the austerity measures announced in Tuesday’s budget. Also helping, the MPC minutes revealing that Junes vote at 7-1 included a member calling for a rate hike. Overall the GBP/USD traded with a low of 1.4802 and a high of 1.4977 before closing the day at 1.4950 in the New York session.

The Australian Dollar (AUD) was very volatile bucking the weakness in other risk currencies as rumors swept the market that the PM Rudd will be replaced in a leadership contest. The market is still unsure as to the mining tax proposed and a new leader may reconsider. Overall the AUD/USD traded with a low of 0.8659 and a high of 0.8784 before closing the US session at 0.8784. Update New Australian PM Glillard after Rudd Quits.

Oil & Gold (XAU) suffered a sharp drop in New York as Oil slumped. Overall trading with a low of USD$1224 and high of USD$1246 before ending the New York session at USD$1236 an ounce. Oil fell near $2 a barrel when weekly inventory numbers came in much higher then expected with a build of 2M barrels. WTI Oil Closed -$1.50 at $76.35 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2335

Initial support at 1.2209 (June 23 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2487 (June 21 high) followed by 1.2672 (May 21 high)

Yen – 89.90

Initial support is located at 89.74 (June 23 low) followed by 88.97 (May 20 low). Initial resistance is now at 91.48 (June 21 high) followed by 92.12 (June 14 high).

Pound – 1.4990

Initial support at 1.4646 (Jun 17 low) followed by 1.4505 (Jun 11 low). Initial resistance is now at 1.5054 (May 10 high) followed by 1.5219 (76.4% 0f 1.5524-1.4231).

Australian Dollar – 0.8745

Initial support at 0.8582 (June 16 low) followed by the 0.8506 (June 15 low). Initial resistance is now at 0. 8865 (May 17 high) followed by 0.9027 (May 17 high).

Gold – 1235

Initial support at 1224 (June 23 low) followed by 1215 (June 10 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (Round Number).

Oil – 76.20

Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 78.00 (Intraday Resistance) followed by 80.00 (Intraday Resistance).

Moody’s downgrades Greek debt to Junk!

•  Markets seemed to shun the fear of an EU wide debt crisis yesterday as global risk appetite picked up. It seems that no news is good news especially when the market was heavily pricing in risks of defaults. With a record number of short positions feeling a little anxious on the day and a fantastic Industrial production report coming in higher than expected at 0.8%, markets scrambled to cover their shorts as well as short term spec accounts dipping their toes in some long positions. The report is considered as a forward looking report on the health of an economy as it reacts quickly to changes in the business cycle as well as consumer confidence and employment levels. As the session went on and the EURUSD climbed to 1.2297 Moody’s decided to downgrade Greece is debt to junk status giving the much needed excuse to offload those short term speculative long positions just before the London Fix was coming to an end. Overall price action on the day was between 1.2162 – 1.2297.
•  In the US yesterday we saw Fed President Bullard reject speculation that the European debt crisis will push back any Fed policy decisions. He says that policy will be dictated by the actual US economic recovery however he says the recovery will have to develop further before any rate hikes are delivered. US stocks traded in line with European wide sentiment with the S&P making highs of just above the 1105 level however as the session went on and the Moody’s downgrade was announced traders rushed for the exit once more and the market ended up closing down 0.2% at 1091 points. USDJPY price action yesterday was between 91.39 – 92.11.
•  In the UK the focus will be on the latest CPI figures so as to gauge the direction of UK inflation pressures. Last CPI reading stubbornly showed a year on year figure of 3.7% prompting assumptions that the BoE may be forced to enter a preemptive rate hike so as to tame such price pressures. GBPUSD price action was between 1.4501 – 1.4808. 

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.2275 with a preference to enter into Short positions at 1.2265
• § The USDJPY pivot point is at 91.75 with a preference to enter Short positions at 91.70

Today’s calendar and market movers:

• § UK Consumer Price Index for expected at 3.5% year in year ending May
• § EU Employment for Q1 with last month reading as -0.2%
• § EU Trade for April expected at 3.7 bio
• § US NAHB for June forecasted at 21

 Equity Markets:

•  US equities closed negative yesterday with the S&P500 down by -0.2% and the DJIA down by -0.18%. The European bourses were positive yesterday with the FTSE up 0.74% the DAX and the CAC closing at 1.28% and 1.98% respectively. The NIKKEI and the HSI at the time of writing is 0.08% and 0.20% respectively.

Last week’s currency trading review

The Dollar was on the backfoot for most of the week as stock markets staged an impressive rebound. Heavily overbought, the USD was ripe for profit taking and the market did so in a broad based fashion. April’s Trade Balance was -40.3bn vs. -40.8bn forecast and US Retail Sales Slumped -1.2% vs. 0.2% forecast for the first negative reading in 8 months. On a Positive note, UoM Consumer Confidence soared to a 2 year high at 75.5 in June. The Euro was bought up quite aggressively on comments from the head of the Chinese pension Fund that the Euro will survive the crisis and that the he was more concerned about their US debt holdings. Also helping sentiment towards the single currency was the improvement in the ECB’s GDP outlook and positive comments from President Trichet after the ECB Rate Meeting where they at 1.0%. The EUR/USD gained +1.19% closing at 1.2119, after opening the week at 1.1967.

The Japanese Yen lost ground against most currencies but stayed in a range against the USD as the two safe haven currencies competed for the weakest performance of the week. AUD/JPY soared in the ‘risk on’ environment up over 3Yen and EUR/JPY also did very well reclaiming the Y110 level after testing support at 108 in recent weeks. Q1 GDP was confirmed at 1.2% Q/Q. The USD/JPY fell -0.29% closing at 91.63, after opening at 91.90 previously. The GBP made small gains but underperformed as heavy EUR/GBP buying on Friday hurt the Pound going into the weekend. The market is paying close attention to the new government’s fiscal outlook and the coming budget will by closely scrutinized. The GBP/USD gained +0.66% closing at 1.4548 after opening at 1.4452. The AUD was the best performing currency in the market as the fundamentals of the commodity based economy continued to outshine the rest of the market and it was only risk aversion keeping the Aussie at lower levels. With the rebound in stocks the market covered shorts quickly testing 0.8500 into the weekend. May Employment change was very strong at 26k vs. 20k forecast and the Unemployment rate dropped to 5.2% vs. 5.4% previously. The AUD/USD gained +3.18% closing at 0.8501 after opening at 0.8231.

The forex trading week preview

In the States; On Tuesday, Net Long Term TIC Flows previously at 140.5bn. On Wednesday, May Housing Starts are forecast at 650k vs. 672k previously. Also released, May Industrial Production forecast at 0.9% vs. 0.8% previously. Also Fed Chief Bernanke speaks. On Thursday, Weekly Jobless Claims are forecast at 453k vs. 456k previously. Also released, June Philly Fed forecast at 21 vs. 21.4 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German ZEW Survey forecast at 42 vs. 45.8 previously. On Wednesday, May CPI is forecast at 0.8% y/y. On Thursday, ECB Monthly Report Released. In the UK; On Tuesday, May CPI is forecast at 3.5% vs. 3.7% previously y/y. On Thursday, May Core Retail Sales forecast at 0.4% vs. 0.1% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Tuesday, BoJ Target Rate is forecast unchanged at 0.1%. On Friday, BoJ Monetary Policy Minutes. In Australia; On Tuesday, June RBA Minutes Released. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.2220

Initial support at 1.2103 (June 14 low) followed by 1.1881 (June 7 low). Initial resistance is now located at 1.2327 (June 3 high) followed by 1.2453 (May 28 high)

Yen – 91.60

Initial support is located at 91.24 (June 11 low) followed by 90.54 (June 1 low). Initial resistance is now at 92.97 (May 18 high) followed by 93.64 (May 13 high).

Pound – 1.4740

Initial support at 1.4505 (Jun 11 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4809 (June 14 high) followed by 1.4918 (May 12 high).

Australian Dollar – 0.8590

Initial support at 0.8427 (June 11 low) followed by the 0.8263 (June 10 low). Initial resistance is now at 0. 8728 (0.505 retrace of 0.9388 – 0.8068) followed by 0.8865 (May 17 high).

Gold – 1223

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 74.80

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).

CURRENCY TRADING SUMMARY – 15^th June (00:30 GMT)

U.S. Dollar Trading (USD) Global stocks continued to rebound early Monday with positive sentiment sending the Dollar lower across the board. The mood changed however late in the US session after moody cut Greece Credit rating to Junk in a widely expected move. US stocks finished slightly lower after being up for most of the day. In US stocks, DJIA -20 points closing at 10190, S&P -2 points closing at 1089 and NASDAQ +1 points closing at 2243. Looking ahead, TIC Long Term Purchase forecast at 77bn vs. 140bn previously.

The Euro (EUR) took advantage of the positive risk environment to surge above resistance at 1.2215 and push towards 1.2300. The moody’s downgrade took the wind out of the rally and the pair finished near support. April’s Industrial Production beat expectation at 0.8% vs. 0.5% forecast. EUR/USD traded with a low of 1.2109 and a high of 1.2300 before closing at 1.2220. Looking ahead, June German Zew Survey forecast at 42 vs. 45.8 previously.

The Japanese Yen (JPY) was able to test Y92 on strong cross buying especially in the AUD/JPY and EUR/JPY but the failure to push higher and the reversal in US stocks sent the pair back to more familiar levels near 91.50. Overall the USDJPY traded with a low of 91.40 and a high of 92.14 before closing the day around 91.60 in the New York session. Looking ahead, June BOJ Rate Decision forecast to remain at 0.1%.

The Sterling (GBP) surged after under-performing on Friday as the risk currency played catch up to rally nearly 200 pips on the day. Resistance at 1.4750 was broken in Europe as BoE member Sentence was quoted over the weekend as supporting a rate hike in the second half of 2010. Overall the GBP/USD traded with a low of 1.4545 and a high of 1.4812 before closing the day at 1.4730 in the New York session. Looking ahead, May CPI is forecast at 3.5% vs. 3.7% y/y.

The Australian Dollar (AUD) tracked stocks higher breaking above major resistance at 0.8580 to surged in Europe to fresh month highs. AUD/JPY rallied and fell just short of the key Y80 level as the favorite risk currency enjoyed widespread support. Overall the AUD/USD traded with a low of 0.8501 and a high of 0.8669 before closing the US session at 0.8580. Looking ahead, June RBA Minutes Released.

Oil & Gold (XAU) lost ground as safe haven demand eased and profit takers took control. Overall trading with a low of USD$1215 and high of USD$1234 before ending the New York session at USD$1221 an ounce. Oil Rallied to above resistance at $75 before settling just under the figure late in the US session. WTI Oil Closed +$1.34 at $74.80 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2220

Initial support at 1.2103 (June 14 low) followed by 1.1881 (June 7 low). Initial resistance is now located at 1.2327 (June 3 high) followed by 1.2453 (May 28 high)

Yen – 91.60

Initial support is located at 91.24 (June 11 low) followed by 90.54 (June 1 low). Initial resistance is now at 92.97 (May 18 high) followed by 93.64 (May 13 high).

Pound – 1.4740

Initial support at 1.4505 (Jun 11 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4809 (June 14 high) followed by 1.4918 (May 12 high).

Australian Dollar – 0.8590

Initial support at 0.8427 (June 11 low) followed by the 0.8263 (June 10 low). Initial resistance is now at 0. 8728 (0.505 retrace of 0.9388 – 0.8068) followed by 0.8865 (May 17 high).

Gold – 1223

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 74.80

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).

US Retail Sales disappoint the markets coming in at -1.2%!

•  Markets on Friday saw volatility pick up across the board with the EURUSD’s trading range over 100 pips. Retail sales on Friday came in weaker than expected for the month at -1.2% however this is not expected to have a great impact on underlying GDP as the report is ex-auto sales. This report spurred a bout of risk aversion and some USD strength pushing the Euro to 1.2045 lows. As the session went on we had the University of Michigan report come out showing a print of 75.5 beating expectations of 74.5. Markets have also shifted their expectations of the next Fed Rate hike to January 2011 from September 2010 given the Euro zone debt crisis. Stocks in the US closed the session in positive territory almost half a percent higher on continued hope that the US will stubbornly continue to grow despite the happenings on the other side of the Atlantic. USDJPY price action was between 91.17 – 91.96.
•  In Europe on Friday rumors circulated that Spain was considering tapping part of the EU’s stabilization fund which caused part of the initial sell off in the pair. The rumors were discarded as unfounded considering the extreme austerity measures that the country is undertaking. Later in the day we had ECB Member Nowotny say that the Central bank will continue to support the EU debt markets until a certain degree of stabilization is seen. Looking ahead the markets are shifting focus to EU CPI readings as the ECB repeatedly highlights price stability as its main objective. Also focus will be given to Ireland’s debt issue tomorrow of 5 year paper for Eur1-1.5 bio. EURUSD price action is between 1.2044 – 1.2208.  
•  In Japan the 2 day policy meeting begins today were new information should be released regarding the latest BoJ lending scheme which is designed to lend to small business finding it difficult to raise funds. Initial estimates are that the scheme will add as much as 3 trillion Yen to the system. Japans Prime Minister Kan went on later in the day saying that Japan risks defaulting on its debt if Japans fiscal difficulties are not tackled. Kan says that by the end of June hbe will present a medium to long term plan on how to reduce Japans deficit

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.2125 with a preference to enter into Long positions at 1.2135
• § The USDJPY pivot point is at 91.55 with a preference to enter Long positions at 92.10

Today’s calendar and market movers:

• § Eurozone Industrial Production for April expected at 0.5%
• § Australia RBA minutes
• § Japan BoJ Rate Decision expected to remain unchanged at %0.1

 Equity Markets:

•  US equities closed positive yesterday with the S&P500 up by 0.38% and the DJIA up by 0.44%. The European bourses were mixed yesterday with the FTSE up 0.61% the DAX and the CAC closing at -0.14% and 1.11% respectively. The NIKKEI and the HSI at the time of writing is 1.80% and 0.88% respectively.

CURRENCY TRADING SUMMARY – 14^th June (00:30 GMT)

U.S. Dollar Trading (USD) remained on the weak side as stocks and most currencies pushed higher into the weekend overcoming weak US Retail Sales data. May Retail Sales slumped -1.2% vs. +0.2% forecast. The data was countered however by a rise in US Consumer Confidence to a 2 year high at 75.5 vs. 73.6 previously. In US stocks, DJIA +35 points closing at 10211, S&P +4 points closing at 1090 and NASDAQ +24 points closing at 2243. Looking ahead, Fed Member Bullard Speaks.

The Euro (EUR) remained well supported as the market continued to rebound after weeks of heavy selling. Positive risk sentiment and strong cross buying especially on the EUR/GBP underpinned the move higher. May German WPI increased 0.3% as expected. EUR/USD traded with a low of 1.2046 and a high of 1.2152 before closing at 1.2090. Looking ahead, April Industrial Production is forecast at 0.5% vs. 1.3% previously.

The Japanese Yen (JPY) USD/JPY grinded higher for most of the day on solid cross buying. Some volatility after the US retail sales saw day lows but better Consumer Confidence numbers allowed the rally to resume. AUD/JPY continued it recent rally up above. Overall the USDJPY traded with a low of 91.20 and a high of 91.78 before closing the day around 91.71 in the New York session.

The Sterling (GBP) was very volatile hitting 1.4750 going into Europe before reversing hard on EUR/GBP buying and weak economic data. Manufacturing and Industrial Production both posted -0.4%m/m in May vs positive expectations. The pair settled under 1.4600 unable to take advantage of the risk on environment. Overall the GBP/USD traded with a low of 1.4505 and a high of 1.4758 before closing the day at 1.4550 in the New York session.

The Australian Dollar (AUD) broke and closed above 0.8500 in the US session but was range bound in Europe and Asia. AUD/JPY buying on the back of the US Consumer Confidence numbers helped lift the Aussie and sentiment towards the pair has turned quite bullish as the relief rally continues. Overall the AUD/USD traded with a low of 0.8418 and a high of 0.8504 before closing the US session at 0.8503. Looking ahead, Holiday in Australia.

Oil & Gold (XAU) gold continued to trade in range finding support at $1215 but struggled to bounce. Overall trading with a low of USD$1215 and high of USD$1231 before ending the New York session at USD$1226 an ounce. Crude Oil slipped as weak retail sales prompted profit taking on the recent rally. WTI Oil Closed -$1.70 at $73.78 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2180

Initial support at 1.1881 (June 7 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2214 (June 4 high) followed by 1.2327 (June 3 high)

Yen – 91.80

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.08 (June 7 high) followed by 92.97 (May 13 high).

Pound – 1.4590

Initial support at 1.4510 (Jun 10 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar – 0.8560

Initial support at 0.8195 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8579 (Feb 5 low) followed by 0.8728 (505 retrace of 0.9388 – 0.8068).

Gold – 1230

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 74.50

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).

CURRENCY TRADING SUMMARY – 11^th June (00:30 GMT)

U.S. Dollar Trading (USD) gave up recent gains in a risk on environment as global stocks rallied and risk aversion eased. Weekly Jobless Claims were steady at 456k vs. 453k previously and April’s Trade Balance was close to expectations at -40.3bn previously. In US stocks, DJIA +277 points closing at 10172, S&P +31 points closing at 1086 and NASDAQ +59 points closing at 2218. Looking ahead, May Retail Sales are forecast at 0.2% vs. 0.4% previously.

The Euro (EUR) broke above 1.2000 in Asia as the head of the Chinese Pension Fund stated that the Euro will whether the Crisis and that he was more concerned with US debt holdings. This positive news combined with comments from ECB’s Trichet (ECB held at 1.0%) concerning upgraded GDP growth forecasts. EUR/USD traded with a low of 1.1956 and a high of 1.2144 before closing at 1.2130. Looking ahead, May German WPI previously at 1.7%.

The Japanese Yen (JPY) weakened as the crosses rallied especially on the AUD/JPY and NZD/JPY. USD/JPY was hardly changed as the USD remained under pressure and speculation of a Chinese Yuan revaluation kept the outlook mixed. Q1 GDP was finalized at 1.2% Q/Q. Overall the USDJPY traded with a low of 90.84 and a high of 91.57 before closing the day around 91.30 in the New York session.

The Sterling (GBP) did well in the risk on environment with cable breaking above 1.4700 and GBP/JPY heading for a test of Y135. The BOE held at 0.5% and did little to surprise the market holding the Asset Purchase program at 200bn. Overall the GBP/USD traded with a low of 1.4507 and a high of 1.4733 before closing the day at 1.4705 in the New York session. Looking ahead, May Core PPI is forecast at 0.5% vs. 1.1% previously.

The Australian Dollar (AUD) staged a second day of major gains with the May Unemployment coming in super strong at +27k vs. +17k forecast and the Unemployment Rate dropped the 5.2% vs. 5.4% previously. Combined with the stock market rally the Aussie broke above 0.8300 and then 0.8400 to test 0.8500 late in the US session. Overall the AUD/USD traded with a low of 0.8273 and a high of 0.8512 before closing the US session at 0.8490.

Oil & Gold (XAU) ended the day unchanged as reduced safe haven demand was countered by the weak USD. Overall trading with a low of USD$1215 and high of USD$1234 before ending the New York session at USD$1220 an ounce. Crude Oil surged for the 3^rd Day. WTI Oil Closed +$1.10 at $75.48 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2110

Initial support at 1.1881 (June 7 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2214 (June 4 high) followed by 1.2327 (June 3 high)

Yen – 91.70

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.08 (June 7 high) followed by 92.97 (May 13 high).

Pound – 1.4710

Initial support at 1.4510 (Jun 10 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar – 0.8475

Initial support at 0.8195 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8552 (May 28 high) followed by 0.8579 (Feb 5 low).

Gold – 1220

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 75.50

Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 76.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).

China reassures support for the EURO, exports gain 50%!

•  As the trading session got under way yesterday we saw an initial spike in risk appetite both in equities and FX pairs. The Euro managed to break above the 1.2000 psychological level and traded above these levels for most of the EU trading session. As New York got its trading underway risk aversion returned to the markets and equities lost plenty of their earlier gains and the DJIA fell 0.4%. The Euro also got hammered and traded back down to 1.1955 from 1.2074 previous highs. Ben Bernanke who is the Chairman of the Federal Reserve testified before the House of Budget Committee on the Economy however overall his comments were expected and he said nothing new or market moving. He reiterated the recovery will be sustainable despite ‘’significant restraints” the long run inflation expectations are stable and that the Fed will begin raising interest rates as the job market recovers.
•  In the EU we saw both German and Portuguese bond issues run smoothly despite the surge in funding costs faced by Southern EU members’ states. No major data out of the region yesterday with the biggest market moving event been Chinas comments that it will continue to support the Euro followed by a 50% surge in Chinese exports which spurred a bout of risk appetite buying and short covering. The Euro managed to trade back up to 1.2055 from the previously mentioned lows of 1.1955. Trichet made some comments overnight saying that the ECB’s mandate is price stability and it will deliver he also made calls for further EU integration in terms of policy.
•  In Japan we saw another surge in capital expenditure of 4% indicating a gradual increase in demand on the other hand we saw a sharp decline in bank lending for the country showing that much of Japans demand still comes from its export orientated economy. USDJPY price action was between 91.66 – 91.04.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.1995 with a preference to enter into Long positions at 1.2005
• § The USDJPY pivot point is at 90.85 with a preference to enter Long positions at 90.90

Today’s calendar and market movers:

• § Germany Consumer Price Index expected to gain by 0.1% for May
• § Bank Of England Rate Decision expected to remain unchanged at 0.5%
• § European Central Bank Rate decision expected to remain unchanged at 1%
• § US Jobless Claims for the week expected at 4.64 mio
• § US International Trade for April expected to drop by $41 bio

 Equity Markets:

•  US equities closed negative yesterday with the S&P500 down by -0.59% and the DJIA down by -0.59%. The European bourses were positive yesterday with the FTSE up 1.15% the DAX and the CAC closing at 1.98% and 1.96%. The NIKKEI and the HSI at the time of writing is 1.03% and 0.49% respectively.

CURRENCY TRADING SUMMARY – 10^th June (00:30 GMT)

U.S. Dollar Trading (USD) was on the back foot as risk appetite picked up in Asia on leaked China Trade Data showing a jump in Exports of 50% vs. 32%. The data is to be officially released later today and could help support the market searching for good news. Crude Oil Inventories showed another draw-down of -1.8mln and help oil and commodities rally. Stocks gave up gain late in the US session as jitters remain and this helped the USD pare loses. In US stocks, DJIA -40 points closing at 9899, S&P -6 points closing at 1055 and NASDAQ -11 points closing at 2158. Looking ahead, Weekly Jobless Claims are forecast at 338k vs. 453k previously and April Trade Balance is forecast at -41bn vs. -40.4bn previously.

The Euro (EUR) broke above 1.2000 as traders went after weak stops above the figure but failed to close above the key level as US stocks slumped into the close. EUR/JPY likewise was able to break above Y110 before the market eased back to close under the key resistance. EUR/USD traded with a low of 1.1923 and a high of 1.2075 before closing at 1.1980. Looking ahead, ECB rate announcement forecast to remain at 1.0% and President Trichet’s Press Conference.

The Japanese Yen (JPY) stayed in a tight range pivoting the Y91.50 level as risk appetite comes and goes. The medium term outlook is being clouded by the weaker then expected US jobs Growth and uncertainty as to the new PM’s fiscal plan. April Machine Orders showed a +4% jump vs. +1.2% previously. Overall the USDJPY traded with a low of 91.04 and a high of 91.69 before closing the day around 91.30 in the New York session. UPDATE Q1 Final GDP confirmed at 1.2%.

The Sterling (GBP) shrugged off Tuesday’s Fitch comments with the market pushing above 1.4600 as sentiment improved before profit taking helped easing into the US close. April’s Trade Balance was slightly worse than expected at -7.3bn vs. -7bn previously. Overall the GBP/USD traded with a low of 1.4394 and a high of 1.4611 before closing the day at 1.4540 in the New York session. Looking ahead, BOE Rate Announcement forecast to remain at 0.5%.

The Australian Dollar (AUD) took full advantage of the improvement in risk to rally up to 0.8350 on strong commodities and good Chinese data. June Consumer Sentiment dropped -5.7% as the European Financial debt crisis and stock market fall took it’s toll. The RBNZ hiked rate 0.25% as expected to 2.75%. Overall the AUD/USD traded with a low of 0.8193 and a high of 0.8361 before closing the US session at 0.8280. Looking ahead, May Employment +17.5k vs. 33.7k previously. May Unemployment Rate forecast at 5.4% vs. 5.4% previously. UPDATE ACTUAL EMPLOYMENT +36K UNEMPLOYMENT RATE 5.2%

Oil & Gold (XAU) Gold was hit hard by profit taking as improving sentiment reduced safe haven demand. The market then took profit induced by the US stock bounce. Overall trading with a low of USD$1221 and high of USD$1241 before ending the New York session at USD$1230 an ounce. Oil rallied on the bullish US weekly Inventory numbers. WTI Oil Closed +$2.39 at $74.38 a barrel.

TECHNICAL COMMENTARY

Euro – 1.1965

Initial support at 1.1827 (March 2006 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2102 (0.50 of 1.2327-1.1877) followed by 1.2327 (June 3 high)

Yen – 91.20

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.08 (June 7 high) followed by 92.97 (May 13 high).

Pound – 1.4525

Initial support at 1.4347 (Jun 8 low) followed by 1.4260 (May 25 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar – 0.8280

Initial support at 0.8195 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8373 (0.618 of 0.8552-0.8083) followed by 0.8552 (May 28 low).

Gold – 1230

Initial support at 1222 (June 9 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (May 14 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 73.80

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).

The USD gains further against the Euro and the Sterling on U.S. economy recovery outpacing that of Europe.

• The U.S. economy’s recovery could outpace that of Europe’s; as sovereign debt concerns continue in the EU to weigh on growth. The euro weakened to as low at 1.1900 yesterday and is trading around that level today ahead of tomorrow’s ECB interest rate decision. The European Central Bank is forecasted to leave its key interest rate at a record low until the second quarter of 2011.
• Federal Reserve Chairman Ben S. Bernanke is due to testify today following his comments on the 7th of June where he said he’ll raise interest rates before the economy returns to full employment. Investors across the world have little confidence in Europe’s efforts to contain its crisis or in Jean-Claude Trichet, ECB President, with a strong majority calling for a default by Greece likely. Only 23% of investors expect the $1 trillion rescue package to both keep the European monetary union together and prevent a debt default by a government, according to a Bloomberg poll of investors and analysts.
• In Asia stocks fell and investors flocked to the safety of the Japanese Yen as the currency rose across the board, increasing demand for safer assets. The yen rose to 109.17 per euro from 109.50 yesterday. Two days ago, the yen traded at 108.08, the strongest level since November 2001.
• Fitch Ratings comments on the U.K.’s fiscal challenge send the sterling lower against most of its major peers. “The scale of the United Kingdom’s fiscal challenge is formidable,” Fitch said in the first statement by a credit-rating firm on the U.K. since Cameron took office May 11. Sterling declined to 1.4345 against the U.S. dollar and 130.40 against the yen.

Currency to watch out for: EURUSD & USDJPY

• The EURUSD pivot point is at 1.2010 with a preference to enter into short positions at 1.2000
• The GBPUSD pivot point is at 1.4480 with a preference to enter into short positions at 1.4470

Today’s calendar and market movers:

• UK Trade Balance expected to post slightly higher to -7.00bln sterling
• US Crude Oil Inventories expected to increase to -1.1 million from -1.9 million
• Federal Reserve Chairman Ben Bernanke is due to testify about economic and financial conditions and the federal budget before the House Budget Committee.

Equity Markets:

• US equities finished mostly higher on Tuesday, led by material and financial shares. At the closing bell the Dow Jones was up 1.26%, the S&P up 1.10% and the NASDAQ ended the day down 0.15%. Stocks in Europe ended lower as well with the FTSE -0.81%, CAC -0.98% and the DAX -0.62%. At the time of writing the Nikkei down 1.04% and the Hang Seng down -0.37%.

CURRENCY TRADING SUMMARY – 9^th June (00:30 GMT)

U.S. Dollar Trading (USD) in another volatile day of trading the market roller coaster continued with a rally in Asia sold off in Europe but finished back at day highs in the US. Bernanke helped markets in Asia with positive comments the the US recovery was continuing. In US stocks, DJIA +123 points closing at 9939, S&P +11 points closing at 1062 and NASDAQ -3 points closing at 2170. Looking ahead, Bernanke Speaks and Crude Oil inventories released forecast at -1.1% vs. -1.9% previously

The Euro (EUR) tested 1.19 as sentiment soured in Europe but when this held the pair rallied sharply to test the now key 1.2000 level. Resistance held true and the pair slipped back into a tight range. EUR/GBP lifted off previous lows on Pound weakness. German Trade Balance missed forecast at 13.1bn vs. 14bn expected. EUR/USD traded with a low of 1.1901 and a high of 1.2010 before closing at 1.1950.

The Japanese Yen (JPY) fell below Y91 at the height of the market weakness in Europe on heavy GBP/JPY and EUR/JPY selling but was able to recover and remain in more familiar ranges in the mid Y91.50 zone. April Leading Indicators dropped -0.2% vs. 4.4% previously. Overall the USDJPY traded with a low of 90.80 and a high of 91.95 before closing the day around 91.40 in the New York session. UPDATE April Machine Orders at 4% vs. 1.2% previously.

The Sterling (GBP) was the worst performing currency as Fitch warned the markets that the UK fiscal position was challenging and required aggressive austerity measures. Cable broke below 1.4400 and was only saved by the late Dow Rally which prompted a return above the figure. Overall the GBP/USD traded with a low of 1.4344 and a high of 1.4532 before closing the day at 1.4440 in the New York session. Looking ahead, April Trade Balance forecast at -7bn vs. 7.52bn previously.

The Australian Dollar (AUD) staged a solid recovery as the risk currency took advantage of stronger stocks to outperform the rest of the market and end close to 0.8300 resistance. 0.8000 continues to be a key target for the bears but the day to day movement of the stock markets are trumping attempts to test the key psychological level. Overall the AUD/USD traded with a low of 0.8121 and a high of 0.8289 before closing the US session at 0.8240. Update June Consumer Sentiment -5.7%.

Oil & Gold (XAU) Gold caught the markets focus with a break higher to fresh record highs above $1250. The market then took profit induced by the US stock bounce. Overall trading with a low of USD$1232 and high of USD$1252 before ending the New York session at USD$1238 an ounce. Oil continued to rally up $0.55 as the gulf spill prompted supply concerns. WTI Oil Closed +$0.55 at $71.99 a barrel.

TECHNICAL COMMENTARY

Euro – 1.1950

Initial support at 1.1827 (March 2006 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)

Yen – 91.50

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.97 (May 18 low) followed by 93.64 (May 13 high).

Pound – 1.4430

Initial support at 1.4393 (Jun 7 low) followed by 1.4366 (May 27 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar – 0.8245

Initial support at 0.8067 (May 25 low) followed by the 0.8000 (Big Figure). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).

Gold – 1236

Initial support at 1202 (May 28 low) followed by 1185 (May 25 low). Initial resistance is now at 1250 (May 14 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 72.40

Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

Gold surges, equities fall as risk aversion picks up!

•  Markets yesterday traded with caution once again with the US equity markets finishing the session below -1.15% and gold approached last month’s record highs to $1245. The VIX, a gauge of fear, traded above 3% to 36.6 as the overall market uncertainty as to developments in Europe and US economic recovery are causing many market participants to purchase insurance in the form of options against future adverse movements in most assets. The only economic data released out of the US on the day was the consumer credit report which showed an increase of $1 bio. We also heard some comments from soon to be Federal Reserve Vice Chairman Janet Yellen saying that ‘’significant; headwinds to stability remain”. USDJPY price action yesterday was between 91.00 – 92.07.
•  In Europe we saw continuous declines in equity and currency markets following the previous days shocking comments from Hungarian officials about the possibility of default. From the financial calendar we had a much stronger than expected factory orders report jumping 2.8% for the month as well as a successful bond auction by the Dutch and Belgian treasury.  This shows that the market still segregates between Northern and Southern countries and that Northern EU members have not experienced any significant rise in the cost of financing their debt. EURUSD price action yesterday was between 1.1991 – 1.1875.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.1990 with a preference to enter into Short positions at 1.1980
• § The USDJPY pivot point is at 91.85 with a preference to enter Short positions at 91.80

Today’s calendar and market movers:

• § Germany Industrial Output for the month of April expected at 0.8%
• § Canada Housing Starts for May expected at 200K
• § US Redbook for the week, previous months reading was 0.3%

 Equity Markets:

•  US equities closed negative yesterday with the S&P500 down by -1.35% and the DJIA down by -1.16%. The European bourses were negative yesterday with the FTSE down -1.11% the DAX and the CAC closing at -0.57% and -1.21%. The NIKKEI and the HSI at the time of writing is 0.18% and 0.35% respectively.

CURRENCY TRADING SUMMARY – 8^th June (00:30 GMT)

U.S. Dollar Trading (USD) weak Asian stocks (Nikkei -4% at one point) kept risk off for most of the day with a mild recovery being sold into and the equity markets closing near day lows. April Consumer Credit was solid at +1bn vs. 0.5bn previously. Keeping sentiment low was news the US Financial Crisis Commission had issued subpoenas for Goldman Sachs. In US stocks, DJIA -115 points closing at 9816, S&P -14 points closing at 1050 and NASDAQ -45 points closing at 2173. Looking ahead, Fed Chairman Bernanke Speaks.

The Euro (EUR) the pressure continued on Monday with the EUR/USD breaking below 1.19 in Asia before staging a relief rally. The Market stalled just below the now key 1.2000 level and fell back once more with US stocks ending weaker. German Factory Orders surprised at 2.8% vs. -0.1% forecast. EUR/USD traded with a low of 1.1876 and a high of 1.1993 before closing at 1.1920. Looking ahead, April German Trade Balance forecast at 14bn vs. 13.3bn previously.

The Japanese Yen (JPY) was stronger is the risk averse environment falling back to Y91 on the major and fresh year lows on the EUR/JPY near Y108. In Europe the markets staged a relief rally and this helped USD/JPY back to Y92 and EUR/JPY tested briefly above Y110. Focus on PM Kan’s Cabinet and policy direction will affect the Yen today in Asia. Overall the USDJPY traded with a low of 90.96 and a high of 92.10 before closing the day around 91.59 in the New York session. Looking ahead, April Leading Indicators previously at 4.4%.

The Sterling (GBP) was beholden to market sentiment off in Asia before rebounding in the Europe above 1.4500. The market then eased back for the rest of the day as US stocks turned negative. EUR/GBP pushed up towards 0.8300 before resuming its downtrend and hitting fresh year lows just above 0.8200. Overall the GBP/USD traded with a low of 1.4387 and a high of 1.4566 before closing the day at 1.4480 in the New York session.

The Australian Dollar (AUD) tested 0.8100 after falling heavily at the start of the week on AUD/JPY selling but was able to bounce back above the 0.8200 as the Euro recovered in Europe. The weakness in US stocks towards the close pushed the Aussie back down to day lows under 0.8100 and weakness in commodities excluding gold is keeping the key 0.8000 level in focus. Overall the AUD/USD traded with a low of 0.8081 and a high of 0.8217 before closing the US session at 0.8110. Looking ahead, May Business Confidence previously at 13.

Oil & Gold (XAU) pushed towards record highs as the European turmoil added demand for the safe haven asset. Overall trading with a low of USD$1210 and high of USD$1245 before ending the New York session at USD$1240 an ounce. Oil was mixed finishing flat after testing $70 a barrel. WTI Oil Closed -$0.07 at $71.44 a barrel.

TECHNICAL COMMENTARY

Euro – 1.1930

Initial support at 1.1827 (March 2006 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)

Yen – 91.60

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.97 (May 18 low) followed by 93.64 (May 13 high).

Pound – 1.4480

Initial support at 1.4393 (Jun 7 low) followed by 1.4366 (May 27 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar – 0.8130

Initial support at 0.8067 (May 25 low) followed by the 0.8000 (Big Figure). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).

Gold – 1240

Initial support at 1202 (May 28 low) followed by 1185 (May 25 low). Initial resistance is now at 1250 (May 14 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 71.50

Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

Last week’s currency trading review

The Dollar spent the first part of the week on the back foot as risk appetite slowly picked up. Sentiment turned quickly on Friday however as the Dow Jones crashed over 300 points for its first weekly close under the 10000 mark for the first time this year. May Manufacturing ISM remained solid at 59.7 vs. 60.4 previously. Service ISM also did well to remain at 55.4. US Nonfarm Payrolls missed at 431k vs. 521k forecast. The Euro finally broke below the key Psychological 1.2000 support on Friday with a combination of news Iran was selling 45bn Euros and French PM Fillion saying he sees only good things in a weaker Euro. German Unemployment change beat expectations at -45k vs. -18k forecast. The EUR/USD fell -2.55% closing at 1.1967, after opening the week at 1.2272.

The Japanese Yen had a volatile weak ending higher against risk currencies on Friday’s risk aversion. Against the USD though the Yen lost ground this week after the resignation of PM Hatoyama. His replacement in Kan is perceived by the market as supporting more measures to weaken the Yen. The USD/JPY gained +0.92% closing at 91.90, after opening at 91.05 previously. The GBP ended the week unchanged making major gains against its European counterpart. EUR/GBP slumped to year lows at 0.8250. Earlier in the week, news of a major Equity deal that would have been GBP negative falling apart helped support a relief rally. Friday’s stock market plunge pushed cable back to its opening level. May Services PMI continued to recover jumping to 55.4 vs. 54.3 previously. The GBP/USD fell -0.02% closing at 1.4452 after opening at 1.4455. The AUD had a volatile week trading mostly in a 0.83-85 range on solid economic data until crashing with Friday’s stock and Euro plunge. The worst performing currency of the week had some upside in April Retail Sales jumping 0.6% vs. 0.4% forecast and strong Q1 GDP at 0.5% Q/Q. The RBA did hold however at 4.5% citing the Euro Crisis and previous rate rises as reasons. The AUD/USD fell -2.93% closing at 0.8231 after opening at 0.8472.

The forex trading week preview

In the States; On Monday, Bernanke speaks along with Yellen. On Wednesday, The Fed Beige book is released and Bernanke speaks again. On Thursday, Weekly Jobless Claims are forecast at 447k vs. 453k previously. Also released, April Trade Balance is forecast at 41bn vs. 40.4bn previously. On Friday, UoM Consumer Confidence is forecast at 75 vs. 73.6 previously. Also released, May Retail Sales is forecast at 0.2% vs. 0.4% previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Monday, April Factory Orders are forecast at 0.2% vs. 5.0% previously. On Thursday, May CPI is forecast at 1.2% y/y. Also released, ECB rate announcement widely predicted to remain unchanged at 1.0%. Attention will be focused on Trichet comments at the press conference. In the UK; On Tuesday, May Nationwide Consumer Confidence is forecast at 72 vs. 74 previously. On Wednesday, April Trade Balance is forecast at -7bn vs. -7.5bn previously. June BOE Rate Announcement is forecast to remain at 0.5% and the Asset Purchase program is forecast to remain at 200bn. On Friday, April Industrial Production is forecast at 2.3% vs. 2.0% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Friday, Q1 Final GDP is forecast at 1.0% vs. 1.2% previously. Also released, May Consumer Confidence previously at 42.1. In Australia; On Thursday, RBNZ Rate Announcement is forecast to hike to 2.75% vs. 2.5%. Also Released, May Unemployment Rate is forecast unchanged at 5.4%. Employment Change is forecast at 16k vs. 33k previously. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro – 1.2310

Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2587 (May 24 high) followed by 1.2747 (May 12 high)

Yen – 91.40

Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).

Pound – 1.4470

Initial support at 1.4231 (Mary 20 low) followed by 1.4111 (March 18 2009 low). Initial resistance is now at 1.4703 (May 14 High) followed by 1.4918 (May 13 low).

Australian Dollar – 0.8490

Initial support at 0.8529 (May 20 high) followed by the 0.7828 ( 2009 low). Initial resistance is now at 0. 8499 (May 18 low) followed by 0.8725 (May 19 high).

Gold – 1213

Initial support at 1166 (May 21 low) followed by 1146 (April 27 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 74.30

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (March high) followed by 76.00 (Intraday Resistance).

Non Farm payrolls disappoint the markets!

•  Markets on Friday had another down day due to the very disappointing Non Farm Payrolls report. The number was expected to show that the US created 523K jobs for the month of may, however the report only indicated that the US created just over 400K jobs and most of these jobs were public sector jobs as opposed to the private sector. The whole world is expecting the US to be one of the main drivers of global growth this year and such disappointing job reports can only add to the global pessimism prevailing these days. USDJPY collapsed from 92.87 – 90.97 following the report. Equity markets fell over 3% and Gold rallied to $1220oz.
•  In Europe on Friday we had further sovereign default risks appear via Hungary as officials said that the previous government has been tampering with budget figures and that the possibility of a Hungarian default cannot be excluded. Clearly Hungarian officials either do not recognize the dangers in using such rhetoric or are planning for a debt restructuring of their own. The Hungarian story coupled with the bad NFP report caused the Euro to trade below 1.2000 to a low of 1.1878 opening the way to 1.1000 targets set by a number of global tier one investment banks.  
•  Looking ahead the market has shifted its focus to the ECB bank stress tests results so as to cast some light on the actual situation faced by EU banks. The ECB policy decision will also be in focus this Thursday where Trichet’s communiqué will be widely watched. It is worth noting that the ECB has lost some credibility lately following its announcement of the bond purchasing program a day after it categorically denied such a move.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.2020 with a preference to enter into Short positions at 1.2010
• § The USDJPY pivot point is at 91.65 with a preference to enter Short positions at 91.60

Today’s calendar and market movers:

• § EZ Sentix Index for June is forecasted at -7
• § Germany Industrial Orders for April expected at 0.2%
• § US Consumer Credit for April expected at 0.5 bio

 Equity Markets:

 US equities closed negative yesterday with the S&P500 down by -3.51% and the DJIA down by -3.44%. The European bourses were negative yesterday with the FTSE down -1.63% the DAX and the CAC closing at -1.91% and -2.86%. The NIKKEI and the HSI at the time of writing is -3.84% and -2.36% respectively.

CURRENCY TRADING SUMMARY – 7^th June (00:30 GMT)

U.S. Dollar Trading (USD) risk aversion spiked again on Friday with weaker than expected Jobs data compounded by renewed European Concerns. May Non Farms increased by 431k vs. 513k forecast and included 411k census jobs. May’s Unemployment Rate dropped to 9.7% vs. 9.9% previously. In US stocks, DJIA +323 points closing at 9931, S&P -37 points closing at 1064 and NASDAQ -83 points closing at 2219. Looking ahead, April Consumer Credit is forecast at 0.5bn vs. 2bn previously.

The Euro (EUR) aggressive selling resumed after the French PM stated the fall in the Euro was good for France and Hungary let the market know the previous government falsified data. Adding to this weak US stocks and the market pushed through 1.20 on the major and Y110 on the EUR/JPY. EUR/USD traded with a low of 1.1958 and a high of 1.2215 before closing at 1.1963. Looking ahead, June Eurozone Sentix forecast at -7bn vs. -6.4bn. Also Released, April German Industrial Orders forecast at 0.2% vs. 5% previously.

The Japanese Yen (JPY) safe haven flows and weak US data reversed the USD/JPY direction which had being enjoying solid gains of the back PM Kan’s appointment. EUR/JPY and AUD/JPY were very heavy in the US and could extend losses if stock markets continue to fall. Overall the USDJPY traded with a low of 91.43 and a high of 92.89 before closing the day around 91.59 in the New York session.

The Sterling (GBP) tracked the Euro lower falling below 1.4500 support on heavy GBP/JPY selling. UK House Prices dropped -0.4% in May according to Halifax. EUR/GBP continued to slump below 0.8300 to test 0.8250. Overall the GBP/USD traded with a low of 1.4456 and a high of 1.4681 before closing the day at 1.4466 in the New York session.

The Australian Dollar (AUD) with risk off the currency crashed nearly 3% falling below 0.8400 and then 0.8300. AUD/JPY slipped back to Y75 support but with Dow losses over 300 points the market is cautious of further selling Monday from Japanese investors. Overall the AUD/USD traded with a low of 0.8214 and a high of 0.8477 before closing the US session at 0.8230.

Oil & Gold (XAU) rallied off $1000 as the demand for alternative investments pushed the precious metal back to $1220. Overall trading with a low of USD$1197 and high of USD$1221 before ending the New York session at USD$1219 an ounce. Oil Slumped on investor concerns about global growth. WTI Oil Closed -$3.10 at $71.51 a barrel.

TECHNICAL COMMENTARY

Euro – 1.1910

Initial support at 1.1827 (March 2006 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)

Yen – 91.10

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.97 (May 18 low) followed by 93.64 (May 13 high).

Pound – 1.4430

Initial support at 1.4366 (Mary 27 low) followed by 1.4231 (May 20 low). Initial resistance is now at 1.4878 (50% 0f 1.5544-1.4231) followed by 1.4918 (May 13 high).

Australian Dollar – 0.8135

Initial support at 0.8067 (May 25 low) followed by the 0.8000 (Big Figure). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).

Gold – 1218

Initial support at 1202 (May 28 low) followed by 1185 (May 25 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 70.30

Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

US thought to have created 513K jobs for May!

•  Markets saw a strong USD yesterday as stock markets started with a negative tone and risk appetite was low. We had a couple of important announcements with results coming in at or just below expectations. Non Manufacturing ISM came in at 55.4 indicating the services sector’s continued expansion, the ADP employment report came in at 55K jobs compared to the consensus of 70K and a slightly worse than expected jobless claims number at 453K. Today the markets are focused purely on Non Farm Payrolls and the general consensus is for the report to show the creation of over 500K jobs in the US for the month of May. USDJPY price action yesterday was 90.52 – 92.85.
• In Europe yesterday we had a series of PMI reports out of several member states, the EuroZone overall PMI services figure came in at 56.2 just above expectations which temporarily boosted the currency however as the session went on we saw a sharp decline in EZ wide retail sales. We also had some statements come from ECB Executive Council Member Shaghi saying that ”Europe is too focused on the exchange rate” hoping that it would help boost imports. EURUSD price action yesterday was between 1.2326 – 1.2152.
•  In the UK we had nationwide house prices come in at 0.5% for the month and services PMI came in weaker at 55.4, many market analysts believe the GBPUSD has formed a base for now and the risk is to the upside. GBPUSD price action was between 1.4583 – 1.4742

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.2230 with a preference to enter into Short positions at 1.2220
• § The USDJPY pivot point is at 92.20 with a preference to enter Long positions at 92.25

Today’s calendar and market movers:

• § US Fed Chairman speech
• § Euro Zone GDP Q1 expected at 0.2%
• § Canada Employment Change for May expected at 12.5K
• § US Non Farm Payrolls for May expected at 513K jobs

 Equity Markets:

•  US equities closed positive yesterday with the S&P500 up by 0.41% and the DJIA up by 0.06%. The European bourses were positive yesterday with the FTSE up 1.16% the DAX and the CAC closing at 1.23% and 1.59%. The NIKKEI and the HSI at the time of writing is -0.13% and -0.26% respectively.

CURRENCY TRADING SUMMARY – 4^th June (00:30 GMT)

U.S. Dollar Trading (USD) risk was on in Asia before the fizzling in the US session on subdued job numbers. May ADP private employment was at 55k vs 60k forecast and Weekly Jobless Claims were at 453k vs. 450k forecast. In US stocks, DJIA +5 points closing at 10255, S&P +4 points closing at 1102 and NASDAQ +21 points closing at 2303. Looking ahead, May Nonfarm Payrolls is forecast at 513k vs. 290k previously. Also released, May Unemployment Rate is forecast at 9.8% vs. 9.9%.

The Euro (EUR) enjoyed a relief rally in Asia to above 1.2300 before the European’s once again focused the market on the downside risks. Heavy EUR/CHF selling added weight to the major falling back towards the key 1.4000 level. April Retail Sales at -1.2% vs. 0.2% forecast. EUR/USD traded with a low of 1.2152 and a high of 1.2328 before closing at 1.2170. Looking ahead, Q1 GDP forecast at 0.2%.

The Japanese Yen (JPY) weakness on the Yen continued with the USD/JPY pushing into the higher Y92 region after the FinMin Kan became the front runner to be the next Japanese PM and the market expect’s his preference of a weaker Yen to hurt the currency. Overall the USDJPY traded with a low of 92.02 and a high of 92.83 before closing the day around 92.55 in the New York session.

The Sterling (GBP) failed above 1.4700 once again and pulled back with the Euro to low 1.46 supports before stabilizing. EUR/GBP rallied to resistance to at 0.8380 in the Asian session before resuming its downtrend. Overall the GBP/USD traded with a low of 1.4584 and a high of 1.4746 before closing the day at 1.4665 in the New York session. Looking ahead, Halifax HPI previously at -0.1% m/m.

The Australian Dollar (AUD) was buoyed in Asia by strong risk appetite and a 3% rally in the Nikkei but was not immune to the softening in the US session and fell back from above 0.8500 to test support under 0.8400. AUD/JPY is continuing to provide a lot of the direction as the recovery provides support on dips. April’s Trade balance beat forecast at +132m vs. -500m previously. Overall the AUD/USD traded with a low of 0.8362 and a high of 0.8525 before closing the US session at 0.8440.

Oil & Gold (XAU) Gold was sold off after failing to break resistance at $1229. Overall trading with a low of USD$1200 and high of USD$1225 before ending the New York session at USD$1205 an ounce. Oil continued to rebound after drop in US inventories. WTI Oil Closed $1.75 at $74.61 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2170

Initial support at 1.2110 (June 1 low) followed by 1.2000 (Round Number). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)

Yen – 92.70

Initial support is located at 90.61 (May 28 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.97 (May 18 low) followed by 93.64 (May 13 high).

Pound – 1.4640

Initial support at 1.4366 (Mary 27 low) followed by 1.4231 (May 20 low). Initial resistance is now at 1.4878 (50% 0f 1.5544-1.4231) followed by 1.4918 (May 13 high).

Australian Dollar – 0.8440

Initial support at 0.8202 (May 27 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).

Gold – 1205

Initial support at 1202 (May 28 low) followed by 1185 (May 25 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 74.30

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).

FX Highlights

• The USD is trading marginally lower as global equity markets rally to a two week high supported by upbeat US economic data and optimism about the global recovery, EUR gains limited by report of weak EU retail sales, GBP rallies in reaction to report of rising UK house prices with gains limited by a downgrade of BP’s rating, AUD trades higher supported by report of better than expected Australian trade balance, CAD supported by a statement from Canada’s finance minister that the time is nearing for G-20 exit strategies, JPY trades lower pressured by improving risk appetite and speculation that Japan’s Finance Minister Kan will become Japan’s new PM, Kan in the past has favored a weak JPY policy
• Focus turns to the release of US ADP employment, jobless claims, factory orders and non manufacturing ISM
• Japan’s Q1 CAPEX falls 11.5%, Suda says that EU debt crisis may hurt Japan ,sees more downside risk to the economy, deflationary pressures continue, JPY lower
• Australia’s April trade balance swings to A$134mln surplus, exports rose by 11%, imports unchanged, May new vehicle sales rose by 9.6%, AUD higher
• EU April retail sales declined by 1.2%, May final services PMI rises to 56.2 from 56,EUR mixed
• UK May services PMI rises to 55.4 from 55.3 last month, May Nationwide house prices rose by 0.5%,GBP higher
• Canada’s Finance Minister Flaherty says time is nearing for G 20 nations to begin exit strategies, CAD higher
• The Feds Lockhart says time is approaching to begin recalibrating monetary policy
• US equity markets set to open higher, European equities 2% higher, Nikkei closed 311 points higher

Upcoming Events

• US- Thursday, May ADP employment will be released expected at 60k compared to 32k last month along with initial jobless claims for week ending 05/29 expected at 450k compared to 460k last week, April factory orders expected at 1.8% compared to 1.1% last month, and May non manufacturing ISM expected at 55.5 compared to 55.4 last month
• CAN-Thursday, no major Canadian economic data is due for release today