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Daily Outlook - 14th August 2012

Written by Imran Allana

CURRENCY TRADING SUMMARY 14/08/2012

Sterling / U.S Dollar (GBP / USD):

GBP/USD did little in Asia with flows few and far between. The range was 1.5675-96 with whatever action on the back of EUR/USD flows. EUR/GBP too was stationary between 0.7864-71.  A flurry of UK announcements have already played out including CPI (2.6% vs. 2.3%), RPI (3.2% vs. 2.8%) and HPI figures, all proving positive for Sterling with the exception of the HPI (2.3% vs. 2.7%).  The overall positive data flow managed to push cable up to a high so far of 1.5728.  Technical analysis is pointing to a higher day for cable, with a pivot of 1.5645 and resistance at 1.5725 and 1.5765.

Euro / U.S Dollar (EUR / USD):

EUR/USD opened in Asia at 1.2332 after spending the US session giving back some of the good gains seen in Europe. Off to 1.2325 early, it tracked higher later to 1.2349 on EUR/JPY buys out of Tokyo.  Several key European data releases included German ZEW economic sentiment (-25.5 vs. -19.4) flash GDP q/q (unchanged at 0.2%), industrial production m/m (-0.6% vs. -0.5%) and ZEW economic sentiment (21.2 vs. -19.1).  At the time of release (10 am BST) took EUR/USD lower from a morning high of 1.2387 to 1.2358.

U.S. Dollar / Japanese Yen (USD / JPY):

USD/JPY remained range bound and stuck in a 78.31-46 range. It was better bid on renewed cross purchases. Offers do remain from around 78.50 however and trail up, and these helped limit moves higher. Stops remain in place above 78.85 and 79.00 but are likely still out of the market\’s range.  July policy meeting minutes were released in the evening which highlighted; members pursuing powerful easing, appropriateness for BOJ to cut the fixed-loan program size and that the BOJ should be ready to act in order to stem risks from Europe.  Upon the release of these minutes, USD/JPY was able to rally to a session high of 78.60.

Australian Dollar / U.S. Dollar (AUD / USD):

AUD/USD opened in Asia at 1.0520 after selling off overnight on unwinding of EUR/AUD shorts and easing commodities prices.  Volume was light. AUD/USD support is eyed around 1.0500, 1.0497 a double bottom. Stops are tipped sub-1.0495 however.  Notable overnight announcements included the NAB business confidence and new motor vehicle sales.  Looking forward, technical analysis has a preference to sell AUD/USD at a pivot of 1.0560 with support at 1.0495 and 1.0465.

Gold (XAU):

GOLD XAU/USD opened in Asia at 1609 and rallied for much of the session, defying the usual range bound action, taking the precious metal to a session high of 1616 before finally closing at 1614.  Gold traders still wait to hear of any stimulus plans from the US, news of which could come from the 31st August speech from Bernanke at Jackson Hole.  Technical analysis is pointing to a lower day for gold with a pivot of 1618 and supports at 1605 and 1598.

Oil:

OIL/USD started the overnight trading session at 92.74 and continued in uncertain trading hitting a low of 92.57, but soon after rallied to a session high of 93.51 before finally closing at 93.16.  Technical analysis has a preference to buy oil at a pivot of 91.75 with resistance at 93.75 and 94.60.

Technical Commentary:

Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5600  1.5645  1.5698  1.5725  1.5765
EUR/USD  1.2295  1.2320  1.2354  1.2385  1.2405
USD/JPY  78.25  78.35  78.57  78.65  78.80
AUD/USD  1.0465  1.0495  1.0526  1.0560  1.0590
XAU/USD  1598.00  1605.00  1614.09  1618.00  1626.00
OIL/USD  90.60  91.75  93.13  93.75  94.60

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