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GB Pound rallies as UK Retail Sales data surprises

Daily Outlook - 16th August 2012

Written by Zoe Fiddes

CURRENCY TRADING SUMMARY 16/08/2012

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

Sterling has rallied from 1.5640 to 1.5712 highs as UK retail sales rises 0.3% m/m and 2.8% y/y, a great deal better than expected. The economist view is that the increase is mainly the result of amplified fuel sales in July. From a technical analysis stance $1.5715-1.5730 is a strong area of resistance, that has been tested numerous times this week. This is also backed up by the technical level seen at $1.5719 from the 200 Day MA. The RSI on a 15 min and 30 min bar-chart indicated that today’s move above $1.5700 was trading at over-bought levels and for now the price has recoiled to trade below the big figure. To the downside the initial support lies at 1.5655 followed by 1.5625.

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

The euro came lower overnight after flirting with 1.2300 highs. The steady downtrend during the Asian session took the pair to 1.2255 and Bulls in the London open dived in at the lower price pulling it back to 1.2285. The move up hasn’t gathered any momentum and 1.2300/15 is a key resistance whilst the pair remains under pressure. The next support lies at 1.2250 followed by 1.2220. Euro-zone inflation data came out as expected at -0.5% m/m and 2.4% y/y and US housing data and initial claims will be released at 13:30 BST and Philadelphia Fed survey results, indicating manufacturing business conditions, is out at 15:00.

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

The JPY crosses mostly remained bid after moves up overnight. Moves higher were marginal but still significant. Rather than the crosses, it was USD/JPY leading the way. Already through 79.00 overnight, early action saw it move higher still with Tokyo players, some already back from Obon and summer holidays, bull-dozing the market up. Offers on the way were absorbed and some more stops above 79.20 were taken out in the process. A high of 79.30 has been seen so far. More stops are eyed above current level and larger above 79.50. Technical analysis is pointing to a higher day for the pair with a pivot of 78.85 and resistance at 79.40 and 79.5.

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

The pair initially rose this morning and came to test the big figure 1.0500. It was unable to break higher and this resistance has forced the price back down to 1.0485.  There is a preference to sell from 1.0500/10, as the price is capped by a negative trend line, and the initial support lies at 1.0475 followed by 1.0450. Trading Central comment that as long as 1.0510 is the resistance the pair is likely to decline to 1.0450. Fundamental data supports the downtrend in AUD as Consumer Confidence data came out negative, -2.5% vs. 3.7% in the previous month.

Gold (XAU):

XAU/USD was fairly range bound for much of the European session yesterday (1607/01) which stayed true well into the overnight session.  Opening in Asia at 1603, the precious metal only managed a high of 1607 and a session low of 1600 before closing at 1605.  The market seems to be bracing itself before news due later today that could indicate an increase in building permits and an increase in unemployment claims from the US, but most traders will be focussing on the Philly Fed manufacturing index.

Oil:

OIL/USD saw a massive surge on the back of US crude oil inventories figures yesterday which showed the US had reduced its stockpiles by about 1.7 million barrels, causing crude to jump from the 92.87 area to the 94.79 area.  The rally somewhat continued overnight with the black gold opening in Asia at 94.35 and achieving a high of 94.59 before a drop to a session low of 93.91 and finally closing the session at 94.24.  Looking ahead, technical analysis is pointing to a higher day for oil with a pivot of 93.30 and resistance at 94.90 and 95.30.

Technical Commentary:

  Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5625  1.5655  1.5696  1.5725  1.5740
EUR/USD  1.2220  1.2250  1.2266  1.2300  1.2315
USD/JPY  78.65  78.85  79.19  79.40  79.50
AUD/USD  1.0450  1.0475  1.0485  1.0500  1.0540
XAU/USD  1584.0  1590.0  1603.3  1608.0  1618.0
OIL/USD  92.65  93.30  94.19  94.90  95.30

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