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Market awaits the Bank of England minutes

Daily Outlook - 15th August 2012

Written by Zoe Fiddes

CURRENCY TRADING SUMMARY 15/08/2012

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


The US dollar strengthened against the pound off the back of better than expected US retail sales figures which saw sales rise 0.8% in July from -0.7% in the previous month. This sent GBP/USD down to 1.5670 from 1.5720 and in the Asia session overnight the pair continued to slide lower. It currently trades at 1.5660 near the weeks low and support level 1.5645. Technical analysis points towards a preference to buy from the 1.5645 floor with initial profit target eyed at 1.5690. However, be aware of a blanket of UK data out at 09:30am BST which includes the Bank of England (BoE) minute, jobless claims change (July)and additional employment figures which is likely to cause some volatility if there are any surprise announcements.


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

The euro came under pressure early in yesterday’s London session and EUR/USD fell from a 1.2384 high down to 1.2316. This was the result of the negative euro-zone GDP q/q and y/y figures at -0.2% vs. 0.0% previous and -0.4% vs. 0.0%  respectively and the German ZEW economic survey (Aug) disappointed with a -25.5 result indicating that financial experts across Europe in the medium term are not confident about Germany’s economic situation. Overnight and into this morning’s trading the pair has been testing the 1.2320/15 area of support with bids remaining at the overnight Asian low at $1.2317, according to MNI. In the short-term the downside pressure may be limited by the 1.2315 pivot point however a break may open the path to 1.2260 the next support. EUR/GBP is also holding up above a support around 0.7860/55 and a change in the value of the GB pound will change this and in turn UK data could also affect EUR/USD pricing.

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

The JPY crosses mostly remained bid after trading higher overnight.  USD/JPY surged in the Asian session after a stellar US retail sales report, breaking above key resistance ahead of 78.85 and to 78.94. It remained higher, up from an early low of 78.68 to 78.90. Offers remain ahead of 79.00, but stops above are said to be fairly large. A number of key technical levels around 79.00 are in focus as well.  The fact that USD/JPY failed to retreat after today’s Tokyo fix does seem to say a lot.  Looking ahead, technical analysis has a preference to buy USD/JPY at a pivot of 78.60 with resistance at 79.05 and 79.15.

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

The Aussie has been in a down trend this week following the test of 1.0600 highs on 9th August. In yesterday’s trading the pair moved from 1.0540 down to 1.0480 as USD strengthened following the good result out of the US and overnight in the Asia session the downtrend continued as Australia’s Westpac consumer confidence figure came out at -2.5% vs. 3.7% previously. Now the price is testing the support zone 1.0450/1.0435 after a move through the 21 Day MA. There are bids to buy seen at 1.0430 however it is important to manager any risk to the downside as a break opens up a clear path south and could be perceived as a signal that the longer term uptrend is over (Daily candle chart). At 02:00 am and 02:30 am BST tomorrow morning consumer inflation, weekly wages data and RBA FX transactions will be released.  

Gold (XAU):

XAU/USD was subject to huge losses yesterday on the back of a string of positive US data taking the precious metal from the 1612 area to the 1595 area.  This was somewhat short lived as some profit taking was seen taking it back above 1600 by the end of the European session.  Overnight trading saw gold open at 1599 and very little movement was seen with it only managing to hit a high of 1603 before ending the session at 1598.  Technical analysis is pointing to a lower day for gold with a pivot of 1608 and supports at 1590 and 1584.

Oil:

Opened in Asia at 93.27 and proceeded to move lower to hit a low of 92.95b before rallying to a high of 93.50 and finally ending the session at 93.29.  Rising tensions surrounding Iran’s nuclear program have resurfaced with Israeli Prime Minister Netinyahu reaffirming last week that Iran cannot be allowed to have nuclear weapons.  Going forward, technical analysis is has a preference to buy oil at a pivot of 91.75 with resistance at 94.00 and 94.60.

Technical Commentary:

  Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5640  1.5660  1.5688  1.5700  1.5720
EUR/USD  1.2275  1.2315  1.2326  1.2370  1.2385
USD/JPY  78.68  78.80  78.94  79.00  79.15
AUD/USD  1.0175  1.0450  1.0468  1.0540  1.0575
XAU/USD  1585.6  1592.0  1596.5  1603.3  1615.0
OIL/USD  91.60  92.00  93.28  93.90  94.65

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