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UK Trade Balance worse than expected at -£5,176 mln

Daily Outlook - 10th August 2012

Written by Zoe Fiddes

CURRENCY TRADING SUMMARY 10/08/2012

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

Following the rally on Wednesday this pair came under selling pressure from the 1.5680 critical resistance level. This was down to a disappointing UK Trade Balance (June) result at -£5,176 mln vs. -£4,100 mln expected coupled with the better than forecasted Trade Balance result from the United States at -42.9 bln vs. 47.5 bln, plus the US initial jobless claims were healthier at 361K vs. 370K expected. The move was given enough momentum to continue south this morning & hit the 1.5580 support before bouncing back to 1.5600. Technical analysis indicates a preference to sell from the pivot point 1.5645 with initial profit target eyed at 1.5570.

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

The pair remains in a gentle downtrend which began on Wednesday falling from the 1.2440 resistance. In the London open, as pressure mounts, the price is testing  the weeks lowest price at 1.2260. At the same time EUR/GBP hovers around the 0.7860/55 support and break lower would spill over into EUR/USD. At 19:00 BST we have the US Monthly Budget Statement (July) which may cause some volatility before liquidity disappears over the weekend.

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

The JPY crosses were mostly range bound. JPY was generally on the back foot with the USD/JPY push up to 78.80 overnight and buoyancy continuing into the Asian day keeping some JPY cross bears at bay. USD/JPY itself traded a tight 78.51-64 range.  The bid tone continued into the afternoon however, suggesting some are eyeing a break above offers ahead of 78.80-85 resistance. Stops are noted above 79.85 and 79.00 but Japanese exporter leave orders are expected all the way up.  Looking ahead, technical analysis is pointing to a  moderately higher day for the pair with a pivot of 78.35 and resistance at 78.62 and 78.80.

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

The Aussie came under some serious selling pressure following a monetary policy statement from the Reserve Bank of Australia (RBA) which delivered a softer tone. This along with weaker than expected trade data from China sent AUD/USD through the 1.0550 support down to  1.0495 in a matter of hours. The London open has seen a pull-back up to 1.0520 as bullish traders took advantage of the low price. Technical analysts indicate a preference to sell from 1.0535 with an initial profit target at 1.0480.  

Gold (XAU):

XAU/USD did little to break the range that it established early in the week and has continued to stay within its confines (1607/16) with minor, temporary breaks on the topside.  Opening in Asia at 1617.27, the precious metal quickly dropped back within the range and found some support at the 1612 area before continuing its drop lower to finally close the session at 1610.  Technical analysis has a preference to sell gold at a pivot of 1618 with support at 1605 and 1600.

Oil:

OIL/USD opened in Asia at 93.46 and proceeded to trade lower during the session, before finally closing at 92.60.  Oil is approaching 91.84, the 50% Fibonacci retracement level from the high seen on the 1st May this year and could find some resistance at this level.  Technical analysis is pointing to a lower day for oil with a pivot of 64.60 and support at 91.50 and 90.60.

Technical Commentary:

  Sup 2 Sup 1 Last Res 1 Res 2
GBP/USD  1.5540  1.5570  1.5607  1.5645  1.5675
EUR/USD  1.2214  1.2250  1.2272  1.2325  1.2380
USD/JPY  78.25  78.35  78.43  78.65  78.80
AUD/USD  1.0450  1.0480  1.0522  1.0535  1.0580
XAU/USD  1600.0  1605.0  1609.1  1618.0  1625.0
OIL/USD  90.60  91.50  92.18  94.60  96.00

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