• USD: Higher, concern about EU debt contagion, China slowdown, productivity slows, jobless claims drop
• JPY: Higher, supported by a spike in risk aversion as Asian equities tank
• EUR: Lower, fear of Greek contagion risk, ECB leaves rates policy unchanged, EUR/CHF tumbles
• GBP: Lower, services PMI dips, election uncertainty
• CAD and AUD: AUD & CAD lower, Australian retail sales growth slows, Shanghai index falls 4%

Overview
The dollar index traded at a new high for the year and the USD traded at a 14 month high versus the EUR supported by concern that the EU may not be able to contain the Greek debt crisis and in reaction to fear that tightening in China has slowed the Chinese economy. The Greek prime minister said that taking bailout money from the EU/IMF is Greece’s only hope to avoid a debt default. Rioting and strikes continue throughout Greece in protest of Greece’s plan to impose harsh austerity measures in return for the bailout funds. EUR was also pressured by a heavy selling of the EUR/CHF cross with the CHF  trading at a record high versus the EUR in reaction to report that the SNB pulled its intervention support bid for the EUR. EUR extended its decline after the announcement that the ECB left monetary policy unchanged. EUR staged a modest recovery in reaction to statement from ECB President Trichet that a Greek default is out of the question. Trichet also said that the ECB is not considering buying sovereign debt. EUR was back on the defensive as US stocks tank. GBP traded lower pressured by report of weaker than expected UK services PMI and UK election uncertainty. The UK election is being held today and is expected to result in a hung parliament. Asian equities traded sharply lower with the Shanghai index falling by 4%. The decline in the Shanghai index reflects concern that the Chinese economy is slowing. The decline in Asian equities contributes to risk aversion and fueled selling of commodity currencies. AUD traded lower in reaction to report of weaker than expected Australian retail sales. The CAD was pressured by report of a modest dip in Canada small business confidence with downside limited by report of the surge in Canadian building permits. JPY traded higher supported by safe haven flows and rising risk aversion. US economic data was mixed. Jobless claims declined by slightly less than market expectation.Q1 productivity slowed but came in above expectation and unit labor costs dropped by more than expected. Focus turns to Friday’s release of US April nonfarm payrolls and unemployment rate. Nonfarm payrolls are expected to post a strong rise with the unemployment rate expected unchanged at 9.7%. The Fed’s Bullard said he expects positive US Jobs growth through the summer. The Fed’s Lacker said he sees a durable recovery and that it is best for the Fed to normalize the balance sheet before hiking interest rates. He warned about complacency on inflation.

Today’s US data:
Initial jobless claims for week ending 05/01 dropped by 7k to 444k, a reading of 442k was expected. Q1 productivity rose by 3.6%, a 2.7% rise was expected. Q1 unit labor costs declined by 1.6%, a 1.1% decline was expected.

Upcoming US data:
On May 7th April nonfarm payrolls and unemployment will be released. Nonfarm payrolls are expected to rise by 190k compared to 162k last month with the unemployment rate unchanged at 9.7%. March consumer credit will also be released on May 7th expected at -2.35bln compared to -11.51bln last.

JPY
Japanese markets reopened for the first time in three days and the Nikkei dropped 3%. JPY  traded sharply higher supported by risk aversion as equity markets continue to decline in reaction to concerns about contagion risk from the Greek debt crisis. JPY was also supported by significant gains in cross trade to Europe and commodity currencies. EUR/JPY traded close to 2% lower with EUR pressured by concern that the EU has not taken enough steps to contain the Greek debt crisis. AUD/JPY traded 2% lower as investors continue deleveraging positions in equity and commodity markets because of fear the Greek debt crisis may be spreading. It’s interesting that the recent strength of the JPY has not sparked threats of intervention from Japan. A Japanese government panel recently called for the BOJ set an inflation target and targets for the JPY. Stronger JPY contributes to deflationary pressures and could slow the recent rebound in Japan’s export sales. JPY direction is expected to trade inversely to equities and risk sentiment.

On May 6th Japan’s April vehicle sales will be released.

Key technical levels to watch in USD/JPY include support at 92.40 the April 20th low with resistance at 93.98 the May 6th high.

EUR
EUR traded at a 14 month low versus the USD pressured by ongoing worries about the Greek debt crisis and heavy selling in cross trade to the CHF. For months the SNB has intervened and threatened to intervene in support of the EUR/CHF cross. The CHF has been in demand from investors seeking safety from the Greek debt crisis. SNB officials fear that appreciation of the CHF would contribute to deflationary pressures in Switzerland. The SNB has been accumulating large amounts in EUR during its intervention and today’s decision to pull this bid may partly reflect the SNB’s decision  that it’s becoming too costly to hold so many EUR’s with the EUR declining every day. Reassuring statements from EU officials failed to support the EUR. EU commission head Barrosso said that he is certain that all European countries will approve the Greek aid package. EU’s Banier said that he does not fear the risk of contagion from Greece. The ECB left interest rates unchanged at 1%. The EUR dropped to a fresh low for the trading session in reaction to the ECB’s decision to hold rates policy steady as the ECB provided no new measures to combat the fallout from the Greek crisis. In the press conference following the ECB rate decision ECB president Trichet said that rates are appropriate, inflation expectations remain well anchored, the economic recovery may be uneven at times but he expects the economy to strengthen in the spring and risk to this outlook is broadly balanced. He went on to say that concerns remain about financial market stress. In the Q&A Trichet said that the ECB did not discuss buying EU bonds or additional quantitative easing measures. Today’s EU economic data continues to point towards firming of the recovery. German March manufacturing orders rose by 0.5%. EUR experienced a bit of stability above 1.27 after S&P announced that it was reaffirming its outlook for the Italian debt outlook as stable and  EU officials have been critical of the credit rating agencies complaining that some of the recent credit downgrades were unwarranted and exacerbate the EU sovereign debt crisis. EUR tried to stage a recovery rally in reaction to a statement from Trichet that Greek default was out of the question.  EUR remains vulnerable to fear of contagion debt risk in Europe. The Greek parliament is expected to vote on the aid package today. The Greek PM said that without the aid package there is no way that Greece could avoid default. The Greek parliament passed the austerity bill.

The technical outlook for the EUR is negative as EUR breaks 1.2800. Expect EUR support at 1.2616 the March 11th 2009 low with resistance at 1.2857 the May 6th high.

GBP
GBP traded lower pressured by disappointing UK service sector PMI report and UK election uncertainty. UK April services PMI declined to 55.3 from 56.5 last month. The unexpected decline in UK services PMI may spark concern about the strength of the UK recovery. Wednesday the UK reported that construction PMI rose to its highest level in 32 months. Today’s modest decline in services PMI should not generate too much concern about the UK recovery as recent UK data including yesterday’s construction PMI point to strengthening of the recovery and rising inflationary pressures. The UK election is taking place today and there is fear that the election will result in a hung parliament for the first time since 1974. A hung parliament may make it difficult for the UK addresses its record budget deficit. Failure to take quick action to tackle the UK budget deficit could result in downgrade UK AAA debt rating. GBP downside is currently limited by significant gains in cross trade to the EUR as investors flee the EUR because of concern that the sovereign debt risk in the EU is spreading. Investors have become more comfortable with the idea that no matter what the result of the UK election the members of the UK parliament know that it must take action to reduce the deficit. UK election outcome has become less of a negative for the GBP.

UK national election will be held on May 6th. On May 7th April PPI will be released expected at 3.8% compared to 3.6% last month. The BOE policy meeting will be delayed until May 10th because of the UK election.

The technical outlook for GBP is mixed as GBP struggles to hold above 1.5200. Expect near-term support at 1.4893 the March 29th low with resistance at 1.5265 the May 4th high.

CAD
CAD traded lower pressured by a spike in risk aversion, and weaker equity and commodity markets. CAD downside was limited by a strong Canadian builders permit report. Fear of a debt contagion from the Greek fiscal crisis has encouraged investors to the de-leverage positions in growth led and commodity-based currencies. Crude oil prices dropped below $80 a barrel Thursday. Fear that growth is slowing in China contributes to selling pressure of commodities. Sunday, China hiked its bank reserve ratio by 50bps for third time this year and Monday China reported a slowing in its manufacturing sector. The Shanghai index dropped 4% Thursday on concern about slowing growth in China. Canada’s building permits surged 12.2% in March, a 0.9% rise was expected. Strong Canadian housing data was offset by Greek debt contagion fear and report of a dip in Canadian small business confidence. Canada’s small business confidence declined to 66.4 from 69.9 last month. April Ivey PMI came in above expectations at 58.7 compared to 57.8 last month, a reading of 56.8 was expected. There was limited reaction to a statement from Canada’s Finance Minister Flaherty that he does not think the Greek crisis is a direct threat Canada but he fears it will hurt other countries. If the Greek debt contagion spreads to other countries it could eventually slow the global recovery and hurt the outlook for Canadian export sales. Focus turns to Friday’s release of US and Canadian employment data. Investors will be looking closely at the employment growth component of the Canadian report for clues to the strength of the recovery and to gauge the possible risk of an earlier BOC rate hike.

On May 7th April unemployment and employment growth will be released. The unemployment rate is expected at 8.1% compared to 8.2% last month with employment growth at 25k compared to 17.9k last month.

The technical outlook for CAD is negative as USD/CAD trades above 1.0200. Look for near-term support at 1.0232 the May 5th low with resistance at 1.0408 May 6th high.

AUD
AUD traded lower pressured by declining equity and commodity markets and rising risk aversion sparked by fears of debt contagion risk in Europe and slowing growth in China. Investors are liquidating holdings of stocks, commodities and high-yield currencies because of lack of confidence that EU officials can contain the spread of the Greek fiscal crisis. AUD is also weakening in reaction to concern about slower growth in China and speculation that the RBA will pause its tightening cycle. China reported that manufacturing growth slowed in March. The Shanghai index declined by 4% Thursday. China is a major export destination for Australia and slowing growth in China could hurt the Australian recovery. AUD was also pressured by report of weaker than expected Australian retail sales. Australia’s Q1 retail sales rose by 0.1%, a 0.8% rise was expected. Australia’s March trade balance narrowed -2.08bln from -2.2bln last month. The RBA hiked interest rates 25bps to 4.25% Tuesday. In a statement following the RBA rate hike, RBA Governor Stevens suggests that Australian interest rates were near the average. This statement by Stevens suggests that the RBA is considering a pause in its rate hike cycle. AUD direction is expected to continue to track equities and commodities. AUD remains vulnerable to diminished RBA rate hike speculation.

On May 7th Australia is monetary policy report would be released.

The technical outlook for the AUD is negative as the AUD breaks below 9100. Expect AUD support at 8935 the March 1st low with resistance at 9118 the May 5th high.

Source: Easy Forex

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CURRENCY TRADING SUMMARY – 2nd April (00:30GMT)

U.S. Dollar Trading (USD) continued to find sellers as the market sold the safe haven currency in favor of riskier investments. Economic data is steadily improving with weekly jobless claims falling to 439k vs. 445k previously and March ISM Manufacturing jumping to 59.6 vs. 56.5 previously. In US stocks, DJIA +70 points closing at 10927, S&P +8 points closing at 1178 and NASDAQ +4 points closing at 2402. Looking ahead, March Non Farm Payrolls forecast at 190k vs. -36k previously. The Unemployment rate is forecast to stay at 9.7%.

The Euro (EUR) the rally continued for a second day as traders were optimistic that the global recovery including Europe was on track. EUR/JPY tracked above Y127 for the first time since January 28^th. German Retail Sales were weaker than expected at -0.4% vs. -0.1% forecast m/m. Overall the EUR/USD traded with a low of 1.3459 and a high of 1.3593 before closing at 1.3585. Looking ahead, Easter Bank Holiday.

The Japanese Yen (JPY) the market pushed the USD/JPY to fresh multimonth highs just above Y94 ahead of the very important US job figures today. Q1 TANKAN Survey at -14 vs. -13 forecast and -24 previously. Most crosses extended there respective rallies except for CHF/JPY which was lower on intervention by the Swiss central bank. Overall the USDJPY traded with a low of 93.26 and a high of 94.08 before closing the day around 92.85 in the New York session.

The Sterling (GBP) tracked the Euro higher on general risk appetite to test 1.5300. GBP/JPY traded above Y143 for the first time since Feb 17 and is turning aggressively bullish as the trade gains momentum. EUR/GBP traded briefly below 0.8880 but failed to follow through. Overall the GBP/USD traded with a low of 1.5179 and a high of 1.5301 before closing the day at 1.5270 in the New York session.

The Australian Dollar (AUD) Regained the 0.9200 level as Oil and Gold rallied heavily and risk appetite helped the high yielding currency. AUD/NZD reclaimed the 1.3000 level after an IMF report put the NZD as overvalued by 10-15%. February Trade Balance forecast at -1924mn vs. -1300 forecast. Overall the AUD/USD traded with a low of 0.9153 and a high of 0.9219 before closing the US session at 0.9195.

Oil & Gold (XAU) broke higher above resistance at $1119 to trade in the $1120′s. Overall trading with a low of USD$1111 and high of USD$1128 before ending the New York session at USD$1126 an ounce. Staged another impressive rally to break and close for the week above $85 a barrel. Crude Oil was up +$1.39 ending the New York session at $83.76.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3247	1.3270	1.3575	1.3591	1.3608
USD/JPY	91.09	91.77	93.80	94.64	95.10
GBP/USD	1.4784	1.4975	1.5270	1.5327	1.5382
AUD/USD	0.8936	0.8978	0.9200	0.9216	0.9250
XAU/USD	1085.00	1102	1125.00	1133	1145.00
OIL/USD	83.80	85	85.30	86	88.00

Euro – 1.3575

Initial support at 1.3270 (March 26 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3591 (April 1 high) followed by 1.3608 (0.618 of 1.3818-1.3268)

Yen – 93.80

Initial support is located at 91.77 (Mar 25 low) followed by 91.09 (Mar 24 low). Initial resistance is now at 94.64 (Aug 25 high) followed by 95.1 (0.618 of 101.44-84.83).

Pound – 1.5270

Initial support at 1.4975 (Mar 30 low) followed by 1.4784 (Ma low). Initial resistance is now at 1.5327 (Mar 31 high) followed by 1.5382 (Mar 19 high).

Australian Dollar – 0.9200

Initial support at 0.8978 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9216 (Mar 30 high) followed by 0.9250 (March 17 high).

Gold – 1125

Initial support at 1085 (Mar 24 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1118 (Mar 31 high) followed by 1133 (Mar 17 high).

Oil – 85.20

Initial support at 85.00 (Intraday Support) followed by 83.80 (Intraday Support). Initial resistance is now at 86.00 (March high) followed by 88.00 (Intraday Resistance).

Source: Easy Forex

My recommended Forex Broker is Forex Yard.

• USD: Higher, house prices fall less than expected, consumer confidence falls sharply, stocks decline
• JPY: Higher, supported by spike in risk aversion and gains in cross trade
• EUR: Lower, IFO unexpectedly declines, German growth may have contracted in Q1, Greek bank downgrade
• GBP: Lower, weak mortgage approvals, BOE’s King says QE may be expanded
• CAD and AUD: AUD & CAD lower, crude oil prices drop, hawkish comments from the RBA deputy governor

Overview
The USD traded higher Tuesday in reaction to weaker economic data from Europe and a sharp drop in US consumer confidence. The EUR was pressured by report of an unexpected drop in German IFO and ongoing concern about the outlook for sovereign debt risk in Greece. EUR was also pressured by report that Fitch has downgraded Greek banks. GBP was pressured by report of weaker than expected UK mortgage lending and comments from a number of BOE officials which suggest that the BOE may have to expand quantitative ease if the UK economic outlook weakens. There was active trade in the EUR/CHF cross with the CHF trading near two week low versus the EUR pressured by rumors of SNB intervention. Commodity currencies traded lower in reaction to a sharp drop in the price of crude and weaker equity market trade. AUD downside was limited by hawkish comments from the RBA deputy governor that strong AUD is helping contain inflation. US economic data was mixed with the Case Shiller home price index coming in near market expectation and consumer confidence posted a sharp decline. USD and JPY rallied to the day’s highs after the release of the weak US consumer confidence supported by weaker equity market trade and a spike in risk aversion. Focus turns to Fed Chairman Bernanke’s testimony before Congress Wednesday and the release of US home sales. The trade expects Bernanke to downplay the risk of an imminent tightening by the Fed. Late Monday the Fed’s Yellen said the US economy still needs low interest rates. New home sales are expected to post a modest gain.

Today’s US data:
December case Shiller HPI came in at -3.1%, a reading of -3.8% was expected. February consumer confidence declined to 46 from 56.5 in January, a reading of 56 was expected.

Upcoming US data:
On February 24th January new home sales will be released expected at 360k compared to 342k last month. On February 25th January durable goods will be released expected at 1.5% compared to 1% last month along with initial jobless claims for the week ending 02/20 expected at 460k compared to 473k last week. On February 26th Q4 preliminary GDP will be released expected at 5.5% compared to 5.7% in the original report. February Chicago PMI and final Michigan sentiment will also be released on February 26th. The PMI is expected at 60 compared to 61.5 last month and Michigan consumer sentiment is expected at 74 compared to 73.7 last month. Finally on February 26th, January existing home sales will be released expected at 550k compared to 545k last month.

JPY
JPY traded sharply higher supported by concern over Greece, speculation that US interest rates will remain low and by Yuan revaluation speculation. JPY rallied in cross trade to Europe supported by spike in risk aversion as the EU has yet to confirm a plan to aid Greece and in reaction to weaker than expected economic data from Europe and the US.  German IFO posted an unexpected decline and UK mortgage approvals came in weaker than expected. Fed Chairman Bernanke will testify before Congress Wednesday. The trade expects Bernanke to downplay the risk of an imminent tightening by the Fed. Last week the Fed surprised the markets and hiked the discount rate by 25bps. Fed officials indicated that the rate hike was technical. Investors will be monitoring Bernanke’s testimony for his explanation of why the Fed hiked the discount rate. Pimco’s EL-Erian joins the recent chorus of a number of analysts predicting that China will soon allow Yuan appreciation. JPY sometimes benefits as a proxy for Yuan revaluation. There was limited reaction to the release of the BOJ policy minutes for January 25th-26th meeting. The minutes state that the economic outlook in Japan was more balanced but weak consumption points to a slow recovery. The government’s overall economic assessment for last month was unchanged but the government expressed concern about deflation and worsening employment outlook in Japan. JPY price direction appears to have re-linked with risk sentiment. JPY traded to the day’s highs after the release of a sharp drop in US consumer confidence. The drop in consumer confidence may temper Fed rate hike fears and sparked safe haven demand for the JPY.

This week’s Japanese economic calendar includes the February 24th release of the January trade balance expected at ¥545bln compared to ¥-40bln last month. On February 26th January CPI will be released expected at -0.2% compared to -0.5% last month along with January industrial output, retail sales, housing starts and construction orders. Industrial output is expected at 2.2% compared to 0.7% last month. Retail sales are expected to fall by 1.2% compared to 0.2% Last month. Housing starts are expected to rise by 3.3% compared to 2.5% last month and construction spending is expected to rise by 0.6% compared to 24.5% last month.

Key technical levels to watch in USD/JPY include support at 90.14 the February 17th low with resistance at 91.90 the February 22nd high.

EUR
EUR traded lower erasing early overseas gains pressured by report of an unexpected decline in German IFO and ongoing concern about EU sovereign debt risk. EUR traded to new lows for the day after the release of weaker than expected US consumer confidence. The decline in US consumer confidence sparked selling of equities and a spike in risk aversion. German February IFO declined to 95.2 from 95.8 last month. IFO officials state that the German economy may have contracted in Q1. The trade ignored the future expectations component of the IFO which rose slightly to 100.9 from 100.6. Weaker than expected growth outlook in Germany adds to concern that deficit cuts in peripheral Europe will lead to a protracted economic recovery. The German economic minister said that the German recovery may not yet be self-sustaining. Concern about the outlook for Greek sovereign debt continues to pressure the EUR. German Chancellor Merkel said the EU must do everything necessary to ensure Greece reduces its deficit and that the stability of the EUR is at stake. ECB’s Bini Smaghi said that any aid to Greece will be lower than earlier reports. Yesterday German press reported that the EU plans a 25bln bailout for Greece. This bailout report was denied by the German finance minister. Analysts at Goldman cut their target for EUR citing concern that the Greek deficit troubles have sapped confidence in the EU and permanently increased the risk of holding the single currency. According to Goldman the current sovereign debt crisis is the most threatening since the EUR came in existence and the crisis exposes the problems of coordinating fiscal policy with currency union. EUR was also pressured by concern about Spain’s debt outlook. ECB’s Ordonez said that bad loans will continue to rise in Spain as the labor market deteriorates and Spain must take aggressive action to reduce its deficit. EUR remains vulnerable to concern about EU sovereign debt risk and speculation that the US economy will recover faster than the EU.

On February 25th EU business climate will be released expected at 98 compared to 97.1 last month. On February 26th EU January CPI will be released expected at 1.2% compared to 1.1% last month.

The technical outlook for the EUR is negative. Expect EUR support at 1.3425 the May 18th low with resistance at 1.3692 the February 23rd high.

GBP
GBP traded lower pressured by report of weaker than expected UK mortgage approvals and revived speculation that the BOE may expand quantitative ease. GBP decline accelerated after the release of weaker than expected US consumer confidence. UK mortgage lending rose by 2.7bln in January, this marks the lowest level since last July. The housing sector has been one of the main bright spots in the UK recovery and today’s disappointing mortgage approvals report generates concern about the strength of the housing market recovery. A number of BOE officials testified before UK Parliament today. The BOE’s Miles said that quantitative ease may be expanded if the economy weakens and the BOE Governor King said it may be necessary to expand quantitative ease. The BOE’s Tucker however expressed concern about the recent rise in UK CPI and warned that if stimulus is withdrawn to slowly it will increase the risk of inflation in the UK. Tucker said that the BOE cannot ignore the rising risk of UK inflation. UK January inflation was reported to have risen by 2.9%. The rise in January inflation is near the high end of the BOE 1 to 3% inflation target range. Tucker’s comments helped to limit the GBP downside. GBP remains vulnerable to concern about UK debt, economic outlook and possibility of an expansion of the BOE’s quantitative ease. This week’s main focus will be Friday’s release of UK GDP. An upward revision in GDP could help to slow the rate of the GBP decline.

This week’s UK economic calendar includes the February 26th release of Q4 GDP expected at 0.2% compared to 0.1% in the prior report. January GFK survey and nationwide home prices will also be released on the 26th. The GFK is expected unchanged at -17 and house prices are expected to rise by 0.4% compared to 1.2% last month.

The technical outlook for GBP is negative as GBP trades below 1.500. Expect near-term support at 1.5345 the February 19th low with resistance at 1.5683 the February 18th high.

CAD
CAD traded lower with selling pressure attributed to a decline in the price of crude oil and a spike in risk aversion as global equity markets decline in reaction report of weaker than expected US consumer confidence. Crude prices traded about one dollar lower. Equity markets weakened in reaction to ongoing impact of sovereign debt risk in Europe and uncertainty about Fed policy outlook. There were no major Canadian economic reports scheduled for release today. CAD is consolidating near one-month high versus the USD supported by recent economic data from Canada which indicate that the domestic economy is improving and gains in cross trade to Europe. Last week Canada reported higher than expected retail sales and above expectation inflation with CPI rising close to the 2% BOC target. The BOC has pledged to maintain low yields through June of 2010 as long as inflation remains in check. The next BOC policy meeting will be held on March 2nd. The trade will be looking to see if the BOC makes any adjustments in its policy outlook because of the recent improvement in Canadian economic data and rising inflation.

On February 26th Q4 current account will be released expected at -8.75bln compared to -13.12bln last quarter

The technical outlook for CAD is mixed to positive as USD/CAD trades below 1.0500. Look for near-term support at 1.0350 January 19th low with resistance at 1.0580 the February 12th high.

AUD
AUD traded both sides of settlement with early overseas gains giving way to a sharp selloff sparked by weaker commodity and equity prices. AUD downside was initially limited by hawkish comments from RBA Deputy Governor Battellino. Battellino said that a strong AUD helps to contain inflationary pressures. His comments are seen as an endorsement of recent tightening of RBA monetary policy. Tighter RBA monetary policy helps to generate demand for the AUD and high-yield currencies continue to outperform gaining against the European currencies and the USD. AUD turned sharply lower after the release of an unexpected sharp drop in US consumer confidence with selling attributed to weaker equity market trade and a spike in risk aversion. AUD was also pressured by selling in cross trade to the JPY. AUD/JPY cross this traded almost 2% higher gaining against all the majors supported by safe haven demand. Last week RBA Governor Stevens said that interest rates are still 50 to 100bps below average and that future policy changes will be made if the economy improves as expected. RBA Deputy Governor Lowe said that the outlook for the Australian economy is positive and he expects interest rates return to more normal levels. Lowes’ comments follow last Tuesday’s release of the RBA minutes which suggest that the RBA is considering future rate hikes. RBA watcher McCrann said that he expects the RBA to hike interest rates 200bps this year with a 25bps rate hike expected in March. AUD should remain well supported on breaks by RBA rate hike speculation and improving outlook for the global recovery.

On February 24th Q4 labor costs will be released expected unchanged at 0.7%. On February 25th Q4 capital expenditures will be released expected at -3.9% compared to 5% last month. On February 26th January private sector credit will be released expected unchanged at 0.3%.

The technical outlook for the AUD is positive as the AUD trades above 9000. Expect AUD support at 8879 the February 19th low with resistance at 9093 the January 22nd high.

Source: Easy Forex

My recommended Forex Broker is Forex Yard.

CURRENCY TRADING SUMMARY – 16th February (00:30GMT)

U.S. Dollar Trading (USD) was little changed in a quiet day of trading keeping to tight ranges against most currencies. US was on Holiday for President’s Day and China was also away for the New Year celebrations. Looking ahead, December Long term TIC flows forecast at 50bn vs. 126bn previously. Also released, NAHB Housing Market Index forecast 16 vs. 15.

The Euro (EUR) the market is focusing on the EU finance Ministers meeting for more details on Greece support. The EUR/USD pivoted the 1.3600 for most of the day but was very quiet. Overall the EUR/USD traded with a low of 1.3578 and a high of 1.3636 before closing at 1.3600. Looking ahead, EU Finance Ministers Meeting Statement expected. Also released, February German ZEW survey forecast at 42.5 vs. 47.2 previously.

The Japanese Yen (JPY) traded in a very tight range on the USD/JPY around the Y90 level but is starting to build support below the key level. Supporting risk in the Asian session was better than expected Q4 GDP at 1.1% vs. 0.9% forecast Q/Q. Overall the USDJPY traded with a low of 89.90 and a high of 90.25 before closing the day around 90.05 in the New York session. Looking ahead, Chinese holidays continue.

The Sterling (GBP) had the widest trading range of the majors with support in the lower 1.5600 area tested before resistance above 1.5700 later in Europe. GBP/JPY is building support below Y141 but is still contained by resistance at Y141.50. Overall the GBP/USD traded with a low of 1.5610 and a high of 1.5723 before closing the day at 1.5665 in the New York session.

The Australian Dollar (AUD) found support on dips from a strong performance in Gold overnight and positive stocks in Europe. Resistance above 0.8900 is containing for now whilst the market waits for speeches from RBA Stevens and Debelle later this week. Overall the AUD/USD traded with a low of 0.8846 and a high of 0.8912 before closing the US session at 0.8895. Looking ahead, February RBA meeting minutes released.

Oil & Gold (XAU) was a solid performer testing and closing above the key $1100 level. Overall trading with a low of USD$1091 and high of USD$1103 before ending the New York session at USD$1101 an ounce. Oil was little changed with the US away. Crude Oil was down -$0.13 ending the New York session at $74.00.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3423	1.3531	1.3600	1.3801	1.3839
USD/JPY	88.83	89.15	90.05	90.55	91.08
GBP/USD	1.5536	1.5560	1.5670	1.5776	1.5888
AUD/USD	0.8710	0.8750	0.8890	0.8921	0.8962
XAU/USD	1061.00	1078	1099.00	1111	1125.00
OIL/USD	70.00	72.50	74.10	75.00	77.00

Euro – 1.3600

Initial support at 1.3531 (May 19 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3801 (Feb 11 high) followed by 1.3839 (Feb 9 high)

Yen – 90.05

Initial support is located at 89.15 (Feb 8 low) followed by 88.83 (Feb 5 low). Initial resistance is now at 90.55 (0.382 of 93.77-88.56) followed by 91.08 (Feb 4 high).

Pound – 1.5670

Initial support at 1.5560 (Feb 11 low) followed by 1.5536 (Feb 8 low). Initial resistance is now at 1.5776 (Feb 5 high) followed by 1.5888 (0.382 of 1.6458-1.5536).

Australian Dollar – 0.8890

Initial support at 0.8750 (Feb 11 low) followed by the 0.8710 (Feb 10 low). Initial resistance is now at 0.8921 (Feb 2 high) followed by 0.8962 (Jan 29 high).

Gold – 1099

Initial support at 1078 (Feb 12 low) followed by 1061 (Feb 8 low). Initial resistance is now at 1111 (Feb 4 high) followed by 1125 (Feb 3 high).

Oil – 74.10

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).

Source: Easy Forex

My recommended Forex Broker is Forex Yard.