CURRENCY TRADING SUMMARY – 27 FEBRUARY 2008
U.S. Dollar Trading (USD) was battered across the board as reports showed that consumer confidence dropped in the month February 87.3 to 75.0, establishing its lowest level in five years. Consumers remain pessimistic that the world’s largest economy is destined to continue its slowing. The Dollar further suffered on dovish comments made by Fed Vice Chairman Kohn. In his speech today, Donald Kohn said that he did not foresee the current levels of elevated inflation to persist, reaffirming market expectations that the FOMC meeting in march will eventuate in another 50 bps cut. In U.S. share markets the NASDAQ was down 17.51 points (0.75%) whilst the Dow Jones was also up by 114.70 points (0.91%). Crude oil also traded at record high overnight of US$101.23 up US$2.00 a barrel. On Wednesday, heavy data is scheduled with the release of New Home Sales and Durable Goods for the month of Jan. More importantly, Fed Chairman Bernanke is scheduled for his semi-annual address on Monetary Policy, as markets will listen more attentively then usual to see if he echoes Vice Chairman Kohn comment last night or takes an opposing stance.
The Euro (EUR) traded at a fresh record high on Tuesday, following a battered US dollar. In data specific news, the German IFO came in at 104.1, well above the expected 102.8, weakening the case for near-term Euro zone interest rate cuts and easing concerns about the health of the single currencies largest economy. The EURUSD traded low of 1.4779 with a high of 1.4984 before closing the day at 1.4968 in the New York session. Gfk consumer confidence and ECB Weber are the key events on Wednesday. UPDATE: The Euro broke through key 1.50 levels for the first time on the open of the Asian session, Trading at an all time high of 1.5050
The Japanese Yen (JPY) strengthened on a broadly weaker dollar on Wednesday following a significantly concerned Fed Vice-Chairman last night. The USDJPY traded with a low of 107.20 and a high of 108.14 before closing the day at 107.24in the New York session.
The Sterling (GBP) rose against the generally weaker greenback as the market caught up with the Bank of England's view that interest rates will be cut gradually, rather than sharply. Overall the GBPUSD traded with a low of 1.9640 and a high of 1.9874 before closing the day at 1.9858 in the New York session. UK GDP data is released on Wednesday.
The Australian Dollar (AUD) continue gaining against the US dollar and Japanese yen, boosted by increased risk appetite as investors piled into higher yield currencies. Overall the AUDUSD traded with a low of 0.9250 and a high of 0.9335 before closing the day 0.9321 in the New York session. The NZD also traded at a record high early Asian Session trading with a high of 0.8186.
Gold (XAU) surged on a broadly weaker dollar, higher oil prices and appeal as a safe haven investment. XAU traded with a low of 926.40 and a high of 948.50
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Euro – 1.4995
Initial support at 1.4778 (Feb 26 low) followed by 1.4702 (Feb 21 low). Initial resistance is now located at 1.5050 (Feb 27 high) followed by 1.5096 (1.4440 plus 1.4311 to 1.967).
Yen – 107.35
Initial support is located at 106.73 (Feb 22 low) followed by 106.35 (Feb 11 low). Initial resistance is now at 108.22 (Feb 25 high) followed by 108.67 (38.2% retracement of the 114.66 to 104.97 decline)
Pound – 1.9865
Initial support at 1.9644 (Feb 26 low) followed by 1.9611 (Feb 22 low). Initial resistance is now at 1.9876 (Feb 26 high) followed by 1.9960 (Jan 30 reaction high)
Australian Dollar – 0.9330
Initial support a 0.9216 (Feb 25 low) followed by 0.9167 (Feb 21 low). Initial resistance is now at 0.9400 (Round Number) followed by 0.9500 (Round Number)
Gold – 951.80
Initial support at 906.1 (Feb 19 low) followed by 896.50 (Feb 7 low). Initial resistance is now at 954.60 (Feb 21 high) followed by 970.73 (Bull channel resistance)
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