Weekly Reports

Week of April 14th, 2014

Weekly Forex Update
The minutes of the Federal Open Market Committee’s (FOMC) latest policy meeting took center stage last week and it influenced trading in currencies and commodities.
The US Dollar took a breather after the minutes of FOMC meeting revealed a more dovish stance than expected, prompting traders to shun the greenback. The minutes revealed that the Federal Reserve (Fed) policymakers were of the opinion that an interest rate hike would have to wait until 2015 or later. Additionally, officials unanimously agreed to scrap the 6.5% unemployment threshold for raising interest rates.
However, losses in the greenback were capped following the release of positive US economic data. The Thomson Reuters/Michigan consumer sentiment index rose in April to its highest level since July 2013, highlighting that the US consumers were more upbeat about the economy at start of the second quarter. Moreover, the number of Americans filing new claims for unemployment benefits fell sharply for the week ended April 5 to the lowest level since May 2007. Additionally, the monthly budget deficit narrowed more than expected in March.
The Euro jumped last week, as positive comments from few European Central Bank (ECB) officials helped ease traders’ concerns surrounding deflation risk in the bloc. The Bundesbank President and the ECB’s governing council member, Jens Weidmann downplayed deflation risk stating that the Euro-area’s risk of decline in consumer prices is low and any unconventional measures to avoid deflation would have to meet many conditions. Providing a further boost to investors risk appetite, reports indicated that Greece raised €3 billion in its first bond auction since 2010, sending a major signal that the Euro-zone debt crisis is fading.
The Pound gained traction following a spate of positive domestic macroeconomic data released last week that suggested that nation’s economic recovery is on track.
The Japanese Yen registered gains against the greenback, after the minutes of the Bank of Japan’s (BoJ) policy meeting revealed that the board members shared the view that the nation was on the path of economic recovery and that they were on the right track to counter deflation. The minutes further indicated that the policymakers did not see an imminent need for additional stimulus.
Commodity currencies including the Loonie, the Aussie and the Kiwi rose last week amid the broad dollar weakness.
The yellow metal recorded gains as traders snapped up the metal after the Federal Reserve’s latest meeting minutes signaled that interest rates are unlikely to rise in the near future.

EUR USD
Last week, the EUR traded 1.31% higher against the USD and closed at 1.3885. The Euro began the week on a positive note, following comments from two eminent ECB officials, Ewald Nowotny and Yves Mersch, who stated that additional monetary easing measures are not imminent to fight low inflation in the region, citing that the strengthening economy could itself reduce the danger of deflation in the bloc. Moreover, another member, Jens Weidmann echoed similar views and indicated that he saw no risk of deflation spiral taking hold in the Euro-zone and further added that the pick-up in the bloc’s economic recovery would eventually cause the inflation rate to gradually rise. The Euro further gained, after news that Greece successfully sold 5-year notes in the bond market. Additionally, the Fitch Ratings raised its outlook on Portugal to “Positive” from “Negative”, citing a falling budget deficit and sturdy economic recovery. During the week, the pair traded at a high of 1.3906 and a low of 1.3697. The pair is expected to find its first support at 1.3753, with the next support expected at 1.3620. The first resistance is at 1.3962 and the next at 1.4038.

Ahead this week, the Euro area inflation report will attract significant market attention along with industrial production and German ZEW sentiment data.

GBP USD
In the last week, GBP traded 0.95% higher against the USD and closed at 1.6733, as upbeat industrial and manufacturing output in the UK boosted investor sentiment, while UK’s trade deficit narrowed as imports fell more sharply than exports. Also, the Conference Board’s leading economic index rose in February, signaling that the recovery in the nation is set to continue in coming months. Moreover, the Britain’s economy got a double boost in the previous week. The National Institute of Economic and Social Research (NIESR) reported that the nation’s economy grew at its fastest quarterly rate since early 2010, in the first quarter of 2014. Also, the International Monetary Fund raised the country’s growth forecasts and stated that the UK is set to be the world’s fastest-growing major advanced economy in 2014. In an another key event, the Bank of England (BoE), kept its interest rate unchanged at a record-low 0.5%, citing a slack in the domestic labor market. The pair traded at a high of 1.6822 and a low of 1.6565 in the previous week. GBPUSD is expected to find its first support at 1.6591, with the next at 1.6450. Resistance exists first at 1.6848, and then at 1.6964.

In the week ahead, UK’s consumer price inflation and employment data would be crucial for determining short term trend in the Pound.

USD JPY
The USD traded 1.62% lower against the JPY and closed at 101.62 in the last week, following the release of the minutes from the Fed’s March 18-19 policy meeting that dampened expectations that the central bank would start raising its interest rates in the near future. Moreover, the Japanese Yen gained after the minutes of the BoJ’s latest policy meeting indicated that policymakers agreed that the Japanese economic recovery and inflation are moving in line with the central bank’s expectations and that the policy makers are unlikely to resort to further easing measures in the near term. Additionally, the minutes revealed that consumer spending would not decline following the sales tax hike in April, as the domestic labor market has shown the signs of improvement lately. The pair traded at a high of 103.35 and a low of 101.32. The pair is expected to find its first support at 100.84, with the next support expected at 100.07. The first resistance is at 102.87 and the next at 104.13.

Market participants would keep a tab this week on domestic industrial output and consumer sentiment data.

USD CHF
The USD backpedalled against the Swiss Franc, declining 1.79% last week to close at 0.8761, following the release of dovish Fed meeting minutes. The Swiss Franc gains came following the release of better-than-expected economic data in Switzerland. Annual consumer prices in the nation unexpectedly remained flat in March, providing relief to the Swiss National Bank policymakers as it indicated that the economy rebounded from deflationary pressures. Real retail sales grew 1.0% (YoY) in February, following a 0.1% decline in the previous month. Additionally, the State Secretariat for Economic Affairs (SECO) reported that on a non-seasonally adjusted basis, the unemployment rate in Switzerland dropped to 3.3% in March, in line with market expectations, compared to a rate of 3.5% reported in February. During the period, the pair traded at a high of 0.8925 and a low of 0.8742. The first support is at 0.8694, and the next at 0.8626. Resistance exists first at 0.8877, and then at 0.8992.

With a light economic calendar, Swissy traders would focus on global economic news for further guidance.

USD CAD
Last week, the USD fell marginally against the CAD and closed at 1.0980, as traders reduced their exposures in the safe currency after the latest FOMC minutes gave hints that policymakers are not inclined to adopt tighter monetary policy measures in the immediate future. The Canadian Dollar started the week on a positive note, after a survey by the Bank of Canada (BoC) indicated that the outlook for investment and employment in the nation firmed slightly in the first quarter of 2014. In a separate report, the Canadian housing starts fell more-than-expected in March, while building permits declined sharply in February, stoking fears over the health of the Canadian housing market. In noteworthy event, the IMF upgraded forecast for Canada’s economic growth for 2014, but cautioned about the nation’s weaker than expected exports, high household debt loads and high house prices which would affect the economic outlook. USDCAD traded at a high of 1.1011 and a low of 1.0857 in the previous week. The first support is at 1.0888, with the next at 1.0795. The first resistance is at 1.1042, while the next is at 1.1103.

This week, the Canadian inflation data will be on investors’ radar. Besides, interest rate decision by the BoC will likely hold the key for determining the near term trend for the Loonie.

AUD USD
AUD traded 1.13% higher against the USD last week, and closed at 0.9397, buoyed by strong domestic economic data. Unemployment rate in Australia fell to a seasonally adjusted 5.8% in March, from previous month’s level of 6.1% while the economy added 18,100, better than expectations for an addition of 5,000 jobs. Meanwhile, another report showed that consumer inflation expectations in Australia rose to 2.4% in April, the highest level since July last year. The Westpac consumer confidence index improved in April, while the National Australia Bank report revealed that nation’s business confidence dipped in March. During the week, the pair traded at a high of 0.9463 and a low of 0.9253. The first support is at 0.9279, and the next at 0.9161. The first resistance is at 0.9489, and the next at 0.9581.

Apart from key macro releases from the US this week, the Reserve Bank of Australia’s latest policy meeting minutes will be on investors’ radar. Additionally, the Chinese first quarter GDP and February’s retail sales and industrial production data would also prove a key determinant for the Aussie.

Gold
In the prior week, Gold traded 1.13% higher against the USD and closed at USD1318.42, after the Fed’s latest meeting minutes signaled that policy makers were in no hurry to lift interest rates. Also, market speculation that China might resort to stimulus measures to lift its economy, following the recent spate of dismal economic data provided support to gold prices. Moreover, gold prices were underpinned by heightened geopolitical tension as Ukraine’s government attempted to reassert control in the eastern city of Slaviansk, after pro-Russian separatists seized power. The yellow metal traded at a high of 1324.63 and a low of 1295.74 in the previous week. Gold is expected to find support at 1301.23 and the next at 1284.04. The first resistance is at 1330.12, while the next is at 1341.82.

In the week ahead, market participants will keenly await data from the US, especially the consumer price inflation and retail sales report for hints on the strength of the nation’s recovery. Moreover, speeches from influential Fed policymakers will be keenly awaited.

Crude Oil
Oil prices traded 2.57% higher against the USD in the last week and closed at USD103.74, amid broad weakness in the US Dollar and lingering tensions between Russia and the West over Ukraine. Moreover, oil prices also found some support after Libya’s oil protection force stated that it had not regained full control of the Zueitina oil port from the rebels. Also, the Energy Information Administration’s (EIA) monthly energy outlook report forecasted that crude average price would rise to $95.60 a barrel in 2014, compared to its previous forecast of $95.33. Moreover, the EIA trimmed its projections on the US crude production for 2014 and 2015. Meanwhile, the secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Abdullah al-Badri, stated that current crude prices are stable and the market has ample supply to meet demand, signaling that existing output ceiling would remain in place at its June meeting. Oil traded at a high of 104.44 and a low of 99.92 in the previous week. Oil has its first major support at 100.96, while the next support exists at 98.18. The first resistance is at 105.48 and the next at 107.22.

Traders would keep an eye on the situation in the Ukraine, as any flare-up in the situations could send oil prices higher.

Week of April 7th, 2014

Weekly Forex Update
Safe haven buying was the theme of last week’s trading session which can partly be attributed to rising deflation concerns taking grip in the Euro-zone. Also, lukewarm data from the UK weighed on market sentiment, proving beneficial for the US Dollar.
Meanwhile, encouraging ADP employment figures and factory orders data in the US supported greenback’s rally. However, a separate report from the Department of Labor indicated that the US nonfarm payroll employment rose by 192,000 in March, lower than expectations for a 200,000 increase. Additionally, the number of Americans filing new claims for unemployment benefits rose more-than-expected last week, while trade deficit widened raising doubts whether the Federal Reserve’s (Fed) taper will remain on track.
Earlier in the week, the USD came under pressure, after the Fed President, Janet Yellen, defended the central bank’s easy monetary policies and indicated that they would continue with it for some more time, citing the slowing pace of domestic economic recovery in recent months and the still weak US labor market. Additionally, few prominent Fed policymakers reiterated that the central bank is in no rush to hike interest rates and indicated that further improvement in the US economy would be necessary to alter the Fed’s stance.
Meanwhile, dovish comments by the European Central Bank (ECB) President, Mario Draghi, played on traders mind as the Euro declined for the third consecutive week against the USD. The ECB left its benchmark interest rate unchanged at a record-low 0.25%, held its marginal lending rate at 0.75% and left its deposit facility rate unchanged at zero. The prevalent deflation worries surrounding the Euro-zone prompted traders to stay away from Euro.
The Pound failed to gain traction following a barrage of dismal economic data released last week in the UK. However, losses were capped as the Bank of England (BoE) Governor, Mark Carney, hinted at the possibility of the central bank embracing higher interest rates ahead of next year’s elections in the UK.
The Yen lost ground against the US Dollar as traders remained on sidelines amid lack of decisive domestic triggers and amid speculation that the Bank of Japan (BoJ) would endorse its neutral policy stance to achieve the 2% target for inflation.
The Aussie managed to hold its ground against the USD, after the Reserve Bank of Australia (RBA) left interest rate unchanged and as the Governor, Glenn Stevens, sounded optimistic about the Australian economy.

EUR USD
Last week, the EUR traded 0.34% lower against the USD and closed at 1.3705, as the ECB President, Mario Draghi reiterated his dovish stance at the central bank’s policy meeting. He indicated that central bank’s governing council was “unanimous” in its commitment to use all unconventional instruments within its mandate to fight deflation threat and added that the board members also discussed the possibility of negative deposit rates. Moreover, the Organization for Economic Cooperation and Development (OECD) cautioned that deflation risks in the block have risen and urged the central bank to keep its interest rates at near zero over the medium term. On the economic front, inflation in the Euro-zone hit its lowest level since November 2009 in March, while services PMI fell more than preliminary estimates. The upbeat retail sales, unemployment rate and fourth quarter GDP in the Euro-zone and better-than-expected factory orders and manufacturing PMI data in Germany failed to provide necessary fillip to the common currency. During the week, the pair traded at a high of 1.3821 and a low of 1.3672. The pair is expected to find its first support at 1.3644, with the next support expected at 1.3584. The first resistance is at 1.3793 and the next at 1.3882.

Ahead this week, market participants will keep an eye on Euro-zone investor confidence and German industrial production, although talks of deflation in the bloc would continue to dominate market sentiment.

GBP USD
The GBP declined 0.38% against the USD last week and closed at 1.6575, as manufacturing PMI in the UK fell to an 8-month low reading of 55.3 in March, while services PMI recorded a 9-month low reading of 57.6. Also mortgage approvals eased in February, while consumer credit remained largely stagnant. However, losses were limited, as the BoE chief, Mark Carney, refused to rule out a rise in interest rates that could be implemented before the next general election in the UK. He did not hint at the specific timing of possible rate hikes, however indicated that interest rates would only rise when the economy was performing closer to full capacity and that hike in interest rate would be “gradual”. The pair traded at a high of 1.6686 and a low of 1.6554 in the previous week. GBPUSD is expected to find its first support at 1.6524, with the next at 1.6473. Resistance exists first at 1.6656, and then at 1.6737.

In the week ahead, the BoE policy meeting will generate significant market interest, as traders will keep a close watch for hints about change in the central bank’s policy stance.

USD JPY
The USD traded 0.45% higher against the JPY over the past week, closing at 103.29. The Japanese Yen came under pressure after a survey report by the BoJ on Wednesday indicated that Japanese companies and consumers were less optimistic about the central bank achieving its 2% inflation target by 2015, especially in the wake of the 3% sales tax hike that came into effect from April 1. Meanwhile, the Japanese Finance Minister, Taro Aso on Friday commended the BoJ’s aggressive monetary easing policy and indicated that it has enabled the nation to boost its consumer inflation rate and drive economic growth. In key economic news, the Tankan large manufacturing index rose less-than-expected to a reading of 17.0 in the first quarter of 2014, while the Tankan large manufacturing outlook declined more-than-expected to a reading of 8.0. The pair traded at a high of 104.14 and a low of 102.78. The pair is expected to find its first support at 102.67, with the next support expected at 102.04. The first resistance is at 104.03 and the next at 104.76.

Ahead this week, the outcome of the BoJ’s monetary policy meeting, will prove crucial for the Japanese Yen in the near term.

USD CHF
USD traded 0.60% higher against the CHF and closed at 0.8921 in the last week. The Swiss Franc declines came following the release of some uninspiring economic data in Switzerland. The SVME manufacturing activity expanded in March at the slowest pace since June last year. The PMI fell to a reading of 54.4 from 57.6 in February. Another report revealed that a leading indicator for the Swiss economy eased in March to hit a two-month low. The KOF Economic Barometer slipped to a reading of 1.99 in March from 2.03 recorded in the previous month. A separate survey for the Swiss economy by the Centre for European Economic Research (ZEW) revealed that economic expectations weakened for the third consecutive month in March. During the period, the pair traded at a high of 0.8954 and a low of 0.8814. The first support is at 0.8839, and the next at 0.8756. Resistance exists first at 0.8979, and then at 0.9036.

Apart from external cues, traders would keep an eye this week on Swiss economic data which includes consumer price inflation, real retail sales and unemployment rate.

USD CAD
Last week, the USD traded 0.72% lower against the CAD and closed at 1.0981. The Canadian Dollar advanced following the release of mostly better-than-expected economic data from Canada. Data revealed that Canada’s economy rebounded, from a drop in December, at a faster-than-expected pace in January. Additionally, nation’s merchandise trade balance swung to a surplus in February. A separate report showed that the economy added 42,900 jobs in March, exceeding market expectations for a 21,500 rise and after a 7,000 decline in February. Also, unemployment rate declined to 6.9% in March, from 7.0% in February. However, the Loonie came under pressure on Friday, after the Canadian Ivey PMI recorded a drop in March. USDCAD traded at a high of 1.1072 and a low of 1.0956 in the previous week. The first support is at 1.0934, with the next at 1.0887. The first resistance is at 1.1050, while the next is at 1.1119.

Ahead in the week, traders would focus on the Canadian housing data and a survey report on business outlook by the Bank of Canada.

AUD USD
AUD traded 0.49% higher against the USD last week, and closed at 0.9292. The RBA kept its key interest rate unchanged at 2.5% and indicated that the rates are likely to remain stable at current low levels for a considerable period of time. Moreover, the RBA Governor, Glenn Stevens, indicated that business and consumer sentiment have shown improvement of late and that exports have also been on an uptrend. In economic news, Australia recorded a seasonally adjusted merchandise trade surplus of A$1.2 billion in February, surpassing analyst forecasts for a surplus of A$850 million following the downwardly revised surplus of A$1.392 billion in January. During the week, the pair traded at a high of 0.9310 and a low of 0.9205. The first support is at 0.9228, and the next at 0.9164. The first resistance is at 0.9333, and the next at 0.9374.

Investors will keep a tab on the Westpac consumer confidence, National Australia Bank’s business confidence and the Australian employment data ahead this week.

Gold
Gold ended the week on a positive note, rising 0.65% against the USD to close at 1303.64, amid hopes that China will implement economic stimulus measures in the near-term to shore up slowing growth. Price for the yellow metal also got a boost from bargain hunters, who took advantage of the recent retreat in the precious metal and increased their exposure amid speculation that physical demand would strengthen. Also, the much-awaited monthly nonfarm report showed that the US economy created fewer jobs than expected last month. The March nonfarm payrolls increased by 192,000 in March, versus expectations for gains of 200,000. However, sentiments towards the precious metal remained under pressure, hurt by the decline in the bullion holdings by the SPDR Gold Trust exchange-traded fund. A leading broking house projecting a further downturn in gold prices added to the negative sentiment. The yellow metal traded at a high of 1307.30 and a low of 1276.98 in the previous week. Gold is expected to find support at 1284.65 and the next at 1265.65. The first resistance is at 1314.97, while the next is at 1326.29.

In the forthcoming week, minutes of the Fed’s latest monetary policy meeting will be crucial for determining near term trend in the precious metal. Also, speeches from influential Fed policymakers will offer insights about the central bank’s future course of action.

Crude Oil
Oil prices traded 0.44% lower against the USD in the last week and closed at USD101.14, hurt by a mixed batch of Chinese manufacturing PMI data. The lackluster manufacturing data released last week in the US and the Euro-zone also weighed on oil prices. Oil price also came under pressure, after reports showed that an eight-month blockage of Libya’s oil export ports would end after rebels and the government stated that they were close to an agreement. However, the losses were kept in check after the American Petroleum Institute (API) reported that US crude supplies dropped 5.8 million barrels for the week ended March 28, missing analysts’ expectations for an increase of 1.1 million barrels. Also, the Energy Information Administration reported that US crude supplies fell 2.4 million barrels, against expectations for an increase of 1.8 million barrels. Oil traded at a high of 101.97 and a low of 98.86 in the previous week. Oil has its first major support at 99.34, while the next support exists at 97.55. The first resistance is at 102.45 and the next at 103.77.

In the week ahead, a slew of important economic releases in the US along with the Federal Reserve meeting minutes will be watched closely for cues to further direction. Additionally, monthly reports from the International Energy Agency and the Organization of the Petroleum Exporting Countries due later in the week will also be crucial.

Week of March 31th, 2014

Weekly Forex Update
The greenback finished mixed against its key peers for the week ending March 28. Contradictory views offered by the Federal Reserve (Fed) policymakers, with regards to the interest rate hike kept a lid on the gains in the US Dollar. Better-than-estimated fourth quarter growth in the US supported greenback. Additionally, the number of people claiming first time unemployment benefits fell unexpectedly last week, hinting that recovery is underway in the US labor market. Furthermore, the US durable goods orders rebounded more-than-expected in February, while the Conference Board’s consumer confidence advanced to the highest level since January 2008 in March. However, Reuters/Michigan consumer sentiment index declined in March.
Moreover, simmering geopolitical tensions in Eastern Europe continued to hurt the overall economic sentiment, after the US threatened Russia with more sanctions in order to prevent the later from invading other parts of Ukraine.
The Euro came under pressure after few European Central Bank (ECB) policy-makers raised concerns of deflation setting into the Euro-zone and urged the use of additional non-standard measures including negative deposit rates in the near term to support the region’s economy. Meanwhile, the latest batch of downbeat manufacturing and services PMI for the Euro-zone and Germany also weighed on investors’ risk appetite.
The Pound registered gains against the USD, after upbeat UK retail sales data fuelled optimism on the nation’s economy. Additionally, the Gfk Group reported that consumer confidence in Britain improved more-than-estimated in March. Moreover, UK’s fourth-quarter GDP came in line with market expectations.
The Yen advanced on Friday, after the annual consumer price inflation in Japan rose as expected in February, inching closer towards the Bank of Japan’s (BoJ) 2% target. Additionally, the unemployment rate in the nation fell unexpectedly to 3.6%, while retail sales rose more-than-expected in February, suggesting an overall improvement in the Japanese economy.
The Aussie recorded gains last week, buoyed by the Reserve Bank of Australia (RBA) Governor, Glenn Stevens’ optimistic comments on the nation’s economy. Moreover, the Fitch Ratings earlier in the week affirmed its “AAA” rating on Australia’s long-term foreign and local currency IDRs with a “Stable” outlook. The Kiwi Dollar strengthened against the greenback last week following the release of upbeat domestic trade surplus data in February, which widened to its highest level since April 2011.

EUR USD
Last week, the EUR traded 0.30% lower against the USD and closed at 1.3752, following the dovish comments from the ECB President, Mario Draghi and the Bundesbank President, Jens Weidmann, who signaled the use of further monetary policy measures including negative deposit rates in the near term to support the region’s economy. The Euro also came under pressure, after manufacturing PMI in the Euro-zone declined to a three-month low reading of 53.0, while services PMI also disappointed. Separately, manufacturing and service PMI in Germany declined more than market expectations in March. Also, the IFO index on Germany’s business climate and business expectations fell more-than-expected in the similar period. During the week, the pair traded at a high of 1.3877 and a low of 1.3705. The pair is expected to find its first support at 1.3679, with the next support expected at 1.3606. The first resistance is at 1.3851 and the next at 1.3950.

Traders are expecting an action packed week ahead wherein the outcome of the ECB policy meeting is awaited along with key economic data out of the bloc. Additionally, a speech by the central bank President, Mario Draghi is also expected to garner market interest.

GBP USD
In the last week, GBP traded 0.92% higher against the USD and closed at 1.6638, after the Bank of England (BoE) policymaker, Martin Weale projected interest rates in the nation to gradually rise to a more normal level with a pickup in the nation’s economic recovery. In economic news, Britain’s GDP rose 0.7% sequentially in the fourth quarter, unrevised from the second estimate, while retail sales recovered at a stronger-than-expected pace in February. Moreover, British consumer confidence hit its highest level since August 2007 in March. However data released earlier in the week indicated that annual consumer price inflation in the nation eased in February, while mortgage approvals also fell marginally. The pair traded at a high of 1.6652 and a low of 1.6465 in the previous week. GBPUSD is expected to find its first support at 1.6518, with the next at 1.6398. Resistance exists first at 1.6705, and then at 1.6772.

Ahead in the week, traders would keep a tab on domestic macroeconomic data, including manufacturing and services PMI and a spate of housing market reports.

USD JPY
The USD traded 0.57% higher against the JPY over the past week, closing at 102.83. In economic news, the consumer price index in Japan rose 1.5% (YoY) in February, faster compared to a 1.4% rise in the previous month. Meanwhile, unemployment rate fell to 3.6% in February. Separately, retail sales in Japan rose 3.6% (YoY) in February, following a 4.4% increase witnessed in the preceding month. The Bank of Japan (BoJ) Deputy Governor, Kikuo Iwata, highlighted the possibility for deflation risks in the Japanese economy should inflation rate stay below 1% for a prolonged period of the time. Meanwhile, the Japan’s Economics Minister, Akira Amari indicated that the BoJ still has a role to play in ensuring a sustained end to deflation in the economy. The pair traded at a high of 102.99 and a low of 101.72. The pair is expected to find its first support at 102.03, with the next support expected at 101.24. The first resistance is at 103.31 and the next at 103.79.

With a light economic calendar, the JPY is expected to take cues from the outcome of global economic news ahead in the week.

USD CHF
USD traded 0.44% higher against the CHF and closed at 0.8868 in the last week. In Switzerland, the UBS consumption indicator rose to a reading of 1.57 in February, from a revised reading of 1.49 in January, led by higher number of tourists and new car registrations. Earlier in the week, the IMF insisted the Swiss National Bank (SNB) to stick to its policy of defending its exchange-rate floor as a further appreciation in the Swiss Franc could trigger deflationary risks in the economy. The IMF further opined that the Swiss Franc at current level still remained moderately overvalued and suggested the SNB to consider introducing negative interest rates on banks’ excess reserves to combat the possibility of a further rise in the value of the Franc. During the period, the pair traded at a high of 0.8900 and a low of 0.8787. The first support is at 0.8803, and the next at 0.8739. Resistance exists first at 0.8916, and then at 0.8965.

Apart from external cues, traders would keep an eye on Swiss economic data which includes KOF leading indicator and SVME manufacturing PMI.

USD CAD
Last week, the USD traded 1.43% lower against the CAD and closed at 1.1061. Despite lack of major economic data from Canada, the Loonie registered gains taking cues from rise in oil prices, Canada’s largest exports. Also, risk appetite was boosted on Friday, after China’s Premier, Li Keqiang indicated that the nation has policies in place to counter economic volatility, easing concerns over recent signs of a slowdown in the world’s second-largest economy. Meanwhile, demand for the greenback was underpinned by speculations that the Federal Reserve could hike interest rates as soon as April 2015 and following a positive economic data from the US. USDCAD traded at a high of 1.1248 and a low of 1.0998 in the previous week. The first support is at 1.0957, with the next at 1.0852. The first resistance is at 1.1207, while the next is at 1.1352.

All eyes are now set on Canada’s unemployment, trade and Ivey PMI data set to release ahead this week.

AUD USD
AUD traded 1.83% higher against the USD last week, and closed at 0.9247, after the RBA Governor, Glenn Stevens, indicated that the Australian economy is rebalancing and might strengthen in 2014. Furthermore, he reiterated that interest rates are likely to remain stable in the near future and could rise thereafter if the economy continues to improve. Additionally, the RBA, in its financial stability review report, stated that the nation’s financial system is sound and major banks are well placed to meet higher international liquidity standards. Moreover, the Aussie was also boosted by the comments of China’s Premier, Li Keqiang, who indicated his confidence on China’s economy and revealed that growth would be in a “reasonable range”. During the week, the pair traded at a high of 0.9297 and a low of 0.9049. The first support is at 0.9098, and the next at 0.8950. The first resistance is at 0.9346, and the next at 0.9446.

Going forward, investors have their plate full with a raft of economic data scheduled for release in Australia. Also, investors will closely monitor the RBA interest rate decision for further direction.

Gold
In the prior week, Gold traded 2.95% lower against the USD and closed at USD1295.27, as the greenback advanced following the latest batch of strong economic data from the US. Moreover, traders refrained from taking major bets in the precious metal amid fears that a hike in the US Fed interest rate could weigh on the demand outlook of the safe-haven metal. Separately, a leading broking house trimmed its 2014 average price forecast for spot gold by 8% to $1,225 per ounce. The yellow metal traded at a high of 1334.35 and a low of 1285.72 in the previous week. Gold is expected to find support at 1275.88 and the next at 1256.48. The first resistance is at 1324.51, while the next is at 1353.74.

In the week ahead, investors would focus on the US nonfarm payrolls report for March for further indications on the strength of the labor market.

Crude Oil
Oil prices traded 2.14% higher against the USD in the last week and closed at USD101.59, as a strong US GDP data boosted the demand outlook for the commodity. Moreover, oil prices rose on supply concerns, as fears of possible Western sanctions on Russia’s energy sector grew. However, gains were capped after the Energy Information Administration (EIA) reported that US crude stockpiles rose more-than-expected 6.6 million barrels for the week ended March 21. Also, the American Petroleum Institute reported that US crude stockpiles rose 6.3 million barrels last week, as compared to analysts’ forecasts of a 2.7 million barrels increase. Oil traded at a high of 102.24 and a low of 98.80 in the previous week. Oil has its first major support at 99.51, while the next support exists at 97.44. The first resistance is at 102.95 and the next at 104.32.

Ahead in the week, oil prices would take cues from economic data from the US and other major economies. Also, developments between the US and Russia on Ukraine crisis will remain key.

Week of March 24th, 2014

Weekly Forex Update
For the week ended March 21, the US Dollar registered gains against its key peers, after the Federal Reserve (Fed) in its policy meeting, trimmed the size of its stimulus package by another $10 billion to $55 billion a month. Moreover, the Fed President, Janet Yellen hinted to an earlier-than-expected hike in the nation’s key interest rate by the mid of 2015. Positive sentiment for the greenback was also supported, after the Fed, in its annual test report of big banks’ financial health, indicated that 29 out of the 30 major banks in the nation met the minimum hurdle to withstand a severe economic downturn.
Upbeat US economic data released during the week also boosted the USD. Initial jobless claims in the US increased to 320,000 for the week ended March 14, less than analysts’ expectations for a rise to 322,000. The US Conference Board’s index of leading indicators rose more-than-forecast 0.5% in February, while the Philadelphia Fed’s manufacturing index rebounded in March. Industrial production rose more-than-expected 0.6% (MoM) in February. Additionally, building permits rose more-than-expected in February, while consumer prices in the US rose 0.1% in February, in line with analysts’ projections.
Striking an upbeat note, the Fitch Ratings on Friday maintained its “AAA” ratings on the US and “stable” outlook on the country’s ratings, dismissing concerns over a possible downgrade in March. However, risk sentiment took a hit after major rating agencies including Standard and Poor’s and Fitch trimmed their outlook on Russia, reflecting concerns over the potential impact of the sanctions by the US and the European Union on the country after its controversial takeover of the Ukraine’s autonomous region of Crimea.
The Euro backpedalled last week against the greenback, following the release of lackluster economic data from the Euro-zone. The consumer price inflation eased unexpectedly in February, raising fears of deflation in the bloc and adding pressure on the European Central Bank’s (ECB) to undertake further measures to support the region’s fragile economic recovery.
Meanwhile, despite the release of positive economic data from the UK, the Pound registered losses against most of its major peers. The CBI industrial orders survey report showed that the UK factory orders rose higher-than-expected in March, while the domestic public finances report revealed that government borrowings climbed in February. Also, number of people claiming jobless benefits declined in February.
The Loonie advanced on Friday, boosted by upbeat domestic retail sales, which rose above market expectations in January, while another report showed that Canadian inflation was higher-than-expected in February, reducing expectations of any cut in interest rates.

EUR USD
Last week, the EUR traded 0.86% lower against the USD and closed at 1.3794, after economic data from the Euro-zone and Germany disappointed investors, fuelling concerns over the economic outlook for the region. The ZEW economic sentiment index in Germany dropped to a seven-month low level of 46.6 in March, while the economic sentiment index in the Euro-zone declined to a level of 61.5. Adding to negative sentiment, consumer price inflation in the Euro-zone rose less than initially estimated in February, underlining concerns over the threat of deflation in the region. Moreover, the ECB Executive Board member, Sabine Lautenschlaeger, indicated that the interest rates would remain at current low level or go even lower for an extended period, until the economic condition in the region improves to a proper level. However, on Friday the Euro rose after consumer confidence in the bloc showed an improvement in March, while current account surplus expanded in January. During the week, the pair traded at a high of 1.3949 and a low of 1.3748. The pair is expected to find its first support at 1.3712, with the next support expected at 1.3629. The first resistance is at 1.3913 and the next at 1.4031.

Traders are expecting significant action ahead in the week in Europe wherein manufacturing and services PMI from major economies are set to release. Additionally, consumer confidence and inflation data from Germany is also expected to garner market interest.

GBP USD
In the last week, GBP traded 0.97% lower against the USD and closed at 1.6486, despite the release of mostly upbeat domestic economic data in the UK, as market participants were mainly influenced by the US Fed Chief, Janet Yellen’s comments over a possible hike in interest rates in a year’s time. Meanwhile, persistent Ukrainian concerns continued to weigh on the GBP. However, losses were capped as the UK Chancellor of the Exchequer, George Osborne while presenting the UK budget for fiscal year 2014-15, indicated that the UK economy will register more-than-expected growth in 2014 and that the nation was on track to make a strong recovery. The minutes of the BoE meeting released during the week indicated that policymakers unanimously voted to retain the interest rate at 0.50% and quantitative easing at £375 billion. The pair traded at a high of 1.6668 and a low of 1.6475 in the previous week. GBPUSD is expected to find its first support at 1.6418, with the next at 1.6350. Resistance exists first at 1.6611, and then at 1.6736.

Later this week, investors have their plate full with a raft of economic data including retail sales and housing data from the UK. Additionally, February’s inflation and fourth quarter growth data will be closely scrutinized for ascertaining near term trend in the GBP.

USD JPY
The USD traded 0.88% higher against the JPY over the past week, closing at 102.25, as investors favored the greenback in wake of Federal Reserve Chair, Janet Yellen’s comments on Wednesday, where she hinted that interest rate hikes were possible around the first half of 2015. Meanwhile, the Japanese Yen traded on a weaker footing after data showed that the nation’s trade deficit narrowed less-than-forecast in February. Moreover, the Bank of Japan Governor, Haruhiko Kuroda, reiterated that the central bank is on the path to achieve its 2% price stability target and will continue to monitor risks and alter policy appropriately to attain the same. However, the BoJ policymaker, Takahide Kiuchi cautioned that side effects of further monetary easing would outweigh the positive effects and that would undermine economic stability in the long run. The pair traded at a high of 102.70 and a low of 101.27. The pair is expected to find its first support at 101.45, with the next support expected at 100.65. The first resistance is at 102.88 and the next at 103.50.

The Japanese Yen is expected to take further cues from the release of the consumer price index, unemployment rate and retail trade data from Japan, along with news flows emanating from both sides of the Atlantic and developments in Eastern Europe.

USD CHF
USD traded 1.20% higher against the CHF and closed at 0.8829 in the last week. The Swiss Franc came under pressure, after the Swiss National Bank (SNB) President, Thomas Jordan, indicated that the market’s perception of Swiss Franc as a safe-haven currency poses a big challenge for monetary policy in the nation. Furthermore, he indicated that, despite the recent economic progress, the nation still remains far away from a full recovery. At its policy meeting, the SNB maintained status quo with regards to its monetary policy, leaving its benchmark interest rate unchanged at 0.0-0.25%. Additionally, the SNB reinforced its cap on the Swiss Franc, citing that the currency remains strong and risks to global economic recovery continue to persist. Furthermore, the SNB lowered its inflation outlook for the nation, projecting that prices will stagnate for 2014 before climbing 0.2% for 2015. Meanwhile, the State Secretariat for Economic Affairs (SECO) lowered the growth outlook for Swiss economy marginally for 2014, while maintaining the estimate for 2015. Additionally, the ZEW economic expectations for Switzerland weakened for the third consecutive month in March. During the period, the pair traded at a high of 0.8870 and a low of 0.8714. The first support is at 0.8739, and the next at 0.8648. Resistance exists first at 0.8895, and then at 0.8960.

With little of note on the domestic economic calendar, investors will keep a tab on global news flows for further direction.

USD CAD
Last week, the USD traded 1.04% higher against the CAD and closed at 1.1221, after the US Fed chief, Janet Yellen earlier during the week outlined a schedule that Fed might hike interest rates around six months after the central bank wraps up its asset purchases programme. Meanwhile, the Canadian Dollar came under pressure, after the Bank of Canada Governor, Stephen Poloz hinted at potential weakness in the Canadian economy in the first quarter of the year and did not rule out an interest rate cut. However, the Loonie rallied on Friday after the release of upbeat Canadian inflation and retail sales data. The core consumer price index (CPI) rose 0.7% (MoM) in February, exceeding expectations for a 0.5% gain, after a 0.2% gain the previous month. The CPI in Canada rose 0.8% last month, compared to an expectation for a 0.6% increase, after a 0.3% uptick in January. A separate report showed that retail sales in Canada rose more-than-expected 1.3% (MoM) in January, from downwardly revised 1.9% fall in December. USDCAD traded at a high of 1.1280 and a low of 1.1024 in the previous week. The first support is at 1.1070, with the next at 1.0919. The first resistance is at 1.1326, while the next is at 1.1431.

With no major domestic data scheduled for release during the week, the CAD is expected to closely track economic releases from the US and Europe for clarity on risk appetite among market participants.

AUD USD
AUD traded 0.59% higher against the USD last week, and closed at 0.9081. However, gains were capped as the minutes of the RBA’s March policy meeting revealed that the policymakers reiterated their stance to maintain record-low interest rates to support growth. With respect to currency levels, the RBA officials indicated that the drop in the Australian Dollar had helped the economy achieve balanced growth, but added that the “exchange rate remained high by historical standards”. Moreover, concerns about the Crimean referendum and sanctions imposed by the European Union and US on Russia further weighed on investors risk appetite. In economic news the Conference Board reported that its economic index for growth advanced 0.2% (MoM) in January, down from the upwardly revised 0.9% gain in December. A separate report by the Westpac and the Melbourne Institute showed that Australia’s leading economic index declined sharply in February. During the week, the pair traded at a high of 0.9140 and a low of 0.8995. The first support is at 0.9004, and the next at 0.8927. The first resistance is at 0.9149, and the next at 0.9217.

The RBA’s financial stability review report and the speeches by the central bank’s Governor and Deputy Governor is expected to remain on investors’ radar this week.

Gold
In the prior week, Gold traded 3.50% lower against the USD and closed at USD1334.70, snapping its six-week rally, after the Federal Open Market Committee (FOMC) meeting hinted at an earlier-than-expected interest rate hike. Moreover, in line with expectations, the Fed further trimmed its monthly purchases by an additional $10 billion at its policy meeting. Meanwhile, the greenback also advanced on mostly upbeat US economic data and after Fitch Ratings affirmed US long-term foreign and local currency credit ratings at “AAA” with a “Stable” outlook. The yellow metal traded at a high of 1388.56 and a low of 1320.57 in the previous week. Gold is expected to find support at 1307.33 and the next at 1279.95. The first resistance is at 1375.32, while the next is at 1415.93.

Traders would focus on economic data from the US and events unfolding standoff between Russia and West for further guidance to yellow metal prices ahead this week.

Crude Oil
Oil prices traded 0.58% higher against the USD in the last week and closed at USD99.46, as traders continued to monitor events in the Eastern Europe, after Crimea’s vote to join Russia and the US and European Union’s sanction against Russia raised concerns over a disruption to supplies. However, gains were capped as lingering concerns on rising US crude stockpiles weighed on the demand prospect of the commodity. The Energy Information Administration reported a more-than-expected rise of 5.9 million barrels in the US crude stockpiles for the week ended March 14. Analysts had expected a rise of 2.6 million barrels in the US crude stockpiles. Earlier, the American Petroleum Institute reported that the crude inventories rose 5.9 million barrels for the similar period, more than double what traders forecasted. Moreover, the Fed in its monthly policy meeting gave an optimistic outlook for the US economy and further stated that there is sufficient underlying strength in the broader economy for it to keep tapering. Oil traded at a high of 100.82 and a low of 97.37 in the previous week. Oil has its first major support at 97.61, while the next support exists at 95.77. The first resistance is at 101.06 and the next at 102.67.

Ahead in the week, investors will keep a tab on US data from the housing sector, as well as reports on consumer confidence and durable goods to further gauge the strength of the economy.

Week of March 17th, 2014

Weekly Forex Update
The greenback finished mostly lower against its key peers last week. However, earlier during the week the greenback advanced, following comments by the Federal Reserve (Fed) policy makers, Charles Plosser and Charles Evans that the Fed would continue to trim its monthly asset purchases. On the economic front, retail sales rebounded in February following a revised 0.6% drop in January, while initial jobless claims for US unemployment benefits unexpectedly fell by 9,000 to a three month low of 315,000 for the week ended March 8.
However, data released on Friday indicated that the Reuters/Michigan consumer sentiment index fell to a reading of 79.9 in March. In the week ahead, investors would focus on Wednesday’s monetary policy announcement. With nonfarm payrolls improving and unemployment claims declining, speculations have risen that the Fed would further trim quantitative easing for a third time at its policy meeting this week and would wind up the program before the end of 2014.
Meanwhile, market participants exercised caution, after Russia launched new military exercises near its border with Ukraine last week, showing no sign of backing down on its position on Crimea. Yesterday’s vote on controversial referendum by majority Crimeans to leave Ukraine and join Russia was denounced by major world powers, with US and Europe warning Russia that they are ready to impose additional sanctions on Russia for its actions.
In the Euro-zone, worries surrounding the bloc’s economy eased following the recent run of mostly positive economic data. However, unexpectedly dovish remarks by the European Central Bank (ECB) President, Mario Draghi and lingering concerns about China’s economic slowdown weighed on the EUR.
Market participants also reduced their exposures in the Pound, following a barrage of dismal domestic data in the UK. However, a report by the NIESR that the British economy has further expanded for the three months ended February and positive view by the Bank of England’s (BoE) Governor, Mark Carney about nation’s economy capped losses in the Pound.
In Japan, the Bank of Japan (BoJ) minutes contained no surprises. The central bank indicated that the nation’s economy and inflation is in line with the forecasts, and the sales tax hike in April should not hurt economic growth. The Kiwi Dollar strengthened after the Reserve Bank of New Zealand raised its benchmark interest rate to 2.75% from 2.50%. Further, central bank Governor, Graeme Wheeler indicated that in order to keep a check on inflation, the central bank might raise the official cash rate over the next two years.

EUR USD
Last week, the EUR traded 0.28% higher against the USD and closed at 1.3914, after a spate of upbeat comments by the Euro-zone policymakers on the bloc’s economy proved beneficial for the common currency. The ECB executive board member, Benoit Coeure indicated that there are no signs of deflation in the Euro-area, while ECB Chief Economist, Peter Praet opined that the Euro-zone’s economy has improved over the past two years. Moreover, the German Finance Minister, Wolfgang Schauble stated that interest rates in the Euro-zone are low and that he doesn’t expect deflation to materialize in the bloc. Also, the ECB monthly report indicated that the central bank continues to remain cautiously positive about the currency bloc’s economic prospects. The Euro investors also cheered upbeat trade data from Germany, industrial production data from Italy and employment data from the Euro-zone. During the week, the pair traded at a high of 1.3968 and a low of 1.3834. The pair is expected to find its first support at 1.3843, with the next support expected at 1.3771. The first resistance is at 1.3977, and the next at 1.4039.

Against this backdrop, this week’s Euro-zone consumer price inflation data will be keenly followed by market participants for further direction to risk appetite.

GBP USD
In the last week, GBP traded 0.39% lower against the USD and closed at 1.6647, following the release of disappointing domestic data in the UK. Trade deficit in the UK widened significantly to a worse-than-forecast £9.79 billion in January, as exports tumbled to a 19-month low. Also, the BRC retail sales data surprised traders on the downside. Industrial production growth in the nation slowed more-than-expected in January, while the manufacturing output growth remained stable compared to December. The GBP also came under pressure following comments from the BoE Deputy Governor, Charlie Bean who expressed concerns over the current strength of the Pound. He stated that any further rise in the currency might hinder the nation’s exports and derail efforts in attaining sustained growth in the near future. However, the NIESR reported that the British economy has further expanded for the three months ended February. Moreover, the BoE Governor, Mark Carney defended the central bank’s forward guidance and indicated that despite strong domestic economic recovery, the UK economy is not close to overheating. The pair traded at a high of 1.6743 and a low of 1.6568 in the previous week. GBPUSD is expected to find its first support at 1.6562, with the next at 1.6478. Resistance exists first at 1.6737, and then at 1.6828.

In the week ahead, the BoE monetary policy meeting minutes, labour market and retail sales reports will generate significant market interest.

USD JPY
The USD traded 1.86% lower against the JPY over the past week, closing at 101.36. The Yen rose on safe haven demand amid heightened tensions over the Ukraine-Russia crisis after the latter launched military exercises near the Ukrainian border. The Yen also received support after minutes of the latest BoJ monetary policy meeting revealed that the nation’s economic recovery is on track and that a planned sales tax hike in April would not derail the recovery in the nation or the central bank’s 2% price target. Additionally, Japan’s industrial production continued to record strong growth, but at a weaker pace in January than estimated. Another report revealed that capacity utilization in Japan rose 5.9% in January, following a 2.2% rise in the preceding month. Also, core machine orders surged a seasonally adjusted 13.4% (MoM) in January. The pair traded at a high of 103.44 and a low of 101.21. The pair is expected to find its first support at 100.56, with the next support expected at 99.77. The first resistance is at 102.80, and the next at 104.24.

Looking ahead, string of domestic economic releases this week along with speech by the BoJ Governor, Haruhiko Kuroda will prove crucial for the Yen against the majors in the near term.

USD CHF
USD traded 0.63% lower against the CHF and closed at 0.8724 in the last week. In Swiss economic news, real retail sales grew 0.3% (YoY) in January, slower than the 2.5% growth seen in December. Moreover, Swiss industrial production grew at a slower pace in the fourth quarter of 2013, in contrast to expectations for improvement. Additionally, data released by the Federal Statistical Office on Friday revealed that Switzerland’s producer and import prices declined in February. During the period, the pair traded at a high of 0.8806 and a low of 0.8698. The first support is at 0.8679, and the next at 0.8635. Resistance exists first at 0.8787, and then at 0.8851.

Apart from economic data traders will keep a tab on Swiss National Bank (SNB) monetary policy decision, after the SNB Chairman Thomas Jordan earlier in the month told that the central bank is prepared to defend the Franc from strengthening further than 1.20 per Euro if tensions in Ukraine push up the Swiss currency.

USD CAD
Last week, the USD traded 0.16% higher against the CAD and closed at 1.1105, following the release of disappointing consumer sentiment data in the US on Friday. However, the Canadian Dollar remained under pressure, amid lack of domestic economic triggers and as crude oil prices, Canada’s largest export plunged more than 3%. Moreover, events unfolding in the Ukraine continued to preoccupy traders, who avoided to take exposure in riskier currencies. Furthermore, disappointing retail sales and industrial data in China stoked worries of further weakness in the world’s second largest economy. USDCAD traded at a high of 1.1155 and a low of 1.1042 in the previous week. The first support is at 1.1046, with the next at 1.0988. The first resistance is at 1.1159, while the next is at 1.1214.

Moving ahead, consumer price inflation and retail sales data from Canada and a slew of economic releases from the US will be the key market triggers. Also, the Bank of Canada Governor, Stephen Poloz speech will be monitored closely for his assessment on nation’s inflation and growth.

AUD USD
AUD traded 0.44% lower against the USD last week, and closed at 0.9028, following the release of dismal economic data in Australia. The Aussie also came under pressure tracking weak macroeconomic data released by its major trading partner, China and as risk appetite waned underpinned by Ukraine geopolitical tensions. Consumer confidence index in Australia declined 0.7% to a ten-month low of 99.5 in March, after falling 3.0% in February, reflecting loss of confidence in the economic outlook. Additionally, the NAB business conditions and business confidence index in Australia also declined in February. Meanwhile, despite adding 47,300 jobs in February, the Australian economy posted a seasonally adjusted unemployment rate of 6.0% unchanged from the January reading. During the week, the pair traded at a high of 0.9105 and a low of 0.8923. The first support is at 0.8932, and the next at 0.8837. The first resistance is at 0.9114, and the next at 0.9201.

In the absence of any key economic data from Australia, the policy decision by the US central bank will be the key event taking center stage this week. Moreover, a “risk off” trading sentiment is expected to prevail in the midst of persisting concerns surrounding Ukraine-Russia issues.

Gold
In the prior week, Gold traded 3.21% higher against the USD and closed at USD1383.05, amid heightened tensions between Russia and the US over former’s involvement in Ukraine’s political crisis. Yesterday, around 95.5% of voters in Crimea supported a disputed referendum to join Russia and leave Ukraine. The US and Europe condemned the referendum as ‘illegal’ and warned to impose economic and diplomatic sanctions on Russia this week. Earlier during the week, Gold prices came under pressure as comments by a host of FOMC policymakers calling for the Fed to continue with its QE3 tapering prompted traders to shun the precious metal. Prices also came under pressure, after a leading broking house projected a fall in the prices of the metal to $1,000 per ounce. The yellow metal traded at a high of 1388.11 and a low of 1327.94 in the previous week. Gold is expected to find support at 1344.62 and the next at 1306.20. The first resistance is at 1404.79, while the next is at 1426.54.

In the week ahead, market participants will keep a tap on Wednesday’s monetary policy announcement by the Federal Reserve.

Oil
Oil prices traded 3.6% lower against the USD in the last week and closed at USD98.89, following a more-than-expected rise in the US weekly crude supplies. The American Petroleum Institute (API) reported a 2.63 million barrels rise in the nation’s crude inventories for the week ended March 7, while the Energy Information Administration (EIA) reported a 6.2 million barrels jump for the similar period. Analysts had expected a 2.3 million barrels rise in EIA reported crude supplies. Moreover, lackluster set of economic data from China, including trade and industrial production data sparked concerns on the demand-outlook for the commodity in the second-largest consumer of crude oil. However, lingering concerns surrounding Ukraine and Russia and escalating protest in Libya over the nation’s oil wealth kept losses in check. Separately, the Organization of Petroleum Exporting Countries (OPEC) reported that that total crude production in its member nations rose in February. The OPEC also projected a rise in the global oil demand by 1.14 million barrels a day in 2014 to an average of 91.14 million barrels a day. Oil traded at a high of 102.55 and a low of 97.55 in the previous week. Oil has its first major support at 96.78, while the next support exists at 94.66. The first resistance is at 101.78, and the next at 104.66.

In the forthcoming week, a raft of crucial economic data from the US and the FOMC policy meeting will keep investors on their toes.

Week of March 10th, 2014

Weekly Forex Update
The greenback finished mixed against its key peers last week. The USD had started the week initially higher as concerns between Ukraine and Russia triggered risk aversion and boosted the demand for the safe haven USD.
In economic news, personal income and spending in the US both rose more-than-expected in January. The ISM manufacturing PMI climbed to a reading of 53.2 in February, while the Markit manufacturing PMI advanced to 57.1, led by a pick-up in new orders. In an upbeat sign for the labor market, first-time claims for unemployment fell more-than-expected for the week ended March 1. Additionally, non-farm payroll employment rose by 175,000 jobs in February compared to market expectations for an increase of about 150,000 jobs.
Elsewhere, Fed Chief Janet Yellen indicated that the central bank will do all it can to ensure that the US recovery remains on track, as the economy is still not as healthy as it should be.
The Euro strengthened against the greenback after the European Central Bank (ECB) decided to keep its monetary policy unchanged and upgraded the Eurozone’s growth outlook. The central bank raised its forecast for the bloc to grow 1.2% in 2014, up from 1.1% previously, citing a gradual recovery in domestic and external demand. Additionally, the ECB chief indicated easing deflation risks in the region.
In the UK, the Bank of England (BoE) kept its interest rates steady at 0.50% and also agreed to maintain its quantitative easing stimulus at £375 billion, in line with market expectations. Ahead in the week, the outcome of UK inflation report will be key as it would provide an outlook from the central bank with regards to both inflation and growth.
The Yen fell against the greenback, after the Bank of Japan (BoJ) Deputy Governor, Kikuo Iwata reiterated that the central bank stands ready to ease monetary policy further if risks to its 2% inflation target arise.
The Canadian Dollar came under pressure on Friday on disappointing local jobs data. Data released by the Statistics Canada revealed that the economy lost 7,000 net jobs in February, giving back some of January’s gains and missing analysts estimates that the economy would add 15,000 jobs.
The Australian Dollar surged last week, as the Reserve Bank of Australia (RBA) kept its interest rate on hold at a record low of 2.5% and after the speech by its Governor, Glenn Stevens raised speculation among traders that the central bank’s easing phase is done. The Governor indicated that nation’s unemployment level will fall this year and re-affirmed that economic growth would pick-up and surpass 3% in 2014.

EUR USD
Last week, the EUR traded 0.53% higher against the USD and closed at 1.3875, after the ECB forecasted the Euro-zone economy to expand 1.2%, higher than the 1.1% growth it had projected earlier. Additionally, the ECB chief indicated easing deflation risks in the region, lending support to the common currency. The Euro also rose underpinned by improved risk appetite following the release of largely upbeat economic data in Europe. The manufacturing and services PMI in most of the countries in the bloc advanced more-than-expected in February. Additionally, upbeat retail sales and in line GDP data in the Euro-zone provided further support to the EUR. In Germany, industrial production increased for a third straight month in January, while the factory orders rebounded, signaling a strong pace of recovery in Euro-area’s biggest economy. During the week, the pair traded at a high of 1.3916 and a low of 1.3707. The pair is expected to find its first support at 1.3749, with the next support expected at 1.3624. The first resistance is at 1.3958, and the next at 1.4042.

Looking ahead, a slew of economic data from the region will keep Euro investors on their toes. While the German trade and inflation data will keep markets interested, the Eurozone industrial, investor confidence and employment data are also important. Additionally, the ECB monthly report will also grab market attention this week.

GBP USD
In the last week, GBP traded 0.19% lower against the USD and closed at 1.6713, despite the release of positive domestic data in the UK. Manufacturing activity in the UK improved in February, while services sector activity in the nation slowed less-than-expected in the similar period. Additionally, housing market continues to strengthen as British mortgage approvals recorded its highest level since November 2007 in January. Furthermore, a report by Hometrack showed that house prices in the UK rose the most since April 2007 in February, while the Halifax house price index rose 2.4%. Moreover, the British construction sector expanded in February, but the pace of expansion eased. On Thursday, the BoE voted to leave it key interest rates unchanged at their record low of 0.50%, and also left its quantitative easing program steady at £375 billion. The pair traded at a high of 1.6788 and a low of 1.6640 in the previous week. GBPUSD is expected to find its first support at 1.6639, with the next at 1.6566. Resistance exists first at 1.6787, and then at 1.6862.

Going forward, traders will remain focus on the BoE’s inflation report. With markets expecting an early interest rate rise, any remarks hinting anything sooner will boost the Pound. Traders would also keep a tab on domestic manufacturing and industrial production data for further direction.

USD JPY
The USD traded 1.45% higher against the JPY over the past week, closing at 103.28, following the release of upbeat economic data in the US. Meanwhile, the Yen came under pressure after the BoJ Deputy Governor, Kikuo Iwata indicated that the central bank is prepared to adjust its monetary policy further, if required. In a speech at the Upper House Budget Committee, he reiterated the central bank’s policy stance stating that bank will continue to assess the risks to its economic and price outlook, and make necessary changes to achieve the 2% inflation target. In economic news, the leading economic index advanced to a reading of 112.2 in January from 111.7 in December, recording its fifth consecutive increase. Additionally, the coincident economic index advanced to 114.8 in January from 112.3 in December. The pair traded at a high of 103.78 and a low of 101.19. The pair is expected to find its first support at 101.72, with the next support expected at 100.16. The first resistance is at 104.31, and the next at 105.34.

All eyes are now set on the Bank of Japan’s interest rate decision this week, along with other domestic economic data from Japan.

USD CHF
USD traded 0.27% lower against the CHF and closed at 0.8779 in the last week. In economic news, the SVME PMI rose to a seasonally adjusted reading of 57.6 in February, highlighting that manufacturing activity in Switzerland grew at the fastest pace since May 2011. Data released by the State Secretariat for Economic Affairs revealed that Swiss unemployment rate held steady at 3.2% in February. Moreover, consumer price index edged-up 0.1% (MoM), following a 0.3% decline recorded in January. Over the weekend, the Swiss National Bank Chairman, Thomas Jordan in a newspaper interview, indicated that the central bank would intervene and buy unlimited quantities of foreign currency to defend the Franc from strengthening further than 1.20 per Euro, if tensions in Ukraine push up the Swiss currency. During the period, the pair traded at a high of 0.8898 and a low of 0.8756. The first support is at 0.8724, and the next at 0.8669. Resistance exists first at 0.8866, and then at 0.8953.

Traders will keep a tab on real retail sales and industrial production data from Switzerland ahead in the week.

USD CAD
Last week, the USD traded 0.21% higher against the CAD and closed at 1.1087. At its policy meeting, the Bank of Canada left its benchmark interest rates on hold at 1.00%, in line with market expectations. The central bank indicated that the nation’s economic growth in the fourth quarter of 2013 was slightly stronger than anticipated and added that it still expects growth of 2.5% in 2014. However, the bank stated that inflation is expected to remain below its target for some time and the direction of the next change in the policy rate will be data dependent. In economic news, the value of building permits issued in Canada surged in January. The Ivey purchasing managers index rose to a reading of 57.2 in February. On Friday, the Statistics Canada reported that the economy lost 7,000 jobs in February, compared to expectations for a 15,000 rise, after a 29,400 increase recorded in January. Moreover, unemployment rate remained unchanged at 7.0% in February. A separate report revealed that Canada’s trade deficit narrowed to C$0.18 billion in January, from C$0.92 billion in December. USDCAD traded at a high of 1.1119 and a low of 1.0952 in the previous week. The first support is at 1.0986, with the next at 1.0886. The first resistance is at 1.1153, while the next is at 1.1220.

With a light Canadian economic calendar this week, a slew of economic releases from the US will likely hold the key for determining the near term trend in the Canadian Dollar.

AUD USD
AUD traded 1.61% higher against the USD last week, and closed at 0.9068, following the release of upbeat domestic economic data and after the after the RBA Governor, Glenn Stevens indicated that he saw no reason to slash interest rates further. At its policy meeting, the Australian central bank maintained its key interest rate unchanged for a seventh successive month at 2.5% and indicated a period of stability in monetary policy, citing high inflationary pressures. In a post-decision statement, the Governor stated that the monetary policy is appropriate to boost sustainable growth in demand. In economic news, the Australian economy expanded faster than expected in the last three months of the year. The economy grew at a seasonally adjusted 0.8% in the December quarter, taking the annual growth rate to 2.8%. The total number of building approvals jumped a seasonally adjusted 6.8% (MoM) in January, while retail sales advanced 1.2%. Moreover, Australia’s merchandise trade surplus rose to A$1.4 billion in January, its best in two-and-a-half-years. During the week, the pair traded at a high of 0.9136 and a low of 0.8891. The first support is at 0.8927, and the next at 0.8787. The first resistance is at 0.9172, and the next at 0.9277.

Apart from external cues, traders would keep an eye on Australian economic data which includes unemployment rate, National Australia Bank’s business confidence and Westpac’s consumer confidence data.

Gold
In the prior week, Gold traded 1.02% higher against the USD and closed at USD1339.98, as risk aversion prevailed during the week following the news of likely war between Russia and the Ukraine. However, gains in the precious metals were kept in check following the release of mostly positive economic data from the US during the last week. Tensions grew over weekend, following the news that Russia has suspended nuclear arms inspections treaty and blocked US military from checking nuclear weapons in response to US move to suspend military cooperation with Moscow. The yellow metal traded at a high of 1354.87 and a low of 1326.67 in the previous week. Gold is expected to find support at 1326.14 and the next at 1312.31. The first resistance is at 1354.34, while the next is at 1368.71.

In the week ahead, market participants will keenly await data from the US, especially the Reuters/Michigan consumer sentiment and retails sales report for hints on the strength of the nation’s recovery and the Fed’s future course of action for its monetary policy. Moreover, political developments in Ukraine will be closely watched for further cues.

Crude Oil
Oil prices traded flat against the USD in the last week and closed at USD102.58. However, prices remained supported by a combination of upbeat economic data in the US and escalating tensions in Ukraine’s Crimean peninsula. A surprisingly strong US jobs report on Friday bolstered optimism about the economy, raising hopes for strong oil demand from world’s largest economy. Moreover, geopolitical uncertainty from the Ukraine crisis escalated after the Russian President, Vladimir Putin ignored warnings from its US counterparts over Moscow’s military intervention in Crimea. On the oil inventory front, the US Energy Information Administration reported the US crude oil inventories rose by 1.4 million barrels for the week ended February 28. Moreover, the American Petroleum Institute reported that US crude supplies rose by 1.2 million barrels during the similar period. Oil traded at a high of 105.22 and a low of 100.13 in the previous week. Oil has its first major support at 100.07, while the next support exists at 97.55. The first resistance is at 105.16, and the next at 107.73.

Traders would keep a watchful eye on the situation in the Ukraine, as any flare-up in the situations could send oil prices higher.

Week of March 3rd, 2014

Weekly Forex Update
The USD traded lower against its key peers last week, following another set of weak economic data from the US and after the Federal Reserve (Fed) President, Janet Yellen admitted before the Senate Banking Committee that monetary authorities were concerned over soft US economic data lately. However, she confirmed that the Fed will stay on the path of QE3 tapering this year.
The US fourth quarter GDP expanded at an annual rate of 2.4%, sharply down from the 3.2% reported last month and the 4.1% logged in the third quarter. However, a couple of top Fed policy-makers indicated that they have not changed their outlook for relatively strong growth in 2014 despite the release of disappointing GDP data. St. Louis Fed chief, James Bullard stated that he remains optimistic about economic growth in 2014, while Charles Plosser, the Philadelphia Fed President indicated that the US economy is in better shape and that he sees steady growth in the nation going forward.
Additionally, the first-time claims for unemployment benefits rose above market estimates, to 348,000 for the week ended February 22, an increase of 14,000 from the previous week’s revised figure of 334,000. The Reuters/Michigan consumer sentiment index saw a modest improvement in February, while the Conference Board reported that its consumer confidence index fell to a reading of 78.1 from a downwardly revised 79.4 in January. The US Commerce Department reported that durable goods orders excluding transportation rose 1.1%, the largest increase since May, after slipping 1.9% in December.
Amid improving economic landscape in the Euro-bloc, the European Commission indicated earlier during the week that economic recovery in the Euro-bloc is set to gain momentum as domestic demand improves gradually. Furthermore, upbeat retails sales, employment and consumer confidence data in Germany bolstered market sentiment and led Euro to trade higher against the US Dollar last week. Moreover, steady inflation in the Euro-zone, dampened speculation that the European Central Bank (ECB) will add to monetary stimulus at its policy meeting ahead this week.
The Pound registered gains against the USD, after domestic growth data confirmed that the UK economic recovery remained firmly on track during the final quarter of last year. Additionally, striking an upbeat note, an eminent economist at IHS Global Insight indicated that the British economy is set to grow at a faster pace in 2014, supported mainly by strong improvement in business investment.
The Yen spiked on Friday, after the Japanese industrial production and retail trade data for January, came in better-than market forecast. The Loonie rose sharply on Friday, after data revealed that the Canadian economy grew more-than-expected in the fourth quarter of 2013.

EUR USD
Last week, the EUR traded 0.45% higher against the USD and closed at 1.3802, as economic data from Germany boosted risk appetite. German retail sales rebounded in January, staging a strong recovery from the slump in December. Moreover, the number of unemployed people out of work in Europe’s largest economy decreased by 14,000 to 2.914 million, while the jobless rate held steady at 6.8% in February. Additionally, forward looking GfK consumer confidence in the nation rose to a seven-year high in March. Another data revealed that the German economy expanded 0.4% in the final quarter of 2013, as initially estimated. Meanwhile, inflation in the Euro-zone stood unchanged at 0.8% in February, lowering the pressure on the central bank to take action to overcome fears of deflation. Moreover, unemployment in the region held steady at 12% in January. Additionally, economic confidence in the bloc improved for the tenth consecutive month to 101.2 in February. During the week, the pair traded at a high of 1.3825 and a low of 1.3642. The pair is expected to find its first support at 1.3688, with the next support expected at 1.3573. The first resistance is at 1.3871 and the next at 1.3939.

Traders are expecting an action packed week ahead wherein the outcome of the ECB policy meeting is awaited along with key economic data out of the bloc. Additionally, a speech by the central bank President, Mario Draghi is also expected to garner market interest.

GBP USD
In the last week, GBP traded 0.64% higher against the USD and closed at 1.6745, following the release of positive economic data in the UK. The UK GDP expanded 0.7% (QoQ), in line with preliminary estimate, while, on a yearly basis, the economy grew 2.7%, down slightly from the preliminary estimate for 2.8% growth. The Nationwide house price index advanced 9.4% annually, after gaining 8.8% in January. Also, mortgage approvals in the UK increased more-than-expected to 49,972 in January. However, the GBP came under pressure earlier in the week after two of the Bank of England (BoE) policymakers, David Miles and Spencer Dale downplayed concerns of an interest rate hike, stating that the central bank is in no hurry to raise interest rates and will focus more on supporting the economic recovery. The pair traded at a high of 1.6770 and a low of 1.6583 in the previous week. GBPUSD is expected to find its first support at 1.6629, with the next at 1.6512. Resistance exists first at 1.6816, and then at 1.6886.

Going forward, investors have their plate full with a raft of economic data scheduled for release in the UK. Also, investors will closely monitor the BoE monetary policy meeting for further direction.

USD JPY
The USD traded 0.82% lower against the JPY over the past week, closing at 101.80. The Yen rose following upbeat domestic economic data. The Japanese factory output highlighted an upward trend, surging 4.0% (MoM) in January, outpacing forecasts for a 3.1% rise. Consumer prices in the nation rose last month, albeit at a steady pace, a sign that the economy is making progress on ending years of deflation. Household expenditure rose more-than-expected by 1.1% (YoY) in January. Furthermore, Japan’s retail trade soared in January, while the unemployment rate remained steady for January. The pair traded at a high of 102.70 and a low of 101.55. The pair is expected to find its first support at 101.33, with the next support expected at 100.87. The first resistance is at 102.48, and the next at 103.17.

Traders would focus on leading economic and coincident index from Japan ahead in the week.

USD CHF
USD traded 0.83% lower against the CHF and closed at 0.8803 in the last week. In economic news, real GDP growth in Switzerland slowed more-than-expected to 0.2% in the final quarter of 2013 from 0.5% in the previous quarter. The KOF economic barometer index advanced to a reading of 2.03 in February from 2.01 in January. Meanwhile, the UBS consumption Indicator, declined to 1.44 in January from 1.80 in December. During the period, the pair traded at a high of 0.8931 and a low of 0.8778. The first support is at 0.8744, and the next at 0.8684. Resistance exists first at 0.8897, and then at 0.8990.

Apart from external cues, traders would keep an eye on Swiss economic data which includes manufacturing PMI, unemployment rate, consumer price index and industrial production data.

USD CAD
Last week, the USD traded 0.51% lower against the CAD and closed at 1.1064. The Canadian Dollar finished sharply higher on Friday, after data showed that the economy expanded in the final three months of 2013, recording its biggest annualized gain in over two years, though growth slowed in December. Statistics Canada reported that fourth-quarter economic growth expanded at an annualized pace of 2.9%, better than a 2.5% rise expected. However, the GDP contracted more-than-expected by 0.5% in December. In a separate release, the agency reported that country’s current account deficit widened to $16 billion in the fourth quarter of 2013. USDCAD traded at a high of 1.1161 and a low of 1.1040 in the previous week. The first support is at 1.1016, with the next at 1.0967. The first resistance is at 1.1137, while the next is at 1.1209.

All eyes are now set on the Bank of Canada’s interest rate decision this week, after upbeat fourth quarter GDP data reduced the possibility that the central bank would consider cutting interest rates.

AUD USD
AUD traded 0.48% lower against the USD last week, and closed at 0.8924. In economic news, the total value of construction work done in Australia dipped 1.0% (QoQ) in the fourth quarter, while private capital expenditure, a key measure of investment, dipped 5.2% in the last quarter of 2013. Data released by the Reserve Bank of Australia (RBA) on Friday revealed that private sector credit in Australia rose 0.4% in January, missing market forecasts for an increase of 0.5%. During the week, the pair traded at a high of 0.9051 and a low of 0.8903. The first support is at 0.8868, and the next at 0.8811. The first resistance is at 0.9016, and the next at 0.9107.

Looking ahead, traders will closely monitor the RBA monetary policy meeting for further direction in the pair. Additionally, a series of economic data from Australia and China will influence risk sentiment among traders.

Gold
In the prior week, Gold traded 0.16% higher against the USD and closed at USD1326.44, as disappointing US economic data added to concerns that the economic recovery has lost momentum since the beginning of this year. Additionally, a cautious statement from the Fed chief, Janet Yellen that recent weak data indicates softness in the economy, weighed on the greenback. The yellow metal’s appeal as a safe haven asset also increased amid political and economic turmoil in Ukraine. The yellow metal traded at a high of 1345.45 and a low of 1318.78 in the previous week. Gold is expected to find support at 1315.00 and the next at 1303.55. The first resistance is at 1341.67, while the next is at 1356.89.

Ahead in the week, traders would focus on the US nonfarm payrolls data, after last week’s jobless claims data highlighted a fragile state of the recovery in the US labor market.

Crude Oil
Oil prices traded 0.38% higher against the USD in the last week and closed at USD102.59, drawing support from the weekly oil inventory data. The US Energy Information Administration reported the US crude oil inventories rose by 68,000 barrels for the week ended February 21, below expectations for an increase of 1.24 million barrels. Moreover, the American Petroleum Institute, indicated that crude inventories rose by 822,000 barrels compared to expectations for an increase of 1.5 million barrels. However, market sentiment remained under pressure, amid fresh political and military tensions between Russia and Ukraine. Oil traded at a high of 103.45 and a low of 101.02 in the previous week. Oil has its first major support at 101.26, while the next support exists at 99.92. The first resistance is at 103.69 and the next at 104.78.

The global macroeconomic data would remain a key catalyst in this week’s market action. Oil traders would also watch events unfolding in Ukraine, after key Western nations stated that there was an “armed invasion” of Ukraine’s volatile Crimean peninsula by Russian troops.

Week of February 24th, 2014

Weekly Forex Update
The greenback rose against its key peers last week, after the minutes of the Federal Open Market Committee’s (FOMC) January meeting revealed that policy makers discussed the possibility of raising interest rates in the near future. The minutes also indicated that the central bank will continue tapering monthly bond purchases as the year unfolds.
On Friday, the Dallas Fed President Richard Fisher stated that the US central bank has done enough to support the economy and should continue to reduce the size of its bond-buying programme.
However, the greenback’s gains were capped as another set of dismal US economic data prompted traders to ponder whether the Federal Reserve (Fed) will slow the pace of reductions of its stimulus program. Manufacturing activity in the New York region fell sharply in February, while the Fed Philadelphia manufacturing index deteriorated in February. The number of building permits issued in January dipped more-than-expected by 5.4% and US housing starts plunged 16%. Another report showed that the number of people filing for initial jobless benefits fell less-than-expected for the week ending February 15, while consumer price inflation in the nation rose in line with market expectations in January. On Friday, the National Association of Realtors indicated that US existing home sales fell 5.1% to 4.62 million units last month.
However, the International Monetary Fund (IMF) has cautioned the US and other advanced economies to avoid speedy exit from monetary stimulus, citing that the recovery is still weak and significant downside risks still remain. The agency also urged the European Central Bank (ECB) to slash its key interest rates below zero as it warned that deflation in the Euro-bloc is a key new risk facing the world economy.
In a key development, the Italian center-left leader, Matteo Renzi was sworn in as nation’s new Prime Minister on Saturday.
Elsewhere, commitment by Japan’s central bank to carry on with its stimulus package longer than planned weighed on the Yen. In the minutes of the Bank of Japan’s (BoJ) January policy meeting, policy makers stated that bank’s monetary easing measures are not strictly set to end in two years.
The minutes of Bank of England (BoE) showed that the policymakers unanimously decided to leave the key interest rate at 0.50% and quantitative easing at £375 billion.
For the week ending February 21, the Canadian Dollar declined 1.4% against the greenback. The Australian Dollar also lost ground against the greenback on the back of disappointing manufacturing data from China, sparking fears of a slowdown in Asia’s largest economy.

EUR USD
Last week, the EUR traded 0.31% higher against the USD and closed at 1.3740, following the release of a mixed set of economic data from the European region. The preliminary manufacturing PMI in Germany, France and the Euro-zone missed market expectations. Additionally, preliminary services PMI in the Euro-zone and France disappointed markets, while service sector activity in Germany rose in February. Consumer confidence in the Euro-area worsened in February, underlining the uneven and fragile recovery in the bloc. The ZEW sentiment indices in Germany and the Euro-zone revealed that economic sentiment unexpectedly deteriorated in February. However, the current situation index in Germany improved more-than-expected. Another set of data revealed that current account surplus in the Euro-zone stood at record €221.3 billion for 2013, while construction output in the bloc recovered in December after declining for three consecutive months. During the week, the pair traded at a high of 1.3774 and a low of 1.3685. The pair is expected to find its first support at 1.3692, with the next support expected at 1.3644. The first resistance is at 1.3781 and the next at 1.3822.

Investors will keep a tab on the string of European macro reports later this week for further direction.

GBP USD
In the last week, GBP traded 0.59% lower against the USD and closed at 1.6638, following a dismal set of macroeconomic data from the UK, raising concerns over the pace of economic recovery in the nation. The consumer price inflation in the UK fell to 1.9% in January, below the central bank’s 2% target. Meanwhile, the ILO unemployment rate surprisingly rose to 7.2% for the three months to December. However, the number of people claiming jobless benefits continued to slide at a stable pace. Also, retail sales declined more than expected in January. The housing data released last week showed an increase in house prices in the UK, raising concerns that a housing bubble could develop in 2014. Meanwhile, the minutes of the BoE’s latest monetary policy meeting offered no significant insights into the near term direction of monetary policy. The pair traded at a high of 1.6824 and a low of 1.6612 in the previous week. GBPUSD is expected to find its first support at 1.6559, with the next at 1.6479. Resistance exists first at 1.6771, and then at 1.6903.

Sterling is expected to take further cues from the outcome of fourth quarter GDP and January’s mortgage approvals data from the UK.

USD JPY
The USD traded 0.79% higher against the JPY over the past week, closing at 102.64. Disappointing economic data released in Japan last week proved a dampener for the local Yen. Nation posted a record merchandise trade deficit of ¥2.8 trillion in January, as growth in exports was outstripped by a surge in import costs. Another data showed that industrial production increased at a weaker pace than earlier estimated in December, while Japan’s all industry activity dropped unexpectedly. Also nation’s leading index rose less than initially estimated in December. The Yen also came under pressure after the BoJ indicated in the minutes of latest policy meeting that its stimulus program could continue for longer than the two years initially stated. The pair traded at a high of 102.84 and a low of 101.38. The pair is expected to find its first support at 101.73, with the next support expected at 100.83. The first resistance is at 103.19 and the next at 103.75.

Going forward, investors have their plate full with a raft of economic data including Japan’s inflation, retail trade and industrial production data.

USD CHF
USD traded 0.48% lower against the CHF and closed at 0.8877 in the last week. The Swiss Franc rose following the release of few positive economic data in Switzerland. In economic news, trade surplus surged in January driven by higher exports. Exports grew at a faster than earlier pace of 2.5% (MoM) in January, while imports declined for the first time in three months. A separate report revealed that the ZEW-CS indicator of economic expectations declined to a reading of 28.7 in February from 36.4 in January, while the current conditions index dropped to 47.6 in February. During the period, the pair traded at a high of 0.8930 and a low of 0.8855. The first support is at 0.8845, and the next at 0.8812. Resistance exists first at 0.8920, and then at 0.8962.

In the week ahead, market participants’ will eye fourth quarter growth data from Switzerland along with the UBS consumption and KOF leading indicator for January.

USD CAD
Last week, the USD traded 1.37% higher against the CAD and closed at 1.1121. The Statistics Canada reported that retail sales in Canada tumbled 1.8% in December, from a 0.5% rise recorded in November. Analysts had expected retail sales to decline 0.4%. The agency also reported that nation’s consumer price index rose 1.5% (YoY) in January, slightly higher than the 1.3% rise expected but below the BoC’s target of 2%. The BoC Governor, Stephen Poloz indicated that he remains concerned about the state of the Canadian economy in the wake of the financial crisis. However, he further added that the local currency’s sharp decline in recent time versus the USD is a welcome development, since it signals growing momentum in its biggest trading partner, the US. The pair traded at a high of 1.1197 and a low of 1.0907 in the previous week. The first support is at 1.0953, with the next at 1.0785. The first resistance is at 1.1243, while the next is at 1.1365.

Ahead in the week, traders would focus on the Canadian gross domestic product data to be released by the Statistics Canada.

AUD USD
AUD traded 0.72% lower against the USD last week, and closed at 0.8967, following the release of another set of disappointing data from China, Australia’s biggest trading partner. The HSBC flash manufacturing purchasing managers’ index (PMI) in China fell to a seven-month low of 48.3 in February. Moreover, the MNI business confidence index in China declined to a 5-year low of 50.2 in February. The minutes of the Reserve Bank of Australia’s latest policy meeting revealed that interest rates in the nation are likely to remain steady at present levels in the near term. However, the bank indicated that economic growth will remain subdued through 2014 and cautioned that improvements in the labor market will take time. During the week, the pair traded at a high of 0.9083 and a low of 0.8935. The first support is at 0.8907, and the next at 0.8847. The first resistance is at 0.9055, and the next at 0.9143.

In the absence of major economic data ahead this week from Australia, market participants will keep a tab on global economic news for further direction.

Gold
In the prior week, Gold traded 0.42% higher against the USD and closed at USD1324.28, following another set of mostly weaker-than-expected US economic data. However, gains were capped as the minutes of the Fed’s January policy meeting highlighted the possibility of an increase in interest rates earlier-than-expected. The yellow metal traded at a high of 1332.45 and a low of 1307.41 in the previous week. Gold is expected to find support at 1310.31 and the next at 1296.34. The first resistance is at 1335.35, while the next is at 1346.42.

In the week ahead, market participants will continue to pay close attention to US economic data for further indications on the strength of the economy and the future course of monetary policy.

Oil
Oil prices traded 1.89% higher against the USD in the last week and closed at USD102.20, amid speculation that weather conditions in the US Northeast will boost demand for oil. In a key development, reports indicated that Iran’s top two oil customers, China and India boosted their imports in January. Last week, the American Petroleum Institute reported a decline of 473,000 barrels in the US crude inventories for the week ended February 14. Analysts had forecast a climb of 1.9 million barrels in crude supplies. Meanwhile, the Energy Information Administration indicated that crude stockpiles rose 1 million barrels for the week ended February 14, against the expectations for a climb of 1.9 million barrels. Oil traded at a high of 103.80 and a low of 100.45 in the previous week. Oil has its first major support at 100.50, while the next support exists at 98.80. The first resistance is at 103.85 and the next at 105.50.

In the week ahead, traders would pay close attention to the US economic data for further directions to the oil prices.

Week of February 18th, 2014

Weekly Forex Update
The greenback fell against a basket of major currencies last week, amid below-par economic data from the US. Retail sales fell unexpectedly in January, while the number of people claiming first time unemployment benefits rose last week. Moreover, the US industrial production unexpectedly declined in January.
Meanwhile, the newly appointed Fed Chair, Janet Yellen in her testimony before US lawmakers hinted that the central bank would continue to taper monetary stimulus. However, she added that the tapering is not on “pre-set course” as the recovery is still far from over. Moreover, St Louis Fed President, James Bullard echoed similar views and indicated that policymakers will probably be careful about changing the pace of stimulus reductions, citing its significant impact on the markets.
On the political front, the US Senate approved a bill permitting the US Treasury to continue borrowing normally through March 2015, putting the debt-limit fight to rest until next year.
The Euro rose against the greenback underpinned by improved risk appetite after data indicated that economic growth in the bloc accelerated at more-than-expected pace in the fourth quarter. Moreover, upbeat German and French GDP data also boosted traders demand for the common currency.
Uncertainty in the Italian political arena resurfaced as the Prime Minister, Enrico Letta resigned after less than a year in office. Meanwhile, Moody’s ratings agency raised its outlook on Italy to “Stable” from “Negative”, citing the country’s financial strength and reduced balance sheet risks.
The Pound advanced against its key peers underpinned by positive domestic data and after the Bank of England (BoE) acknowledged improved economic conditions in the UK. In its quarterly inflation report, the BoE indicated that it would look to performance of the various growth indicators rather than use the jobless rate only, before raising interest rates. Additionally, the BoE raised its UK economic growth forecast to 3.4%, from previous forecasts for 2.8% growth. Governor, Mark Carney also noted that the unemployment rate fell much faster than expected and is likely to reach the target sooner than expected.
Commodity prices surged last week, as gold jumped 4.2%, while silver surged 7.3%, amid rise in physical demand from China and as soft economic data from the US weighed on the greenback.

EUR USD
Last week, the EUR traded 0.57% higher against the USD and closed at 1.3697, boosted by a set of positive GDP data from the Euro-zone and its top economies. Germany’s GDP rose 0.4% in the fourth quarter of 2013, while the French economic output showed a 0.3% rise. Moreover, Euro-zone’s economic activity accelerated 0.3% in the final quarter of 2013. Meanwhile, the ECB in its monthly report reiterated that inflation in the bloc would remain low for a prolonged period and that the central bank will continue to maintain its accommodative stance for as long as necessary. During the week, the pair traded at a high of 1.3715 and a low of 1.3561. The pair is expected to find its first support at 1.3600, with the next support expected at 1.3504. The first resistance is at 1.3754, and the next at 1.3812.

The ZEW sentiment indices, the Markit manufacturing and services PMIs and the European Commission’s economic growth forecast are the main triggers for this week’s trading session.

GBP USD
In the last week, GBP traded 2.01% higher against the USD and closed at 1.6737, following upbeat economic data released in the UK. Construction activity in the nation rose in December, while retail sales advanced at the fastest annual pace since April 2011 in January. A separate report by the Lloyds Banking showed an improvement in the nation’s employment confidence. To add to the upside, the Confederation of British Industry projected the UK economy to expand 2.6% in 2014, up from its November forecast of 2.4%. Providing a further boost, the BoE in its quarterly inflation report raised the nation’s growth forecasts and lowered its inflation projections. Additionally, the BoE Governor, Mark Carney, stated that recovery in Britain was gaining momentum, assuring that the forward guidance adopted by the central bank was working. The pair traded at a high of 1.6744 and a low of 1.6383 in the previous week. GBPUSD is expected to find its first support at 1.6499, with the next at 1.6260.
Resistance exists first at 1.6860, and then at 1.6982.

Ahead in the week, investor’s focus would invariably revolve around UK’s January inflation data and the BoE minutes.

USD JPY
The USD traded 0.50% lower against the JPY over the past week, closing at 101.83, as traders reduced their exposure to the US Dollar following a dismal set of economic data released last week in the US. In Japan, core machine orders plunged a seasonally adjusted 15.7% (MoM) in December, while the seasonally adjusted consumer confidence index declined to a reading of 40.5 in January from 41.3 in December. Moreover, current situation index and expectations index fell more than market forecasts in January. A separate report revealed that Japan’s GDP grew 0.3% in Q4 2013, same as in the previous quarter but against the expected rise of 0.7%. The pair traded at a high of 102.72 and a low of 101.56. The pair is expected to find its first support at 101.36, with the next support expected at 100.88. The first resistance is at 102.52, and the next at 103.02.

In Japan, January trade data later this week will be in focus. Additionally, market participants would also keep a tab on the Bank of Japan’s interest rate decision.

USD CHF
USD traded 0.68% lower against the CHF and closed at 0.8920 in the last week. In economic news, the unemployment rate in Switzerland remained unchanged at 3.5% in January. On an annual basis, the consumer price index rose 0.1% in January, compared to a similar rise reported in the previous month. Meanwhile, on a monthly basis, producer and import prices in Switzerland remained flat in January. During the period, the pair traded at a high of 0.9039 and a low of 0.8903. The first support is at 0.8869, and the next at 0.8818. Resistance exists first at 0.9005, and then at 0.9090.

Moving forward, the Swiss trade balance and monthly statistical bulletin by the Swiss National Bank will be key for the Swiss Franc against the majors.

USD CAD
Last week, the USD traded 0.61% lower against the CAD and closed at 1.0971, after the Federal Reserve head, Janet Yellen told US lawmakers that the central bank would gradually reduce the pace of its asset purchase program and reiterated that the bank would hold interest rates at zero. Meanwhile, the Canadian Dollar found support from rising oil prices, nation’s largest export item. In Canada, housing starts fell more-than-expected in January, while another data showed that manufacturing shipments in the nation declined in December, first time since August. USDCAD traded at a high of 1.1092 and a low of 1.0938 in the previous week. The first support is at 1.0909, with the next at 1.0846. The first resistance is at 1.1063, while the next is at 1.1154.

Ahead in the week, investors have their plate full with a raft of economic data scheduled for release, including the Canadian inflation data.

AUD USD
AUD traded 0.79% higher against the USD and closed at 0.9032, as the greenback came under pressure after the release of tepid US economic data last week. Earlier on Thursday, the Aussie came under pressure after the IMF indicated that Australia needs a weaker AUD to achieve balanced growth. Additionally, data showed that Australia’s unemployment rate rose more than expected to 6% in January, the highest level since July 2003. Also, the number of employed people in Australia declined by 3,700 in January, compared to expectations for a 15,000 rise. In other economic news, the Australian business confidence improved for the first time in four months in January, while business conditions rose to the highest level in nearly three years. Additionally, house prices in the nation rose more than market expectations in Q4 2013. During the week, the pair traded at a high of 0.9069 and a low of 0.8906. The first support is at 0.8936, and the next at 0.8839. The first resistance is at 0.9099, and the next at 0.9165.

Market participants would focus on the release of the RBA minutes and other domestic data ahead in the week.

Gold
In the prior week, Gold rallied 4.24% against the USD and closed at USD1318.69, after Fed chief, Janet Yellen’s testimony and amid a slew of lackluster economics data in the US. The yellow metal rose after Fed Chair, Janet Yellen last week indicated that the recovery in the US labor market is “far from complete”, reviving hopes of sustained stimulus efforts by the central bank. Traders sentiment towards precious metal also improved, after SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, posted its biggest inflow since late December, up 7.5 tonnes to 806.35 tonnes. The yellow metal traded at a high of 1321.52 and a low of 1265.13 in the previous week. Gold is expected to find support at 1282.04 and the next at 1245.39. The first resistance is at 1338.43, while the next is at 1358.17.

In the week ahead, apart from the minutes of the Fed’s January meeting, traders would focus on the global economic indicators for further guidance to gold prices.

Crude Oil
Oil prices traded 0.20% higher against the USD in the last week and closed at USD100.30, as persistent winter storm in the US bolstered the demand prospect of the commodity, while social unrest in Libya weighed on the supply outlook of the commodity. Moreover, oil prices also gained after the Organization of the Petroleum Exporting Countries (OPEC) predicted stronger global crude demand amid an improving outlook for the world economy. Market sentiment was also lifted as China’s import growth in January hit a six-month high. On the US oil inventory front, the American Petroleum Institute reported that the US crude inventories rose by 2.1 million barrels, while the Energy Information Administration reported a more-than-expected rise in the US crude supplies by 3.3 million barrels, during the week ended February 7. Oil traded at a high of 101.38 and a low of 99.11 in the previous week. Oil has its first major support at 99.15, while the next support exists at 97.99. The first resistance is at 101.42, and the next at 102.53.

The global macroeconomic data would remain a key catalyst in this week’s market action.

Week of February 10th, 2014

Weekly Forex Update

The US dollar traded broadly lower against its key peers, after manufacturing activity in the US fell to its lowest level in January. Additionally, non-farm payroll report revealed that the economy added fewer-than-expected jobs in January. Furthermore, trade deficit in world’s largest economy widened more-than-expected to $38.7 billion in December, while the US factory orders posted a decline of 1.5%, compared to a gain of 1.8% a month earlier.

However, losses in the greenback were capped as few Fed officials continued their support for further cut in stimulus measures. The Philadelphia Fed Chief, Charles Plosser urged the central bank to fasten the pace of QE3 tapering, while the Atlanta Fed President indicated that further cuts in bond purchases would continue and the QE3 programme might end by 2014.

The Euro rose against the USD after upbeat manufacturing PMI data released in Europe revealed that recovery in the bloc has gained “significant momentum” last month. Moreover, manufacturing activity in Greece returned to growth for the first time in more than four years in January, fuelling hopes that the country’s long slump could be easing.

During the week, the European Central Bank decided to leave its interest rate unchanged at 0.25% and announced no additional easing measures to shore up slowing inflation. However, the ECB President, Mario Draghi indicated that the central bank is monitoring developments in the region and may take necessary action in its next policy meeting, if low inflation continues to persist.

The GBP retreated against its major peers. In the UK, the Bank of England left its key interest rates steady at 0.50% and made no change to its quantitative easing program. On the economic front, manufacturing PMI fell more-than-expected to 56.7 in January, while service sector growth slowed unexpectedly to a seven-month low in January. Additionally, the nation’s industrial production recovered at a slower-than-expected pace in December.

However, the National Institute of Economic and Social Research (NIESR) on Friday stated that the British economy will grow 2.5% in 2014 and 2.1% in 2015, citing that consumer spending and buoyant housing market will drive domestic demand.

The Aussie gained sharply against the USD, after domestic retail sales, trade balance and business confidence data boosted investors’ risk appetite for the local dollar. To add to the positive tone, the Reserve Bank of Australia (RBA) on Friday, upgraded its growth and inflation outlook for the Australian economy for 2014.

EUR USD

Last week, the EUR traded 0.86% higher against the USD and closed at 1.3620, following the release of mostly upbeat economic data across the European economies. Manufacturing PMI in the Euro-zone rose to 54.0 in January from 52.7 in December, while the German manufacturing PMI rose to a 32-month high of 56.5. Similar gauge in France rose to a four-month high in January. Additionally, peripheral countries in the Euro-zone also reported an increase in manufacturing activities in January. The common currency also rose after the ECB announced no new monetary easing measures at its policy meeting. Additionally, the central bank chief, Mario Draghi stated that the Euro zone will not slide into deflation. During the week, the pair traded at a high of 1.3644 and a low of 1.3477. The pair is expected to find its first support at 1.3517, with the next support expected at 1.3413. The first resistance is at 1.3684, and the next at 1.3747.

Moving ahead, apart from the ECB’s monthly report and Mario Draghi’s speech, investors’ would keep a tab on the fourth quarter GDP data from the Euro-zone and Germany.

GBP USD

In the last week, GBP traded 0.19% lower against the USD and closed at 1.6408, as dismal domestic data dampened investors’ sentiment towards the Pound. Manufacturing activity in the UK fell unexpectedly in January, while expansion in the services sector eased last month, pointing towards a weak start to 2014. Data released on Friday, showed that industrial and manufacturing output in the UK rose less than market expectations. The pair traded at a high of 1.6440 and a low of 1.6252 in the previous week. GBPUSD is expected to find its first support at 1.6293, with the next at 1.6179. Resistance exists first at 1.6481, and then at 1.6555.

Investors look forward to the central bank’s Quarterly Inflation Report this week.

USD JPY

The USD traded flat against the JPY over the past week, closing at 102.35. The Yen came under pressure on Thursday, after the Bank of Japan Deputy Governor, Hiroshi Nakaso indicated that the central bank will take all the necessary steps to adjust policies if risks emanating from emerging markets come in the way of achieving its 2% inflation target. Another Deputy Governor, Kikuo Iwata echoed a similar view and said that the central bank would continue its stimulus measures until the 2% inflation target is achieved in a stable manner. In economic news, the leading economic index in Japan advanced to 112.1 in December, marking the fourth successive rise, while the coincident index rose to a reading of 111.7 from 110.7 in November. The pair traded at a high of 102.59 and a low of 100.75. The pair is expected to find its first support at 101.20, with the next support expected at 100.06.
The first resistance is at 103.04, and the next at 103.74.

Apart from domestic economic data, traders would focus on the global news ahead in the week.

USD CHF

USD traded 0.77% lower against the CHF and closed at 0.8981 in the last week. In economic news, consumer sentiment in Switzerland improved sharply in Q4 2013. A separate report indicated that Switzerland’s trade surplus narrowed more-than-expected in December, while the Swiss retail sales increased at a weaker pace in December. During the period, the pair traded at a high of 0.9083 and a low of 0.8959. The first support is at 0.8948, and the next at 0.8892. Resistance exists first at 0.9072, and then at 0.9140.

Apart from external cues, traders would focus on the Swiss unemployment rate and inflation data for January to offer further guidance in the pair.

USD CAD

Last week, the USD traded 0.74% lower against the CAD and closed at 1.1038. The Canadian Dollar rose after the Ivey PMI advanced to a reading of 56.8 in January. The gains were further strengthened after data on Friday revealed that the Canadian economy added 29,400 more jobs in January, while the jobless rate fell to 7.0% from 7.2% recorded in the previous month. USDCAD traded at a high of 1.1135 and a low of 1.0966 in the previous week. The first support is at 1.0958, with the next at 1.0877. The first resistance is at 1.1127, while the next is at 1.1215.

With no major domestic data scheduled for release during the week, the CAD is expected to closely track global economic news for clarity on risk appetite among market participants.

AUD USD

AUD traded 2.39% higher against the USD last week, and closed at 0.8961, after the RBA left its interest rate unchanged at 2.5% and indicated that the current monetary policy is appropriate to support sustainable growth. On Friday, the central bank raised the nation’s growth and inflation forecasts for 2014. On the data front, trade surplus in Australia widened sharply in December, while retail sales climbed a seasonally adjusted 0.5% (MoM) for the same period. Moreover, the NAB business confidence rose in Q4 2013, hitting a two-and-a-half year high. During the week, the pair traded at a high of 0.9000 and a low of 0.8729. The first support is at 0.8793, and the next at 0.8626. The first resistance is at 0.9064, and the next at 0.9168.

The Australian employment and consumer confidence report later this week remain the main domestic triggers to determine the near term trend for the Aussie.

Gold

In the prior week, Gold traded 1.64% higher against the USD and closed at USD1265.01, as the greenback weakened on disappointing economic data released in the US. The USD further came under pressure after data on Friday showed that job creation in the US slowed further in January. Gold prices also rose amid hopes that demand from China would rebound as the markets in the nation re-opened after a week long holiday for the Lunar New Year, boosting volumes for the precious metal. The yellow metal traded at a high of 1274.73 and a low of 1240.97 in the previous week. Gold is expected to find support at 1245.74 and the next at 1226.48. The first resistance is at 1279.50, while the next is at 1294.00.

In the week ahead, the Federal Reserve new chief, Janet Yellen will testify before Congress on the bank’s Semiannual Monetary Policy Report in Washington. Her comments will be closely watched, in the light of Friday’s tepid jobs report.

Crude Oil

Oil prices traded 2.70% higher against the USD in the last week, to close at USD100.10. Oil traders were disappointed from the economic data released last week in China and the US, world’s largest oil consumers. Despite this, oil prices rose as persistently cold weather across the US boosted heating fuel demand. Additionally, upbeat manufacturing PMI data from Europe supported gains in oil prices. On the US oil inventory front, the American Petroleum Institute (API) reported a less-than-expected 384,000 barrels rise in the US crude stockpiles for the week ended January 31, while the Energy Information Administration (EIA) indicated that crude oil inventories rose by 440,000 barrels. Oil traded at a high of 100.24 and a low of 96.26 in the previous week. Oil has its first major support at 97.49, while the next support exists at 94.89. The first resistance is at 101.47, and the next at 102.85.

Ahead in the week, the EIA, the International Energy Agency and the Organization of the Petroleum Exporting Countries are all scheduled to release monthly reports on the oil market.

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DirectFx_Weekly Currency Report_10th February 2014.pdf

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Week of November 18th, 2013

During the past week, the greenback was dragged lower against most of its major peers, after the incoming US Federal Reserve’s (Fed) Chairperson, Janet Yellen, stated that there is no time set by the central bank to scale back its asset purchase policy, citing the importance of asset purchases amid an already suffering US economy.
In economic news, the weekly initial jobless claims and business optimism data failed to meet market expectations. Meanwhile, the trade deficit widened more than analysts’ expectations in October. Separately, economic activities in Chicago improved in September and manufacturing activity in New York retreated in November. Moreover, industrial production dropped more than market expectations.
The Euro finished higher, as Janet Yellen’s support of the Fed’s ultra loose monetary policy and the weak jobless claims numbers countered weak Euro-zone growth estimates. In her confirmation hearing of the US Senate Banking Committee, the incoming Governor highlighted that the central bank will do everything possible to promote a very strong recovery. However, gains were kept in check, as the European Central Bank’s (ECB) monthly report reiterated to keep its monetary stance accommodative for a prolonged period of time. Furthermore, a decline in the pace of the Euro area’s and Germany’s growth figures also kept the gains in the Euro limited.
The Sterling gained against the greenback, after the Bank of England’s (BoE) inflation report upgraded its growth outlook for the nation for current and next year and indicated that it expects the jobless rate in the UK to fall to 7% by 2015, after which the central bank would consider to raise its interest rates. Additionally, the BoE Governor, Mark Carney, stated that the recovery in the UK has finally taken a grip.
The Japanese Yen capped its losses, after a report revealed that the gross domestic product rose more than market expectations in the third quarter, however, remaining below its previous level. Meanwhile, the country’s Finance Minister, Taro Aso stated that the intervention in the currency market remains an important policy tool for the Japanese government.
The Canadian Dollar slipped against the USD, after the Bank of Canada’s (BoC) quarterly review noted that the central bank might not hike its lending rates, even if the economy is running at full speed and inflation is close to the target level. Also, the BoC’s Deputy Governor, John Murray, echoed the similar opinion for the monetary stance of the central bank.
Separately, the Aussie came under pressure, mainly on the back of discouraging domestic data. The New Zealand Dollar finished higher, after it came under pressure on Wednesday following the concerns raised by the Reserve Bank of New Zealand Governor, Graeme Wheeler on the impact the higher rates would have on the Kiwi Dollar, as the central bank plans to hike its interest rate next year. The governor also highlighted the threat to New Zealand’s financial system due to a potential slowing of the Chinese economy.

EUR USD
Last week, the EUR traded 0.92% higher against the USD and closed at 1.3483, as the greenback fell. Traders attributed the weakness in the greenback to the dovish remarks by Janet Yellen to the US Senate Banking Committee, pointing towards a still weak US economy and labor market and calling for further improvement before the central bank contemplates scaling back its monthly asset purchase programme. However, gains in the shared currency were capped, after the ECB’s monthly report noted that the central bank would continue to remain accommodative for an extended period of time, in line with its forward guidance. Moreover, a slew of disappointing growth reports from the Euro-zone, Germany and France, left investors jittery about the growth prospects of these regions.
During the week, the pair traded at a high of 1.3506 and a low of 1.3346. The pair is expected to find its first support at 1.3384, with the next support expected at 1.3285. The first resistance is at 1.3544 and the next at 1.3605.

Ahead in the week, the German gross domestic product, ZEW survey and IFO indices would be closely tracked by market participants. Furthermore, Euro-zone’s consumer confidence and ZEW economic sentiment along with a batch of manufacturing purchasing managers’ index (PMI) across the Euro region would also act as a catalyst in determining the direction of the shared currency.

GBP USD
In the last week, GBP traded 0.70% higher against the USD and closed at 1.6108, as the BoE’s quarterly inflation report raised the growth outlook and lowered its stance on inflation and unemployment for the nation. Also, a separate report confirmed that the jobless claims in the nation dropped further in October and the unemployment rate dropped surprisingly to 7.6% in the same period. However, the muted inflation and retail sales data capped the gains in the Sterling. Meanwhile, the BoE Governor, Mark Carney, voiced that the jobless rate is falling at a quicker than expected pace, highlighting the robust recovery of the British economy. The pair traded at a high of 1.6135 and a low of 1.5854 in the previous week. GBPUSD is expected to find its first support at 1.5930, with the next at 1.5751. Resistance exists first at 1.6211, and then at 1.6313.

Moving forward, the BoE’s minutes and inflation report hearings would take the driver’s seat during this week’s market action. Also, the preliminary reading of the UK’s growth figures would remain on the radar of investors.

USD JPY
The USD traded 1.23% higher against the JPY over the past week, closing at 100.26. The Yen lost ground after, the nation’s Finance Minister, Taro Aso, opined that intervention in the currency markets remains a key weapon for the Japanese government. Also, the comments of the advisor of the Japanese Prime Minister, Koichi Hamada that the Bank of Japan should undertake further easing measures, to offset the possible hazards of a hike in the sales tax during the next year, weighed upon the Yen.
However, a better than expected reading in the Japanese gross domestic product in the third quarter, limited the losses in the Yen. Moreover, the Japanese current account, trade balance and industrial production data improved for September.
The pair traded at a high of 100.45 and a low of 98.92. The pair is expected to find its first support at 99.30, with the next support expected at 98.34. The first resistance is at 100.83 and the next at 101.41.

The BoJ’s interest rate decision and monetary policy statement would remain the key macroeconomic development during the week. Also, the trade balance data would bring in fluctuations in the pair.

USD CHF
USD traded 0.73% lower against the CHF and closed at 0.9155 in the last week, following the comments from Fed’s incoming Chief, Janet Yellen that the central bank’s bond buying program would continue for a foreseeable future.
On the macroeconomic front, producer and import prices in Switzerland dropped 0.4% (MoM) in October.
During the period, the pair traded at a high of 0.9232 and a low of 0.9124. The first support is at 0.9109, and the next at 0.9062. Resistance exists first at 0.9217, and then at 0.9278.

The Swiss trade balance and ZEW survey expectations are the only major macroeconomic releases scheduled for this week.

USD CAD
Last week, the USD traded 0.34% lower against the CAD and closed at 1.0452. However, the losses were limited, after the BoC’s quarterly report showed that the central bank might not necessarily raise the interest rates even the after the Canadian economy begins to prosper. The release of the domestic macroeconomic data also kept the gains in the Loonie under check. The international merchandise trade and new housing price index in Canada disappointed investors. However, the manufacturing shipments rose 0.6% in September. USDCAD traded at a high of 1.0527 and a low of 1.0439 in the previous week. The first support is at 1.0418, with the next at 1.0385. The first resistance is at 1.0506, while the next is at 1.0561.

The Canadian inflation data would be the major macroeconomic trigger for the Loonie traders during this week.

AUD USD
AUD traded 0.22% lower against the USD last week, and closed at 0.9360, as the release of the domestic macroeconomic data in Australia weighed on the Aussie. The business confidence and consumer inflation expectation in the country dropped in October. Meanwhile, the Westpac consumer confidence index fell to 103.0 in November from 108.3 in the previous month. During the week, the pair traded at a high of 0.9392 and a low of 0.9269. The first support is at 0.9289, and the next at 0.9217. The first resistance is at 0.9412, and the next at 0.9463.

During this week, the release of the minutes of the Reserve Bank of Australia’s (RBA) latest policy meeting would remain on the radar of the market participants. Also, investors would closely track the speeches from the RBA’s Governor and Assistant Governor, to gain insights regarding the central bank’s future monetary stance.

Gold
In the prior week, Gold swung into gains and losses and finally finished marginally lower to close at USD1288.21. Initially gold prices fell, amid uncertainties that the US Fed might begin to taper its monetary stance when it meets during the next month. However, the losses were short lived, as the comments from the Fed’s incoming Chief, Janet Yellen endorsing the continuation of the current pace of the bond buying program weighed on the greenback. Meanwhile, the World Gold Council (WGC) predicted that China might surpass India as the largest consumer of the yellow metal, amid the strict import rules introduced by the Indian Finance Ministry. A separate report released by the WGC revealed that India gold demand dropped 32% in September quarter. The yellow metal traded at a high of 1294.42 and a low of 1261.42 in the previous week. Gold is expected to find support at 1268.28 and the next at 1248.35. The first resistance is at 1301.28, while the next is at 1314.35.

Investors in yellow metal would closely track the speech of the current Fed Chief, Ben Bernanke, along with minutes of the FOMC’s latest policy meeting to adjust their exposures to the safe haven yellow metal.

Crude Oil
Oil prices traded 0.66% lower against the USD in the last week and closed at USD93.73, as reports emerged that Iran signed an agreement giving international authorities an access to its nuclear weapons, easing supply concerns. However, internal strife in Libya and likely continuation of the Fed’s bond buying program supported crude oil prices. Separately, the Energy Information Administration reported that the US crude oil inventories gained 2.60 million barrels, for week ended November 8. Meanwhile, the American Petroleum Institute reported 599,000 barrels rise in the US crude oil stock piles for the similar period. Oil traded at a high of 95.38 and a low of 92.51 in the previous week. Oil has its first major support at 92.37, while the next support exists at 91.00. The first resistance is at 95.24 and the next at 96.74.

In the week ahead, investors will scour Federal Reserve Chairman, Ben Bernanke’s speech and minutes of the central bank’s October meeting for hints on when it might start paring its asset-buying programme.

Week of November 11th, 2013

Weekly Forex Update
The greenback continued its winning streak against a basket of key currencies during the past week, as better than expected US gross domestic product report and non-farm payrolls data stoked speculations that the US Federal Reserve (Fed) might start withdrawing its asset purchase program sooner than expectations.
However, the Fed’s regional Presidents from St.Louis and Boston opined that the central bank should not hastily taper the pace of its bond purchases, citing the weakness in the labor sector and low inflation levels. Meanwhile, the Fed Chairman, Ben Bernanke cautioned that there is still a tremendous slack in the US labor market.
On the data front, the University of Michigan consumer sentiment data dropped to a near two year low, highlighting pessimism among the Americans about their economy. Unemployment rate inched higher in October. Initial jobless claims and mortgage approvals trailed market expectations. However, services purchasing managers’ index (PMI) rose to level of 55.4 in October and the economic optimism rose to a reading of 41.4 in November, defying market expectations.
The Euro lost ground against all its key peers, after the European Central bank (ECB) cut its benchmark rate at its latest policy meeting. Moreover, the ECB Chief, Mario Draghi, indicated that inflation in the Euro region would continue to hover at the current low levels. The common currency also lost ground after the European Commission slashed its growth outlook for the Euro-zone’s economy for the next two years.
The Sterling inched higher against the greenback during the last week, after the Bank of England (BoE) left its interest rates and the size of asset purchases untouched. A string of better than expected domestic macroeconomic data released in the UK also helped the Pound trade in the green. Separately, the National Institute of Economic and Social Research (NIESR) projected that the British economy grew at a slower pace during the three months ending October.
The minutes of the Bank of Japan’s (BoJ) policy meeting echoed that the Japanese economy would continue to recover on the back of a gradual rise in exports and inflation is expected to rise steadily. Meanwhile, the BoJ Governor, Haruhiko Kuroda, indicated that the bank would not hesitate in adjusting the monetary policy to avoid the hurdles in achieving the price stability target.
The Swiss Franc inched lower against the USD, following an unexpected drop in Swiss inflation. Meanwhile, the Loonie capped its losses, after a report confirmed that employment and jobless rate in Canada improved in October.
The Aussie lost ground against the greenback, after the Reserve Bank of Australia (RBA) slashed the growth forecast for the country for the following year. Furthermore, it kept its interest rates unchanged, keeping the doors open for another rate cut.

EUR USD
Last week, the EUR traded 0.98% lower against the USD and closed at 1.3360, after the ECB surprised markets by lowering its benchmark interest rate at its latest policy meeting. Comments by the ECB Chief Mario Draghi, that inflation in the Eurozone would remain muted in the foreseeable future dragged the Euro lower. Losses were compounded by the European commission’s cut in its regional growth forecast for 2014 and 2015. The French credit rating downgrade by Standard & Poor’s rating services also fuelled negative vibes. Data released in the Euro region last week was mixed. Factory orders in Germany rebounded at the fastest pace in September. Meanwhile, a batch of manufacturing and services PMI’s in the Euro area and Germany recorded encouraging readings in October. However, retail sales growth in the Euro area and industrial production in German disappointed markets. During the week, the pair traded at a high of 1.3548 and a low of 1.3295. The pair is expected to find its first support at 1.3254, with the next support expected at 1.3148. The first resistance is at 1.3507, and the next at 1.3654.

Going forward, the gross domestic product and inflation data from the Euro zone and Germany would be the crucial economic releases, along with the Euro region’s industrial production.

GBP USD
In the last week, GBP traded 0.43% higher against the USD and closed at 1.5996, after the BoE kept its key lending rates and the size of its monetary stimulus unchanged. The rise in the domestic macroeconomic indicators also supported the Sterling. Construction and services PMI data topped market expectations in October. Meanwhile, industrial and manufacturing production surged at a faster pace in September. However, the gains in the UK Pound were kept under check, after the NIESR estimated that the UK’s economy grew at 0.7% for three months ending October, which was lower than in the three months ending September, and after the country’s trade deficit widened unexpectedly in September. The pair traded at a high of 1.6120 and a low of 1.5903 in the previous week. GBPUSD is expected to find its first support at 1.5893, with the next at 1.5789. Resistance exists first at 1.6110, and then at 1.6223.

UK is expected to release consumer price index and employment data during this week. Furthermore, the Bank of England’s quarterly inflation report and retail sales data would also be in focus.

USD JPY
The USD traded 0.28% higher against the JPY over the past week, closing at 99.04, amid escalating expectations that the US Fed might be induced to withdraw its ultra loose monetary policy sooner than expectations, in light of better than expected domestic macroeconomic data. The minutes of the Bank of Japan’s (BoJ) policy meeting indicated that the Japanese economy would continue to recover on the back of a pickup in exports and inflation is expected to rise gradually. Meanwhile, the BoJ Governor stated that the central bank would not hesitate in adjusting its monetary policy to achieve its inflation target. In economic news, leading economic and coincident indices in Japan recorded readings of 109.5 and 108.2, respectively, in October. The pair traded at a high of 99.42 and a low of 97.61. The pair is expected to find its first support at 97.96, with the next support expected at 96.88. The first resistance is at 99.77, and the next at 100.50.

Later during the week, market participants would keep a tab on Japanese industrial production and consumer confidence data which would help in gauging the health of the Japanese economy.

USD CHF
USD traded 1.05% higher against the CHF and closed at 0.9222 in the last week, as expectations that the US Fed might alter its accommodative policy supported the greenback. The Swissy lost support after the consumer price index in Switzerland came in lower than expectations in October. On the data front, retail sales in Switzerland dropped unexpectedly in September. Meanwhile, the jobless rate in the nation remained unchanged in October. During the period, the pair traded at a high of 0.9251 and a low of 0.9090. The first support is at 0.9124, and the next at 0.9027. Resistance exists first at 0.9285, and then at 0.9349.

The trade balance is the only key macroeconomic release in Switzerland scheduled for release this week.

USD CAD
Last week, the USD traded 0.57% higher against the CAD and closed at 1.0488. However, the losses in the Loonie were capped after a report noted that number of jobs added by the Canadian economy increased in October. Meanwhile, market participants also cheered the reading in the nation’s jobless rate, which remained steady in same period, defying market expectations. USDCAD traded at a high of 1.0505 and a low of 1.0397 in the previous week. The first support is at 1.0422, with the next at 1.0355. The first resistance is at 1.0530, while the next is at 1.0571.

The Bank of Canada’s quarterly review and the Canadian trade data would act as a catalyst in determining the direction of the pair during this week.

AUD USD
AUD traded 0.60% lower against the USD last week, and closed at 0.9381, after the RBA in its monetary policy statement trimmed its growth outlook for the island nation for the next year. Meanwhile, it kept its key lending rates unchanged, keeping the doors open to trim them further, citing the elevated unemployment levels and the strength in the currency. Meanwhile, the RBA Chief, Glenn Stevens echoed that the Aussie remains comfortably higher, hampering the growth prospects of the nation. However, the encouraging Chinese trade balance data limited losses in the Aussie. In economic news, retail sales in Australia rose more than market expectations in September. Meanwhile, the trade deficit narrowed more than market expectations. During the week, the pair traded at a high of 0.9545 and a low of 0.9352. The first support is at 0.9307, and the next at 0.9233. The first resistance is at 0.9500, and the next at 0.9619.

During the week, Australia’s consumer confidence and consumer inflation expectations data would hog centre stage.

Gold
In the prior week, Gold traded 2.06% lower against the USD and closed at USD1288.25, as investors remained jittery that the recent set of macroeconomic figures in the US might compel the US Fed to start winding up its highly accommodative asset purchase policy ahead of time. The yellow metal traded at a high of 1326.57 and a low of 1281.18 in the previous week. Gold is expected to find support at 1270.76 and the next at 1253.28. The first resistance is at 1316.15, while the next is at 1344.06.

This week, traders will closely track the speech of the Fed Chairman scheduled for cues on the future stance of the US monetary policy.

Crude Oil
Oil prices traded 0.27% lower against the USD in the last week and closed at USD94.35, amid reports of resumption of higher oil exports from Libya and as inventories rose in the US. The American Petroleum Institute reported that the US crude oil inventories rose 871,000 barrels during the week ended 1 November. Meanwhile, the Energy Information Administration reported that inventories climbed 1.6 million barrels for the same period. Oil traded at a high of 95.40 and a low of 93.07 in the previous week.

Oil has its first major support at 93.15, while the next support exists at 91.94. The first resistance is at 95.48, and the next at 96.60.

Week of November 4th, 2013

Weekly Forex Update
During the last week, the greenback rebounded from its previous losses, amid continued uncertainty regarding the future stance of the US Federal Reserve (Fed) about tapering its asset purchase program. The Fed stated that downside risks pertaining to the health of the economy and the labor market have diminished from the previous levels.
Domestic data released in the US was mixed. The ADP jobs and the initial jobless claims data were dismal while consumer confidence slumped, hurt by the recent economic and political developments in the country. Retail sales and pending home sales data also failed to lift risk appetite among investors. On the positive, industrial production and Institute of Supply Management manufacturing Purchasing managers’ index (PMI) data ticked higher from their previous levels.
Meanwhile, Euro traded in the red against the USD, as lower than anticipated inflation in the region increased expectations that the European Central Bank (ECB) might need to further loosen its monetary stance to support economic activity. Also, the elevated unemployment rate in the Euro region along with a decline in consumer confidence in Germany weighed on the common currency.
The Sterling ticked lower during the past week against the greenback. The Bank of England (BoE) Governor, Mark Carney, opined that the UK economy is currently driven by housing markets and cautioned that the house prices in the UK still remain patchy.
The JPY restricted its losses during the last week, after the Bank of Japan (BoJ) left its monetary stance untouched, stating that the economy is benefiting from the aggressive monetary policy. Furthermore, the central bank upgraded its economic stance in its half yearly economic outlook. However, the comments from the BoJ Governor, Haruhiko Kuroda, that three of central bank’s key policymakers has raised doubts on whether the country might achieve the inflation target left investors jittery.
The AUD came under pressure against most its peers, as the comments of the Reserve Bank of Australia’s (RBA) Chief, Glenn Stevens that the currency would remain weak in the foreseeable future weighed on the Aussie. Meanwhile, the Swissy lost ground following the release of downbeat Swiss manufacturing PMI data.
Bucking the overall trend, the CAD found support following the release of robust gross domestic product report from Canada. In a noteworthy development, the Bank of Canada’s Governor, Stephen Poloz, stated that the decision to keep the interest rates untouched was due to low inflation which remained persistently below the 2% mark.

EUR USD
Last week, the EUR traded 2.28% lower against the USD and closed at 1.3492, as downbeat consumer price index data in the euro area fuelled speculations that the ECB might resort to further easing measures. Meanwhile, the ECB Executive Board member, Benoit Coeure indicated that the common currency bloc has pulled itself out of the danger zone. In another positive development, Spain exited recession and its sovereign credit rating was upgraded by Fitch Ratings Services.
The shared currency was pressurized by dismal domestic data. The unemployment rate in the euro region continued to remain at multiyear highs. Meanwhile, the consumer confidence in Germany in November slipped below its previous level. On the positive side, consumer and industrial confidence and economic sentiment indicator in the euro region recorded improvements.
During the week, the pair traded at a high of 1.3818 and a low of 1.3480. The pair is expected to find its first support at 1.3375, with the next support expected at 1.3259. The first resistance is at 1.3713, and the next at 1.3935.

During this week, the ECB’s interest rate decision would remain the key economic event, accompanied by German factory orders data and manufacturing and services PMI indicators and retail sales figures from the Euro zone.

GBP USD
In the last week, GBP traded 1.53% lower against the USD and closed at 1.5927, as disappointing domestic data weighed on the growth prospects of the UK. Net lending to individuals and consumer credit dropped unexpectedly in September. Meanwhile, the British consumer confidence and the CBI distributive survey recorded dismal readings. In a noteworthy development, the BoE Governor, Mark Carney, opined that the UK economy is currently driven by housing markets and cautioned that the house prices in the UK still remains patchy. The pair traded at a high of 1.6210 and a low of 1.5909 in the previous week. GBPUSD is expected to find its first support at 1.5821, with the next at 1.5714. Resistance exists first at 1.6122, and then at 1.6316.

Going ahead, the Bank of England’s monetary meeting would remain on the radar of market participants, followed by the UK’s gross domestic product estimate for October. Moreover, the industrial and manufacturing production and trade balance would directly influence the direction of the UK Pound.

USD JPY
The USD traded 1.44% higher against the JPY over the past week, closing at 98.76, amid a broad surge in the greenback. Meanwhile, the BoJ kept the size of monetary stimulus unaltered, citing that the aggressive measures undertaken by the central bank are paying off. Additionally, the BoJ upgraded its economic stance in its semi-annual economic outlook. In economic news, unemployment rate in Japan slipped from the previous levels in September. Meanwhile, housing starts and construction orders surged more than expectations in September, while industrial production rebounded for the same month. The pair traded at a high of 98.86 and a low of 97.45. The pair is expected to find its first support at 97.85, with the next support expected at 96.94. The first resistance is at 99.27, and the next at 99.77.

Japan is expected to release the minutes of its central bank’s policy meeting which would provide further insights about the views of policy makers. Meanwhile, the Japanese current account and trade balance data would also gather attention of market participants.

USD CHF
USD traded 2.23% higher against the CHF and closed at 0.9126 in the last week, amid uncertainty about when the US Fed would scale back its quantitative easing program. The greenback also found support from the Fed statement that downside risks for the economy and labor market have reduced from the previous levels. On the data front, UBS consumption indicator in Switzerland stood at a reading of 1.56 in September. Meanwhile, KOF leading indicator rose at the fastest pace in two years at 1.72. During the period, the pair traded at a high of 0.9139 and a low of 0.8922. The first support is at 0.8986, and the next at 0.8845. Resistance exists first at 0.9203, and then at 0.9279.

Later during the week, investors would keep a close tab on the Swiss unemployment and consumer price index data. Moreover, the country’s consumer climate and retail sales numbers would also act as a catalyst during this week’s market action.

USD CAD
Last week, the USD traded 0.21% lower against the CAD and closed at 1.0429. The Loonie gained traction after Canadian gross domestic product growth beat expectations. Meanwhile, the Bank of Canada’s Governor, Stephen Poloz, stated that the decision to refrain from hiking the interest rate was due to low inflation, which remained persistently below the 2% mark. Separately, the Canadian Finance Minister Jim Flaherty indicated that the Canadian budget surplus might surge in the fiscal year that begins April 2015. USDCAD traded at a high of 1.0499 and a low of 1.0409 in the previous week. The first support is at 1.0392, with the next at 1.0356. The first resistance is at 1.0482, while the next is at 1.0536.

In the week ahead, Canadian unemployment and trade balance data would be keenly awaited. The other key indicators include building permits and manufacturing PMI.

AUD USD
AUD traded 1.51% lower against the USD last week, and closed at 0.9438, after the statement by the RBA Governor, Glenn Stevens, that the Aussie would remain weak weighed on the currency. On the macroeconomic front, Australian new home sales surged to the highest levels in seventeen months. Meanwhile, the building permits rebounded at a faster pace in September. Manufacturing index stood at a reading of 53.2 in October. Another positive was the rise in the Chinese manufacturing PMI. During the week, the pair traded at a high of 0.9624 and a low of 0.9421. The first support is at 0.9365, and the next at 0.9291. The first resistance is at 0.9568, and the next at 0.9697.

The RBA’s interest rate decision would remain the prime event during the week, followed by the release of retail sales, trade balance and unemployment data.

Gold
In the prior week, Gold traded 2.76% lower against the USD and closed at USD1315.35, amid uncertainty about the timing of tapering by the US central bank. Moreover, speculation that an import curb in India, the largest consumer of the yellow metal, might reduce physical gold demand in the country during the festive and the marriage season weighed on the yellow metal. The yellow metal traded at a high of 1361.93 and a low of 1306.00 in the previous week. Gold is expected to find support at 1293.59 and the next at 1271.83. The first resistance is at 1349.52, while the next is at 1383.69.

Market participants would focus on speeches of several Fed’s key officials this week, where they are expected to provide further insights about the timing of the Fed stimulus tapering.

Crude Oil
Oil prices traded 3.32% lower against the USD in the last week and closed at USD94.61, after the Energy Information Administration reported a higher than expected rise in the US crude oil inventories for the week ended 25 October. Oil traded at a high of 98.82 and a low of 94.36 in the previous week.

Oil has its first major support at 93.04, while the next support exists at 91.47. The first resistance is at 97.50, and the next at 100.39.

Week of October 28th, 2013

Weekly Forex Update
The greenback experienced yet another sell-off against its key counterparts, in the past week, as a greater than expected fall in the US non-farm payrolls increased speculation that the US Federal Reserve (Fed) might not initiate a policy taper in the foreseeable future. The statement of the Fed Chicago President Charles Evans, that the US economy provides no evidence to withstand an alteration in the bond buying program, increased the odds in the favor of a possible postponement of an alteration in the Fed’s monetary stance. However, the USD managed gains against the riskier commodity currencies.
Domestic data released in the US also weighed on the demand for the dollar. The deterioration in the US consumer outlook following the government’s shutdown was evident after the University of Michigan consumer sentiment index fell at the fastest pace in 10 months. Also, weekly initial jobless claims fell less than market expectations. Meanwhile, manufacturing purchasing managers’ index (PMI) and existing home sales also disappointed market participants. However, the jobless rate and durable goods orders bucked the trend and came in better than market expectations.
The shared currency breached the 1.38 psychological mark against the USD during the last week, as overall risk appetite among investors increased. Market participants also cheered European Central Bank (ECB) decision to put top Euro-zone banks through rigorous stress tests next year, to mitigate risk in the region’s banking system. However, gains in the Euro-zone’s single currency were capped after Markit reported that its PMI on the region’s manufacturing and service sector came in below market expectations for October. Adding to the negative sentiment was the latest batch of downbeat IFO data on the Germany economy for October.
The Sterling ended the week in green, as the Office for National Statistics reported that the UK economy expanded in the July-September quarter, at the fastest rate since the second quarter of 2010. Meanwhile, the Bank of England (BoE) Governor, Mark Carney, promised easier credit the nation’s well managed banks in the form of low cost long term loans.
The JPY also advanced during the past week against the USD, as a faster than expected rise in Japanese consumer price figures stoked optimism that the nation might achieve its inflation target well before the time set by the Bank of Japan. Meanwhile, the Cabinet Office of Japan, in its monthly economic report, reaffirmed that the economy is on the way to recovery at a moderate pace.
Bucking the overall trend, the CAD gave up ground against the USD, spooked by the Bank of Canada’s decision to slash its growth forecast on the Canadian economy for the next three years. Moreover, the Bank of Canada (BoC) Governor, Stephen Poloz, cited the fragile state of the economic growth and negative stance on the inflation to justify refraining from any near term rise in interest rates. Meanwhile, Reserve Bank of Australia’s Deputy Governor, Philip Lowe’s indication of a further depreciation in the Aussie, triggered a sell-off in the currency.

EUR USD
Last week, the EUR traded 0.94% higher against the USD and closed at 1.3807, as the greenback remained under pressure on disappointing US economic data, raising speculation that the Federal Reserve might continue its current pace of asset purchase program well into next year. Moreover, market participants also reacted positively to the announcement by the ECB of more rigorous stress tests for banks to ensure that the Euro-zone’s banks continue to improve the quality of their health.
Meanwhile, the German Bundesbank reported that the German economy is on track for a modest growth. In a noteworthy development, Fitch Ratings affirmed Portugal’s long-term foreign and local currency IDRs at ‘BB+’ with a Negative outlook. In economic news, consumer confidence in the Euro-area came in line with market expectations, while manufacturing PMI in the Euro-zone, Germany and France fell short of market expectations for October.
During the week, the pair traded at a high of 1.3833 and a low of 1.3649. The pair is expected to find its first support at 1.3693, with the next support expected at 1.3579. The first resistance is at 1.3877, and the next at 1.3947.

Going ahead, the inflation and unemployment figures from euro area and Germany would be on the radar of the investors. Also, German consumer confidence survey would gather significant attention of market participants.

GBP USD
In the last week, GBP traded 0.09% higher against the USD and closed at 1.6174, after data released last week indicated that the UK economy expanded in the third quarter at the fastest rate since 2010 with widespread growth across all sectors. However, gains were capped after the BoE policymakers unanimously kept the size of its asset purchases unchanged. During the past week, the BoE Governor, Mark Carney committed to provide incentive in the form of long term loans at lower borrowing costs to the banks that are properly regulated. Meanwhile, one of the central bank’s policymaker, Charlie Bean, stated that the economic recovery in the UK is gaining traction and the nation’s banks are well positioned to provide the necessary credit required for the health of the economy. The pair traded at a high of 1.6259 and a low of 1.6116 in the previous week. GBPUSD is expected to find its first support at 1.6107, with the next at 1.6040. Resistance exists first at 1.6250, and then at 1.6326.

During this week, manufacturing PMI, consumer confidence, mortgage approvals and housing prices data is due for release.

USD JPY
The USD traded 0.54% lower against the JPY over the past week, closing at 97.35, as lower than expected US jobs data tilted the needle in favor of a possible continuation of the US Fed’s current pace of bond buying program. Moreover, inflation in Japan inched closer towards the BoJ’s 2% target during the past month, highlighting the effectiveness of the central bank’s stimulus. Meanwhile, the Bank of Japan Governor, Haruhiko Kuroda, reiterated maintaining BoJ’s accommodative policy to help the economy achieve its inflation target. The pair traded at a high of 98.50 and a low of 96.94. The pair is expected to find its first support at 96.70, with the next support expected at 96.04. The first resistance is at 98.26, and the next at 99.16.

The Bank of Japan’s interest rate decision announcement would remain the key economic event scheduled during week. The announcement would be accompanied by the bank’s monetary policy statement, wherein the bank would release key insights into the nation’s economic outlook. Moreover, industrial production, housing and unemployment data in Japan would also influence the direction of the Yen during this week.

USD CHF
USD traded 1.07% lower against the CHF and closed at 0.8927 in the last week, as US nonfarm payrolls trailed market expectations in September, weakening the case for the US Fed to scale back its monthly asset purchase program soon. On the data front, trade surplus in Switzerland rose more than market expectations. During the period, the pair traded at a high of 0.9046 and a low of 0.8890. The first support is at 0.8863, and the next at 0.8798. Resistance exists first at 0.9019, and then at 0.9110.

The Swiss leading and consumption indicator would be the crucial economic releases during the week accompanied by the real retail sales and the PMI data.

USD CAD
Last week, the USD traded 1.53% higher against the CAD and closed at 1.0451. The Loonie lost ground after the BoC showed no intention to hike its key interest rates from the current levels, citing fragile economic conditions. Meanwhile, it also slashed its growth outlook for the Canadian economy for the current and next two years. The losses in the Loonie were also contributed by the lower than expected Canadian retail sales data. USDCAD traded at a high of 1.0462 and a low of 1.0268 in the previous week. The first support is at 1.0325, with the next at 1.0200. The first resistance is at 1.0519, while the next is at 1.0588.

The Canadian gross domestic product is likely to influence the direction of the pair.

AUD USD
AUD traded 0.90% lower against the USD last week, and closed at 0.9583, as demand for riskier currencies was dampened amid weak global cues. However, the losses in the Aussie were capped, as higher than expected third quarter inflation pinned down the possibilities of a further rate cut by the RBA. The Chinese manufacturing PMI, which climbed to seven month high in October, also came to the Aussie’s rescue. Meanwhile, the RBA Deputy Governor, Philip Lowe opined that lower interest rates and a weak currency remain the important factors for the growth of the Australian economy. During the week, the pair traded at a high of 0.9759 and a low of 0.9570. The first support is at 0.9516, and the next at 0.9448. The first resistance is at 0.9705, and the next at 0.9826.

Later during the week, traders would focus on the speech of the RBA Governor, Glenn Stevens and Australia’s building permits data.

Gold
In the prior week, Gold traded 2.77% higher against the USD and closed at USD1352.70, amid escalating speculation that the US Fed might need to keep its ultra loose monetary stance unaltered, citing the weakness in the US labor sector and the losses due to the two week of governmental shutdown. Separately, a report indicated that Russia trimmed its bullion holdings for the first time since a year, due to the decline in the prices. Also, one of the leading gold fund experienced a fall in its holding. The yellow metal traded at a high of 1356.51 and a low of 1310.32 in the previous week. Gold is expected to find support at 1323.18 and the next at 1293.65. The first resistance is at 1369.37, while the next is at 1386.03.

Market participants await cues from the Fed policy meeting later this week. Traders would also closely monitor physical demand in Asia, especially from India, as the key wedding and festival season is set to begin in early November.

Crude Oil
Oil prices traded 2.96% lower against the USD, slipping below the USD100.00 level mark in the last week and closed at USD97.86, amid concerns over the weakening US economic outlook and its impact on future oil demand prospects. Oil prices also fell after the Energy Information Administration, reported a 5.25 million-barrel climb in US crude supplies for the week ended October 18, more than analysts’ expectation for a rise of 2.7 million barrels. Oil traded at a high of 100.95 and a low of 95.95 in the previous week. Oil has its first major support at 95.56, while the next support exists at 93.25. The first resistance is at 100.56 and the next at 103.25.

Oil traders would closely watch the outcome of the US Federal Reserve’s two-day policy meeting, with speculation rising that the US central bank could stand pat for the rest of the year as economic data released since the partial government shutdown ended has been surprisingly weak. The market will also keep an eye on talks between Iran and six world powers on October 30-31 on the Iranian nuclear programme with hopes of a breakthrough rising.

Week of October 21th, 2013

Weekly Forex Update
The greenback experienced a setback against most of its major counterparts during the last week, as speculation rose that the Federal Reserve would not initiate a tapering of its stimulus measures in the next meeting amid uncertainty relating to the nation’s economic growth. The political deadlock led to a government shutdown for 16 days, taking a toll on the economy. The last minute deal left fundamental issues unresolved and left the risk of another government shutdown early in 2014.
Meanwhile, rating agency Standard & Poor’s indicated that economic losses to the US due to the budgetary impasse among the lawmakers might be to the extent of $24 billion and cut its growth outlook for the US for the fourth quarter.
On the economic front, initial jobless claims in the US dropped less than market expectations, while manufacturing activity in New York and homebuilder’s confidence dropped unexpectedly. However, Philadelphia manufacturing activity dropped less than expected.
The Euro rose against the USD during the last week, following some encouraging domestic data in the Euro-area and political developments in Germany. Investors also cheered Irish Prime Minister, Enda Kenny comments that Ireland would exit the EU bailout programme by December 15. However, gains were capped as the European Central Bank President, Mario Draghi, hinted that the Euro-zone’s economy would stay “subdued and uneven” for a while and that the central bank could cut its benchmark interest further to assist the region’s economic growth.
The Sterling rebounded, following the release of encouraging jobless claims report for September. Also, upbeat retail sales data in the UK bolstered the recovery prospect of the Britain economy. The Pound also found support, after one of the Bank of England’s policymaker, Spencer Dale, provided some bullish comments on the recovery in the British economy.
The Bank of Japan Governor, Haruhiko Kuroda, last week, stated that the Japanese economy is recovering and would continue to recover at a modest pace. He further pledged that the central bank would continue to pursue its ultra lose monetary policy to help the Japanese economy find its way out of deflation.
The Swiss Franc advanced against the USD, buoyed by strong ZEW survey expectation data in Switzerland. Meanwhile, an upbeat rise in Canada’s consumer inflation helped the Loonie register gains against the USD. The Canadian Dollar also received support from the Canadian Prime Minister, Stephen Harper’s comments that he stands committed to introduce some stringent norms to ensure sound state of the finances in the Canadian economy.
Meanwhile, the Reserve Bank of Australia (RBA) Governor Glenn Stevens opined that the nation needs to do a lot of work to improve its financial regulation. The Aussie traded higher during the last week, as the minutes of the Reserve Bank of Australia revealed that policymakers showed no indications to trim interest rates. The Aussie also gained support from upbeat GDP data from its largest trading partner, China.

EUR USD
Last week, the EUR traded 0.92% higher against the USD and closed at 1.3679, as demand for higher yield currencies received a boost after US policymakers hammered a deal to avoid a potential financial turmoil. The shared currency received support from a rebound in industrial production in the region and a rise in the economic sentiment in the Euro-zone and Germany to multi year highs. On the German political arena, coalition talks between Angela Merkel’s Christian Democratic Union and Social Democrats reached advanced stages, hinting at the formation of a grand coalition between them. Additionally, the comments of the Irish Prime Minister, Enda Kenny, to exit the bailout programme run by the European Union and other international creditors on December 15, fueled positive vibes among investors. During the week, the pair traded at a high of 1.3705 and a low of 1.3472. The pair is expected to find its first support at 1.3532, with the next support expected at 1.3386. The first resistance is at 1.3765 and the next at 1.3852.

Moving forward, a barrage of domestic economic data scheduled this week, including manufacturing and services PMIs and confidence indices, will provide further insights into the strength of the region’s recovery.

GBP USD
In the last week, the GBP swung between gains and losses and finally closed 1.25% higher at 1.6160, as better-than-expected jobs report in the UK showed that jobless benefits in the nation fell for the twelfth straight month. However, the unemployment rate remained unchanged. Furthermore, an upbeat retail sales report underlined the robust economic recovery in the UK. Meanwhile, the Bank of England policymaker, Spencer Dale, opined that UK’s economic recovery is gaining traction. He warned that the borrowing cost might rise during the next year. The pair traded at a high of 1.6226 and a low of 1.5894 in the previous week. GBPUSD is expected to find its first support at 1.5961, with the next at 1.5761. Resistance exists first at 1.6293, and then at 1.6425.

Later during the week, traders would closely watch the Bank of England’s minutes and study the voting pattern of its policymakers to gauge the near term action of the central bank. Additionally, the preliminary gross domestic product and a couple of house prices indicators would influence the movement in the Sterling..

USD JPY
The USD traded 0.61% lower against the JPY over the past week, closing at 97.88, following fears that the sixteen day partial shutdown of the US government had affected the US economic recovery. Meanwhile, the Japanese Yen received support, after the Bank of Japan Governor, Haruhiko Kuroda expressed confidence in the nation’s economic growth, stating that “the economic outlook is brighter than at any other point since the turn of the century”. In economic news, a report released during the week revealed that industrial production in the third largest economy of the world went back into the contraction zone. The pair traded at a high of 99.02 and a low of 97.56. The pair is expected to find its first support at 97.28, with the next support expected at 96.69. The first resistance is at 98.75 and the next at 99.62.

The release of the Japanese consumer price index, industrial production and the retail trade data, would keep market participants on their toes during the week.

USD CHF
USD traded 0.99% lower against the CHF and closed at 0.9024 in the last week, amid speculation that the US Federal Reserve might be forced to carry on with its quantitative easing program at the current pace, in light of the losses faced by the US economy due to the recent budgetary impasse. On the data front, Switzerland’s economic confidence rose for the fourth straight month in October to its highest level in the past three years, after data from a monthly survey conducted by the ZEW showed that the indicator of economic expectations increased to a reading of 24.90. During the period, the pair traded at a high of 0.9179 and a low of 0.9004. The first support is at 0.8959, and the next at 0.8894. Resistance exists first at 0.9134, and then at 0.9244.

The Swiss trade balance data would be the only economic release scheduled during this week.

USD CAD
Last week, the USD traded 0.48% lower against the CAD and closed at 1.0294. The Loonie found support as the reopening of the US national government improved trading prospects for Canada. In a noteworthy development, the Canadian Prime Minister, Stephen Harper, committed to carve out legislation which would help the country’s finances to be in a balanced state. On the data front, Canada’s inflation remained at 1.1% in the 12 months to September after running at the same pace in August. Analysts had predicted a lower inflation rate, estimating that it would have eased to 1.0% year-on-year. Meanwhile, manufacturing shipments dropped more than expectations in August. USDCAD traded at a high of 1.0393 and a low of 1.0275 in the previous week. The first support is at 1.0248, with the next at 1.0203. The first resistance is at 1.0366, while the next is at 1.0439.

With relatively light domestic economic calendar during the week, traders would keep a tab on Wednesday’s interest rate decision by the Bank of Canada for further direction to the Loonie.

AUD USD
AUD traded 2.12% higher against the USD last week, and closed at 0.9670, amid improved risk appetite and after the minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting revealed policymakers opinion that the central bank should neither close off the possibility of reducing rates further nor signal an imminent intention to reduce them. In economic news, home loans in Australia dropped more than market expectations, while the leading index fell 0.1% in August. Meanwhile, confidence among Australian businesses moved up in the September quarter. During the week, the pair traded at a high of 0.9679 and a low of 0.9433. The first support is at 0.9509, and the next at 0.9348. The first resistance is at 0.9755, and the next at 0.9840.

Ahead in the week, among other releases, market participants would keenly look forward to Australia’s consumer price index data for further direction to the Aussie Dollar against the majors.

Gold
Gold traded 3.39% higher against the USD and closed at USD1316.28, posting its best weekly gain in two months, as investors speculated that the recent political impasse would lead the US Federal Reserve to keep its accommodative monetary stance intact. The US budget deal last week extends the government’s borrowing authority through February 7 and restores federal funding through January 15, threatening a further crisis early next year. The yellow metal traded at a high of 1328.40 and a low of 1251.84 in the previous week. Gold is expected to find support at 1269.28 and the next at 1222.28. The first resistance is at 1345.84, while the next is at 1375.40.

The Federal Reserve holds its next policy meeting on October 29-30, with speculation among traders rising that if the central bank decides to stick with its current pace of bond-buying, gold may rise further towards the $1,350 level.

Crude Oil
Oil prices traded 0.90% lower against the USD in the last week and closed at USD100.84, as investors speculated that nuclear talks between Iran and the West might reach an amiable agreement and the sanctions on the country might be lifted. Oil prices also fell after the American Petroleum Institute, reported a 5.9 million-barrel climb in US crude supplies for the week ended October 1, more than analysts’ expectation for a rise of 2.25 million barrels. Oil prices however found support on Friday, after data showed that China’s economy expanded at an annual rate of 7.8% in the third quarter, in line with expectations and up from 7.5% in the three months to June. A separate report showed that industrial production in China rose by an annualized rate of 10.2% in September.

Oil traded at a high of 102.97 and a low of 100.03 in the previous week. Oil has its first major support at 99.59, while the next support exists at 98.34. The first resistance is at 102.53 and the next at 104.22.

Week of October 14th, 2013

Weekly Forex Update
The USD ended the week higher against major counterparts, after the minutes from the Fed’s latest policy meeting highlighted policymakers’ willingness to start tapering the size of the central bank’s stimulus package by the end of this year and eventually end it by the mid of 2014. Positive sentiment for the greenback was also fuelled after FOMC members, including Sandra Pianalto and Charles Plosser, in their respective speeches, highlighted their support for tapering Fed’s $85 billion monthly asset purchase program.
However gains in the greenback were kept in check amid a government shutdown. Little progress was made after the US President, Barack Obama expressed his willingness to talk with the Republicans over a short term resolution of the nation’s budget ceiling. Moreover, the news that the US President, Barack Obama has tapped dovish Federal Reserve Vice Chairwoman, Janet Yellen to head the US central bank also limited gains in the USD.
The Euro declined marginally against its US counterpart, after the European Central Bank (ECB) President, Mario Draghi hinted the possibility for the central bank to slash its borrowing rate further, should the volatility in the money market increase. The single currency also came under pressure as the region second quarter GDP data failed to surprise markets and after the ECB’s monthly report, highlighted the possibility for lower interest rate to prevail over a prolonged period in the region.
The GBP/USD pair edged lower during the week, as downbeat domestic manufacturing and industrial production data, coupled with a slower rise in the NIESR GDP estimate for the three months ending September, spooked investors’ confidence in the recovery of the UK economy. However, the currency found some support from the Bank of England’s decision to refrain from altering its monetary policy at its October meeting.
The Japanese Yen gave up ground against the USD, as traders digested comments from the Bank of Japan (BoJ) Chief that the central bank will do everything it can do to curb deflation, apart from maintaining its loose monetary policies for a longer time.
During the week, the Swiss National Bank (SNB) President, Thomas Jordan reiterated his September monetary policy assessment indicating that the central bank’s policy to cap the Swiss Franc’s gains versus the Euro is the right tool for ensuring price stability in the foreseeable future. He justified the SNB’s stance saying that global risks still prevail and the Swiss Franc is still highly valued, and therefore the central bank would maintain the minimum exchange rate.
Bucking the overall trend, the AUD ended the week higher against the USD, buoyed by upbeat domestic employment data.

EUR USD
Last week, the EUR traded marginally lower against the USD and closed at 1.3554, after the ECB’s monthly report echoed the ECB’s commitment to keep the benchmark rates at record low levels. However, it also mentioned that the euro area is making a gradual recovery. The discouraging domestic data from Germany, France and Italy also set a negative tone for the Euro. During the week, the pair traded at a high of 1.3608 and a low of 1.3485. The pair is expected to find its first support at 1.3490, with the next support expected at 1.3426. The first resistance is at 1.3613, and the next at 1.3672.

The direction for the Euro during this week would be influenced by the Euro-area’s industrial production, economic sentiment, consumer price index and trade balance data. Meanwhile, the German economic sentiment would also gather eye balls of market participants.

GBP USD
After a long streak of positive data, the UK reported some disappointing figures last week that clearly weighed on the performance of the Pound. The GBP traded 0.42% lower against the USD and closed at 1.5960. However, losses were limited after the IMF sharply raised its outlook on the Britain’s economy for 2013 and 2014. Industrial production in the UK showed a larger than expected drop, raising concerns over Britain’s economic recovery. Moreover, a leading macro-economic think-tank, NIESR estimated that nation’s economy grew by 0.8% for the three months ending September, slower than growth of 0.9% for the three months to August. The Bank of England, in its latest policy meeting kept its key lending rates and size of the asset purchase unchanged, largely matching market expectations. The pair traded at a high of 1.6126 and a low of 1.5913 in the previous week. GBPUSD is expected to find its first support at 1.5873, with the next at 1.5787. Resistance exists first at 1.6086, and then at 1.6213.

In the week ahead, consumer price inflation, claimant count change and retail sales for September will hold importance for Sterling’s movement against the majors. Additionally, developments taking place in the US political arena will be keenly eyed.

USD JPY
The USD traded 1.09% higher against the JPY over the past week, closing at 98.48. The Japanese Yen retreated following the release of dismal set of domestic economic data. The nation’s current account surplus contracted to a record low for August, amid a drop in overseas income and as imports exceeded exports. A separate report showed that nation’s trade deficit narrowed less than expected for the same period. Also, Japan’s machine tool orders decreased in September. However, an Eco Watchers’ survey provided an upbeat assessment of the Japanese economy. Meanwhile, the minutes of the BoJ’s latest policy meeting revealed that Japan on path of moderate recovery. The pair traded at a high of 98.59 and a low of 96.57. The pair is expected to find its first support at 97.17, with the next support expected at 95.85. The first resistance is at 99.19, and the next at 99.90.

In the absence of any key data, market participants would focus on industrial production and capacity utilization data slated for release later during the week in Japan. Also, any developments in the US political arena will prove crucial for risk sentiment.

USD CHF
USD traded 0.49% higher against the CHF and closed at 0.9114 in the last week, as the minutes of the latest FOMC meeting showed that the Fed is open to taper its asset purchase program by the end of 2013. On the data front, Swiss consumer prices fell marginally on an annual basis in September, while retail sales growth accelerated. In a separate report, Switzerland’s jobless rate remained unchanged in September. During the period, the pair traded at a high of 0.9134 and a low of 0.9015.The first support is at 0.9041, and the next at 0.8969. Resistance exists first at 0.9160, and then at 0.9207. During the week, the Swiss National Bank (SNB) President, Thomas Jordan reiterated his September monetary policy assessment indicating that the central bank’s policy to cap the Swiss Franc’s gains versus the Euro is the right tool for ensuring price stability in the foreseeable future. He further cautioned that the global risks still prevail and with the Swiss Franc still high, maintaining the minimum exchange rate is the right tool for ensuring price stability for the foreseeable future.

The upcoming Swiss economic calendar is quiet with only unemployment rate and real retail sales scheduled for release.

USD CAD
Last week, the USD traded 0.44% higher against the CAD and closed at 1.0344. The gains in the Canadian Dollar were arrested earlier in the week, amid concerns that the ongoing US government stalemate will negatively influence the Canadian economy. Adding to negative tone Canadian building permits fell more than expected for August, while Canada’s trade deficit hit its highest level in 2013 in August. However, there was better news from housing starts, which rose substantially in September. The Loonie capped its losses after the employment change in Canada slipped less than market expectations. Also, an unexpected decline in the unemployment rate also helped the CAD limit its losses. USDCAD traded at a high of 1.0421 and a low of 1.0295 in the previous week. The first support is at 1.0286, with the next at 1.0227. The first resistance is at 1.0412, while the next is at 1.0479.

Later this week, the Canadian CPI data for the month of September along with news flows from the US political arena will be closely watched by market participants. With Canada’s economy closely linked to its southern neighbor, any negative news from the US is expected to weigh on the Canadian Dollar performance.

AUD USD
AUD traded 0.39% higher against the USD last week, and closed at 0.9469, as the nomination of the current Vice Chairperson of the Fed, Janet Yellen, stoked speculations that the tapering of the Fed’s bond buying program might be delayed. Meanwhile, the Aussie remained supported as traders saw a reduced chance that the Reserve Bank of Australia will lower interest rates again in the near-term. Data released on Thursday showed that Australia’s unemployment rate fell to 5.6% last month, from 5.8% in August. The report also indicated that the number of employed people in Australia rose by 9,100 in September, after a downwardly revised 10,200 decline the previous month. During the week, the pair traded at a high of 0.9487 and a low of 0.9387. The first support is at 0.9408, and the next at 0.9348. The first resistance is at 0.9508, and the next at 0.9548.

Two of the important fundamental events in Australia scheduled for this week are the release of minutes of the RBA’s latest policy meetings and the speech of the RBA Governor, Glenn Stevens. Investors will continue to closely monitor political developments in the US.

Gold
In the prior week, Gold traded 2.89% lower against the USD and closed at USD1273.09, following the release of the FOMC meeting minutes which hinted at the possibility of tapering the Fed’s asset purchase policy by the end of this year. Moreover, losses were extended after a leading brokerage firm slashed its price target for gold for 2014. Some technical selling also contributed to losses after prices fell through key support levels. Meanwhile, the nomination of Janet Yellen as the next Chairwoman of the US Fed helped the yellow metal cap its losses, as markets consider her more dovish as compared to Ben Bernanke. The yellow metal traded at a high of 1330.57 and a low of 1260.6 in the previous week.

Gold is expected to find support at 1245.6 and the next at 1218.12. The first resistance is at 1315.57, while the next is at 1358.06.

Crude Oil
Oil prices traded 1.80% lower against the USD in the last week and closed at USD101.76, as the budget impasse at the Senate dampened the demand prospects for crude oil from the biggest consumer of the commodity. Also, the US consumer sentiment deteriorated in October to its weakest in nine months as the first federal government shutdown in 17 years undermined Americans’ outlook on the economy. Meanwhile, oil prices also came under pressure, after the American Petroleum Institute reported a 2.8 million-barrel climb in crude supplies for the week ended October 4, while the Energy Information Administration reported that US crude oil inventories rose by 6.8 million barrels, above expectations for a rise of 1.5 million barrels during the last week. Additionally, the International Energy Agency stated that the non-OPEC supply would rise by an average of 1.7 million barrels per day (bpd) in 2014, the highest annual growth since the 1970s.

Oil traded at a high of 104.08 and a low of 100.60 in the previous week. Oil has its first major support at 100.21, while the next support exists at 98.67. The first resistance is at 103.69, and the next at 105.63.

Week of October 7th, 2013

Weekly Forex Update
The greenback traded mixed against its major peers as the lack of progress in resolving the US budget standoff increased uncertainty about the timing of tapering the bond buying program of the Federal Reserve. Democrats and Republicans in the US House of Representatives agreed on Saturday to retroactively pay government employees once the government reopens, but there are currently no signs in sight of an end to the shutdown.
Over the weekend, House Speaker, John Boehner stated that he sees no way out of the current standoff unless President Barack Obama is willing to engage in negotiations with the Republicans. On the other hand, US Treasury Secretary, Jacob Lew, stated that measures to raise the nation’s $16.7 trillion debt limit need to be taken. The IMF chief, Christine Lagarde, also warned of damage to the global economy in the event of a failure to raise the debt limit.
Economic data in the US was mostly negative, with the ADP private sector employment increasing less than market expectations and the ISM non-manufacturing purchasing managers’ index (PMI) dropping to 54.4 in September from 58.6 in August.
The Euro climbed against the greenback last week, after the European Central Bank (ECB) decided to keep interest rates unchanged at 0.5%, citing the region’s recovery from its longest-ever recession. The ECB President, Mario Draghi, stated that the central bank would use all available instruments to make sure that interest rates do not head northward and hurt the current recovery. Additionally, political developments in Italy further extended support to the common currency.
Sterling closed lower against the greenback amid weak economic data in Britain and dovish comments by the Bank of England (BoE) Governor, Mark Carney. Economic data from the UK showed that construction and manufacturing PMI’s and Halifax house prices rose less than expectations for September. The BoE Governor stated that the central bank would not raise interest rates as long as there are no indications of improvement in the UK economy.
Moving on to Asia, the Bank of Japan (BoJ) kept its interest rates unchanged at 0.1% and maintained its view that the economy was recovering at a moderate pace. The BoJ Governor, Haruhiko Kuroda, warned that the current US fiscal debate could destabilize global financial markets if it drags on.
The Aussie traded higher last week, following the Reserve Bank of Australia’s (RBA) decision to keep borrowing costs unchanged at 2.5% and gave a more upbeat assessment of the state of the Australian economy.

EUR USD
Last week, the EUR traded 0.30% higher against the USD and closed at 1.3557, after the ECB decided to leave interest rates unchanged at 0.5%. Following the rate decision, the ECB President stated that he is ready to take more action if needed, leaving open the possibility of a third longer-term refinancing operation. Supporting the common currency was news that Italian Premier Enrico Letta won a confidence vote, thus avoiding possibility of elections. The greenback was pressurized by the US government’s partial shutdown, which showed no signs of easing. In economic data in the Euro-zone, manufacturing PMI’s in Germany and Italy disappointed for September, while services PMI’s in the same countries showed upbeat readings. During the week, the pair traded at a high of 1.3647 and a low of 1.3477. The pair is expected to find its first support at 1.3474, with the next support expected at 1.3390. The first resistance is at 1.3644, and the next at 1.3730.

This week in Europe will see a series of economic releases, including the gross domestic product, the ECB monthly report as well as consumer prices, industrial production and factory orders from Germany.

GBP USD
In the last week, GBP traded 0.66% lower against the USD and closed at 1.6027, after the BoE Governor, Mark Carney, stated that interest rates would not be raised until there are clear signs of economic improvement in the UK. The Pound came under pressure as UK economic indicators failed to surpass economists’ forecasts. Manufacturing and construction PMI’s in the UK showed tepid readings for September but remained in expansion territory. Additionally, Halifax house price did not match expectations in September. Separately, the BoE member Paul Fisher stated that he does not see a bubble in the UK housing market and officials would monitor risks from a property revival. The pair traded at a high of 1.6262 and a low of 1.602 in the previous week. GBPUSD is expected to find its first support at 1.5944, with the next at 1.5861. Resistance exists first at 1.6186, and then at 1.6345.

Investor attention would turn now to the BoE interest rate decision, a crucial event in the week, and trader would also eye industrial and manufacturing data from the UK.

USD JPY
The USD traded 0.88% lower against the JPY over the past week, closing at 97.42, as the government shutdown in the US spurred speculation that it may further delay the Federal Reserve’s plans to start winding down its monetary stimulus. Meanwhile, the BoJ decided to keep the pace of monetary expansion unchanged at ¥60-70 trillion and sounded upbeat about the domestic recovery. Earlier in the week, the Japanese Prime Minister, Shinzo Abe, decided to go ahead with the sales tax hike in order to contain Japan‘s soaring public debt. The pair traded at a high of 98.74 and a low of 96.93. The pair is expected to find its first support at 96.65, with the next support expected at 95.88. The first resistance is at 98.47, and the next at 99.51.

This week’s Yen movement would be influenced by the BoJ minutes, which would provide further insights on stance of the Japanese central bank on the current easing program. Other important Japanese economic releases include current and trade balance data, machinery orders and consumer confidence index.

USD CHF
USD traded 0.14% higher against the CHF and closed at 0.9070 in the last week. The Swiss Franc witnessed selloff ad end of last week after the Swiss banking regulators stated that they are investigating several Swiss banks on whether they have manipulated foreign exchange rates. In Switzerland, the manufacturing activity grew for the sixth consecutive month in September pointing to greater confidence about the outlook for the economy. During the period, the pair traded at a high of 0.9083 and a low of 0.8967. The first support is at 0.8997, and the next at 0.8924. Resistance exists first at 0.9113, and then at 0.9156.

The upcoming Swiss economic calendar is quiet with only unemployment rate and real retail sales scheduled for release.

USD CAD
Last week, the USD traded marginally lower against the CAD and closed at 1.0299, after news of the partial shutdown of the US government. Separately, the Bank of Canada senior Deputy Governor, Tiff Macklem, on Tuesday stated that the central bank does not expect economy to grow at a rate of 3.8% in the July-September period as forecasted earlier. In economic news, the Canadian economy showed the fastest monthly growth in two years in July. However, the seasonally adjusted Ivey PMI rose less than expectations in September. USDCAD traded at a high of 1.0358 and a low of 1.0273 in the previous week. The first support is at 1.0262, with the next at 1.0225. The first resistance is at 1.0347, while the next is at 1.0395.

Important economic data featuring in this week’s Canadian economic calendar includes release of international merchandise trade balance, new housing price index, housing starts and building permits.

AUD USD
AUD traded 1.23% higher against the USD last week, and closed at 0.9432, after the RBA decided to keep the key benchmark rate unchanged at 2.5% and gave a more upbeat assessment on the state of the economy. On the data front, the AiG Performance of manufacturing index in Australia rose to 51.7 in September from 46.4 in August. Retail sales in Australia rose 0.4% (MoM) in August, while HIA new home sales rose 3.4% (MoM) in August. During the week, the pair traded at a high of 0.946 and a low of 0.928. The first support is at 0.9321, and the next at 0.9211. The first resistance is at 0.9501, and the next at 0.9571.

This week, traders would be watching out for gross domestic product, trade balance, industrial production data from China and employment data from Australia.

Gold
In the prior week, Gold traded 1.85% lower against the USD and closed at USD1310.93. The yellow metal traded higher earlier in the week, as market participants took shelter in safe-haven precious metals after the partial shutdown of the US government. Separately, Fitch Ratings stated that gold prices could fall below 1,200 US dollars an ounce as the US withdraws its bond buying program and speculative investment demand weakens. The yellow metal traded at a high of 1344.13 and a low of 1277.15 in the previous week.

Gold is expected to find support at 1277.34 and the next at 1243.76. The first resistance is at 1344.32, while the next is at 1377.72.

Crude Oil
Oil prices traded 0.77% higher against the USD in the last week and closed at USD103.62, as supply concerns re-emerged on Friday after Tropical Storm Karen moved into the Gulf of Mexico with oil companies closing down production in the area. Oil traded lower initially in the week, as the US government shutdown raised doubts about oil demand prospects. Further pressurizing oil prices was downbeat Chinese economic data and reports showing rise in US crude oil inventories. The American Petroleum Institute reported that US crude oil inventories rose 4.55 million barrels for the week ended 27th September. Additionally, the Energy Information Administration reported that the US crude oil inventories rose 2.5 million barrels for the week ended September 27. Oil traded at a high of 104.38 and a low of 101.05 in the previous week.

Oil has its first major support at 101.65, while the next support exists at 99.69. The first resistance is at 104.98, and the next at 106.35.

Week of September 30th, 2013

Weekly Forex Update
The greenback traded mixed against major global currencies, advancing against the Euro and the Australian dollar, while dropping against the British Pound, the Japanese Yen and the Swiss Franc.
The US debt ceiling debate dented investor sentiment last week. The US politicians have deadline of today to decide on whether to increase debt ceiling considering background that the US Treasury Department would hit its $16.7 trillion borrowing ceiling limit around mid-October.
Investors also pondered over the Federal Reserve’s next move on its quantitative easing program after comments by senior Fed officials. The Chicago Fed President, Charles Evans, stated that there is a possibility that the Federal Reserve would not start scaling back its bond-buying program until early 2014. Additionally, the New York Fed President, William Dudley, defended the bond-buying program stating that economic recovery still needs support. Moreover, the Minneapolis Fed President, Narayana Kocherlakota, stated that Fed needs to strengthen its support for the economy, and not pull back, or taper.
Macroeconomic data from the US showed that third and final review of gross domestic product for the second quarter of 2013 came in below market forecasts. Annual pending home sales growth slowed in August and the Reuters/Michigan consumer sentiment index declined in September. However, initial jobless claims dropped unexpectedly for week ended 20th September.
The Euro dipped against the greenback, after the European Central Bank (ECB) President, Mario Draghi, flagged the possibility of providing additional long-term loans to banks to safeguard the region’s fragile economic recovery. The losses continued as the ECB Governing Council member, Ewald Nowotny, echoed same opinion.
Sterling rose against the greenback, following the Bank of England’s (BoE) Governor, Mark Carney’s statement that he sees no case for providing additional stimulus as the UK economy strengthens. However, the central bank’s Deputy Governor, Paul Tucker and the Monetary Policy Committee member, David Miles, earlier, opined to continue with current loose monetary policy.
In Asia, traders continue to speculate the possibility of corporate tax cut in Japan after its Finance Minister, Taro Aso, on Friday stated that Japan should eventually lower its effective corporate income tax level to bring it in line with other major economies if sufficient financial resources can be secured amid budgetary constraints.
In its financial stability review report, the Reserve Bank of Australia (RBA), stated that the nation’s financial system remains in a relatively strong position, while issuing a warning to banks that they must not relax lending standards or take unnecessary risks in an environments of record-low interest rates.

EUR USD
Last week, the EUR traded marginally lower against the USD and closed at 1.3517. The Euro came under pressure, on back of dovish comments by the ECB policy makers. The ECB President, Mario Draghi, on Monday opened the door for another round of cheap loans to banks, if needed, to keep borrowing rates low and support the region’s economic recovery. Additionally, the ECB Governing Council member, Ewald Nowotny, also voiced the need for providing banks with additional central bank loans. However, losses were trimmed as the greenback weakened broadly, amid looming US debt ceiling stalemate. Economic data showed that services PMI’s in the Euro-zone and Germany rose in September, while manufacturing PMI’s showed drop. Meanwhile, annual M3 money supply in the Euro-zone rose further in August. During the week, the pair traded at a high of 1.3565 and a low of 1.3461. The pair is expected to find its first support at 1.3464, with the next support expected at 1.3410. The first resistance is at 1.3568, and the next at 1.3618.

On the European market radar, the ECB interest rate decision as well as other important economic releases such as manufacturing and services activities data and producer prices from the Euro-zone and Germany would be watched closely.

GBP USD
In the last week, GBP traded 0.72% higher against the USD and closed at 1.6134, after the BoE Governor, Mark Carney, stated that he sees no need for more bond-buying by the central bank, given the gathering pace of the UK economic recovery. The Pound traded weak at start of the week, as the BoE Deputy Governor, Paul Tucker, stated that the UK central bank was in “no rush” to withdraw stimulus, while the BoE MPC member, David Miles, indicated that the market’s view on unemployment is too optimistic, and it is wrong to think a tightening of policy is imminent. Further weighing on the Pound was the UK gross domestic product data showing a 1.3% expansion in the second quarter of 2013, in comparison to 1.5% expansion expected by markets. Additionally, total business investment in the UK fell 2.7% (QoQ) in the second quarter of 2013, compared to a 0.9% rise expected by analysts. The pair traded at a high of 1.6140 and a low of 1.5955 in the previous week. GBPUSD is expected to find its first support at 1.6013, with the next at 1.5891. Resistance exists first at 1.6198, and then at 1.6261.

Trading trends in the pair are expected to be determined by release of manufacturing and services PMI data from the UK.

USD JPY
The USD traded 1.10% lower against the JPY over the past week, closing at 98.28, on speculation that the US debt ceiling debate would lead to potential shut down in Washington. News reports indicate that the Japanese government may cut corporate taxes to offset an expected hike in a sales levy. Economic data showed that National consumer price index (CPI) in Japan rose 0.9% (YoY) in August, compared to a 0.8% rise expected by markets. Tokyo (CPI) rose 0.5% in September, while the corporate service price index in Japan rose more-than-expected in August. The pair traded at a high of 99.31 and a low of 98.09. The pair is expected to find its first support at 97.81, with the next support expected at 97.34. The first resistance is at 99.03, and the next at 99.78.

BoJ interest rate decision is likely to receive increased market attention this week.

USD CHF
USD traded 0.52% lower against the CHF and closed the week at 0.9057. The Swiss National Bank (SNB), in its quarterly bulletin, reaffirmed to maintain its minimum exchange rate of CHF1.20 per euro and reiterated that the value of the Swiss Franc remains high. Earlier in the week, the KOF Economic Institute forecast that the Swiss economy would grow at a rate of 1.9% in 2013, faster than 1.0% growth recorded in 2012. During the period, the pair traded at a high of 0.9139 and a low of 0.9021. The first support is at 0.9006, and the next at 0.8954. Resistance exists first at 0.9124, and then at 0.9190.

Economic indicators slated for release this week include real retail sales and SVME purchasing managers’ index in Switzerland.

USD CAD
Last week, the USD traded 0.07% higher against the CAD and closed at 1.0301.The Canadian Dollar fell, as concerns of political impasse on the budget in the US and uncertainty over the direction of the Federal Reserve’s economic stimulus plans diminished appeal of riskier currencies. Economic report from Canada showed that retail sales rose 0.6% (MoM) in July, reversing previous month’s drop. USDCAD traded at a high of 1.0342 and a low of 1.0268 in the previous week.

The first support is at 1.0265, with the next at 1.0230. The first resistance is at 1.0339, while the next is at 1.0378.

AUD USD
AUD traded 0.94% lower against the USD last week, and closed at 0.9317. The RBA, in its latest financial stability review, stated that there are still chances of negative outcomes in the Euro area that could harm global financial stability, despite some positive policy developments and early signs of an improved economic outlook. During the week, the pair traded at a high of 0.9459 and a low of 0.9296. The first support is at 0.9256, and the next at 0.9194. The first resistance is at 0.9419, and the next at 0.9520.

This week’s economic calendar has the RBA interest rate decision along with trade balance, building permits and retail sales data from Australia.

Gold
In the prior week, Gold traded 0.76% higher against the USD and closed at USD 1335.66, as speculation that the US debt ceiling impasse may lead to government shutdown in Washington, boosted demand for the safe-haven precious metal. The yellow metal traded at a high of 1344.34 and a low of 1305.75 during the week.

Gold is expected to find support at 1312.83 and the next at 1289.99. The first resistance is at 1351.42, while the next is at 1367.17.

Crude Oil
Oil prices traded 1.68% lower against the USD in the last week and closed at USD102.83, as worries of a possible government shutdown in Washington on the back of debt ceiling dispute, pushed oil prices lower. Additionally, easing tensions in the Middle East further pressured oil prices. Over the weekend, the US President Barack Obama and Iranian President Hassan Rouhani spoke about the Islamic Republic’s nuclear program during a phone call on Sept. 27. Additionally, the United Nations Security Council approved an agreement to eliminate all of Syria’s chemical weapons. Additionally, the Energy Information Administration reported that the US stockpiles increased 2.64 million barrels, for week ended September 20, defying analysts’ expectations for a decline of 1.5 million barrels. However, the American Petroleum Institute reported that the US crude oil inventories fell 54,000 barrels in the week ended September 20. Oil traded at a high of 105.12 and a low of 102.20 in the previous week.

Oil has its first major support at 101.65, while the next support exists at 100.46. The first resistance is at 104.57, and the next at 106.30.

Week of September 16th, 2013

Weekly Forex Update
The greenback moved lower against the high yield and the riskier currencies after risk appetite received a boost last week, over hopes for a peaceful solution to the Syrian crisis and inspiring Chinese economic data. The US President, Barack Obama, agreed to a Russian plan to place Syria’s chemical weapons under international oversight.
Meanwhile, in economic data from the US, initial jobless claims for week ended 6th September showed an unexpected drop, while on the other hand retail sales showed lower than expected growth in August and the Reuters/Michigan consumer sentiment index for September dropped sharply.
In political updates, the former US Treasury secretary, Lawrence Summers, withdrew from the race to become next Federal Reserve Chairman. Markets are now focused on the Federal Reserve’s monetary policy meeting this week. Traders expect the Fed to announce a reduction in its monthly bond purchase program.
In the Euro-zone, economic reports were not positive, limiting the gains in the common currency. Gross domestic product in Italy contracted more than market expectations in the second quarter of 2013, followed by decline in industrial production for July. In Germany, consumer and wholesale prices showed disappointing readings for August.
Separately, the European Central Bank (ECB), in its monthly report, revealed progressing economic recovery for the region. The ECB once again reiterated that it would continue with accommodative monetary policy to support the economic recovery.
Sterling closed higher against the greenback, buoyed by upbeat UK economic data, showing accelerated growth in the UK RICS housing price balance in August. Employment data was also positive, with the unemployment rate recording a drop, while jobless claims fell to the lowest level since February 2009. However, the gains were trimmed, after the Bank of England (BoE) Governor, Mark Carney, reaffirmed that tightening would not be considered as long as the economy is not able to withstand it.
Moving on to Asia, the Japanese Yen declined after the Japanese Economy Minister, Akira Amari, indicated that there would be a need for another stimulus package, to offset the impact of the tax levy, if the Japanese Prime Minister goes on with the proposal for sales tax hike.
Meanwhile, the minutes of the Bank of Japan’s (BoJ) August meeting revealed that the board members believe that the country’s economy is beginning to see a moderate recovery.
Other riskier currencies such as the CAD and the Aussie ended higher, amid fading fears of an attack on Syria. The Aussie found further support following upbeat economic data from China.

EUR USD
Last week, the EUR traded 0.94% higher against the USD and closed at 1.3307. The greenback sank against the common currency, as concerns over a potential US military strike on Syria eased after the US President, Barack Obama, asked Congress to delay its vote on military action. However, gains were limited amid weak Euro-zone economic data. Industrial production in the Euro-zone fell 1.5% (MoM) in July, following a 0.6% rise in the previous month. Additionally, gross domestic product in Italy showed contraction in the second quarter of 2013, while industrial production dropped in July. During the week, the pair traded at a high of 1.3325 and a low of 1.3166. The pair is expected to find its first support at 1.3207, with the next support expected at 1.3107. The first resistance is at 1.3366, and the next at 1.3425.

The releases lined up in the Euro-zone economic calendar this week include consumer prices, consumer confidence and current account data in the Euro-zone and the ZEW economic indicators in Germany.

GBP USD
In the last week, GBP traded 1.56% higher against the USD and closed at 1.5878, as concerns surrounding an attack on Syria eased. The Pound found support, following comments by the UK Chancellor, George Osborne, that there are tentative signs of sustainable economic recovery. He, however, cautioned that it was still in the early stages and risks still prevailed. The UK currency found added support following upbeat economic updates. The claimant count in the nation dropped by 24,000 to 2.487 million. Unemployment rate in the UK dropped to 7.7% for three months ending in July, from 7.8% previously. However the gains were trimmed, after the BoE Governor on Thursday stated that while the British economy was gaining momentum, the central bank would consider providing more help for the economy if its recovery weakens. The pair traded at a high of 1.5886 and a low of 1.5627 in the previous week. GBPUSD is expected to find its first support at 1.5708, with the next at 1.5538. Resistance exists first at 1.5967, and then at 1.6056.

This week’s key event in the UK is the release of BoE minutes. Additionally, the economic calendar is also loaded with indicators such as producer prices, consumer prices and retail prices data.

USD JPY
The USD traded marginally higher against the JPY over the past week, closing at 99.28. The Yen came under pressure, over comments by the Japanese Economy Minister, Akira Amari, that the Japanese government would need a ¥2.0 trillion spending package to cushion the impact of a possible increase in the national sales tax. The BoJ on Thursday upgraded its assessment of the economy for the seventh time this year, citing a pickup in business investment. In economic news, on an annualized basis, the Japanese economy grew 3.8% during the second quarter, more than 3.7% rise expected by markets. Meanwhile, trade deficit widened in July, while consumer confidence index dropped in August. The pair traded at a high of 100.62 and a low of 99.01. The pair is expected to find its first support at 98.65, with the next support expected at 98.02. The first resistance is at 100.27, and the next at 101.25.

Trading trends in the Yen are expected to be determined by release of Japanese trade balance data ahead in the week.

USD CHF
USD traded 0.93% lower against the CHF and closed at 0.9290 in the last week. The Swiss Franc strengthened, amid a broadly weak greenback and after reports showed that the unemployment rate in Switzerland steadied in August. Meanwhile, annual Swiss real retail sales and producer and import prices growth slowed for the month of July and August, respectively. During the period, the pair traded at a high of 0.9394 and a low of 0.9272. The first support is at 0.9243, and the next at 0.9197. Resistance exists first at 0.9365, and then at 0.9441.

Swiss economic calendar for this week has many important events, namely the SNB interest rate decision, and the release of trade balance data and ZEW economic expectations index.

USD CAD
Last week, the USD traded 0.58% lower against the CAD and closed at 1.0339, as chances of a possible military action in Syria faded. Canadian economic data was mixed with building permits rising 20.7% (MoM) in July, surpassing expectations for a 1.0% rise. Additionally, the new housing price index rose 0.2% (MoM) in July, compared to 0.1% increase anticipated by analysts. Meanwhile, housing starts declined to 180,300 in August, worse than market expectations for a decline to 189,000 and compared to a reading of 193,000 in the previous month. USDCAD traded at a high of 1.0416 and a low of 1.0304 in the previous week. The first support is at 1.0290, with the next at 1.0241. The first resistance is at 1.0402, while the next is at 1.0465.

CAD movements this week would be influenced by the release of consumer prices, manufacturing shipments and wholesale sales data for July.

AUD USD
AUD traded 0.65% higher against the USD last week, and closed at 0.9250, supported by encouraging economic data from Australia and China. Industrial production and retail sales in China showed inspiring growth in August. Trade surplus in China widened more-than-expected in August, while Chinese consumer prices for the same month rose higher than expected. In Australia, the National Australia Bank’s business confidence index rose in August while the Westpac consumer confidence index advanced in September. During the week, the pair traded at a high of 0.9356 and a low of 0.9166. The first support is at 0.9159, and the next at 0.9067. The first resistance is at 0.9349, and the next at 0.9447.

Traders await the RBA minutes for cues on the future monetary stance. Markets also await the release of conference board leading economic index for August in China.

Gold
In the prior week, Gold traded 4.41% lower against the USD and closed at USD1327.60, as comments by the US President, Barack Obama, raised hopes for a diplomatic approach in Syria, stoking expectations that a military attack would be avoided. Markets also await whether the Fed would decide to start altering asset purchases in its policy meeting this week. The yellow metal traded at a high of 1392.17 and a low of 1305.04 in the previous week.

Gold is expected to find support at 1291.04 and the next at 1254.47. The first resistance is at 1378.17, while the next is at 1428.73.

Crude Oil
Oil prices traded 1.60% lower against the USD in the last week and closed at USD108.55, as supply concerns eased on signs of resolution of the Syrian conflict. Meanwhile, the American Petroleum Institute and the Energy Information Administration reported drops in crude inventories in the US. The Organization of Petroleum Exporting Countries (OPEC), stated that the global oil market is “well-supplied” and indicated that it would need to provide an average 29.6 million barrels a day next year, reducing its estimate “slightly” from last month. The International Energy Agency (IEA), in its monthly report, citing improving underlying economic situation, indicated that the global demand for oil next year is expected to grow by 1.2% or 1.1 million barrels a day to 92 million barrels a day. Oil traded at a high of 110.46 and a low of 106.39 in the previous week.

Oil has its first major support at 106.47, while the next support exists at 104.40. The first resistance is at 110.54, and the next at 112.54.

Week of September 9th, 2013

Weekly Forex Update
The greenback traded mixed against major currencies last week.
Macro economic data from the US was mixed with ISM manufacturing purchasing managers’ index, factory orders, unemployment rate and initial jobless claims showing upbeat readings, while trade balance and nonfarm payrolls showing disappointing numbers.
The G20 members warned on Friday that the global economic recovery is weak, with risks of a further slowdown. The members also agreed on the need for military action against Syria, in response to a chemical attack in Damascus last month.
The Euro dipped last week against the greenback, following remarks by the European Central Bank (ECB) President, Mario Draghi, that a reduction in interest rates could be considered if required and that the current accommodative would remain in place as long as necessary.
Economic data from the Euro-zone showed that the services sector returned to growth in August, while producer prices rose. The reading on the gross domestic product growth indicated that the region escaped an 18-month recession in the second quarter.
Meanwhile, the British Pound gained as robust UK manufacturing and service sector activity figures were extremely strong, indicating that the UK is seeing signs of recovery. The Bank of England (BoE) held its benchmark rate at 0.5% and left the size of its bond-buying program unchanged at £375 billion, amid signs of firming economic recovery.
Separately, the Bank of Japan (BoJ) kept its interest rate unchanged at 0.1% and maintained the target of the monetary base expansion at an annual pace of ¥60-70 trillion. The BoJ also raised its assessment of the nation’s economy and left its easing program unchanged.
The Canadian dollar ended higher last week. The Bank of Canada (BoC) decided to keep the key policy interest rates unchanged and stated that low interest rates would remain appropriate as long as inflation and growth in Canada remains subdued. The Loonie found support from the encouraging employment data from Canada on Friday.
The Aussie received a boost, after the Reserve Bank of Australia (RBA) decided to keep its interest rates unchanged and offered no hints for any further rate cuts. It indicated that the current monetary policy setting was appropriate. Also, encouraging gross domestic product data from Australia added further support to the Aussie.
In political updates, the Australian Liberal leader Tony Abbott, won the Australian Prime Ministerial election.

EUR USD
Last week, the EUR traded 0.20% lower against the USD and closed at 1.3182, following comments by the ECB President, Mario Draghi, that the central bank is ready to cut interest rates or infuse more liquidity if needed to boost the Euro-zone’s economic recovery. The ECB kept its interest rates unchanged at 0.5%. The Euro came under pressure at start of the week, amid dismal manufacturing and services data from the Euro-zone and its group countries. Additionally, trade surplus in Germany widened less-than-expected in July, while factory orders dropped for the same month. Meanwhile, gross domestic product in the Euro-zone contracted 0.5% (YoY) in the second quarter of 2013, compared to a 0.7% contraction expected by markets. During the week, the pair traded at a high of 1.3229 and a low of 1.3104. The pair is expected to find its first support at 1.3114, with the next support expected at 1.3047. The first resistance is at 1.3239, and the next at 1.3297.

Markets will be watching out for industrial production and Sentix investor confidence data from the Euro-zone for further indications about the region’s recovery from recession. Consumer prices data from Germany and France are other important economic events from Europe scheduled for this week.

GBP USD
In the last week, GBP traded 0.90% higher against the USD and closed at 1.5634, as a flurry of positive economic data from the UK showed signs that economic recovery in the nation is gaining strength. The Markit manufacturing PMI for the UK rose to a reading of 57.2 in August, compared to a reading of 54.8 in the previous month. Services PMI rose to a reading of 60.5 in August from a reading of 60.2 in the previous month. The BoE left its benchmark interest rate unchanged at 0.5% and also decided to retain the asset purchase program at £375 billion. The pair traded at a high of 1.5681 and a low of 1.5502 in the previous week. GBPUSD is expected to find its first support at 1.5530, with the next at 1.5427. Resistance exists first at 1.5709, and then at 1.5785.

This week’s UK economic calendar contains important releases such as unemployment rate, claimant count change and Conference Board leading economic index for August.

USD JPY
The USD traded 1.09% higher against the JPY over the past week, closing at 99.24. The Yen came under pressure, on uncertainty on whether the BoJ Governor, Haruhiko Kuroda, would go ahead with a sales-tax increase. Separately, the BoJ board voted unanimously to keep the pace of monetary easing program unchanged, stating that the economy is recovering moderately. The central bank stated that Japanese economy has started recovering moderately and the annual change in the core consumer price index is now in the range of 0.5-1.0%. On the economic front, the monetary base in Japan rose 42.0% (YoY) in August, compared to a 38.0% rise in July. Labor cash earnings rose 0.4% (YoY) in July, compared to a 0.6% rise in the previous month. The pair traded at a high of 100.24 and a low of 98.35. The pair is expected to find its first support at 98.31, with the next support expected at 97.38. The first resistance is at 100.20, and the next at 101.17.

Investors await the BoJ minutes to be released ahead in the week. Also on the deck are other Japanese economic releases such as industrial production, consumer confidence index and money supply data.

USD CHF
USD traded 0.74% higher against the CHF and closed at 0.9377 in the last week. The Swiss Franc dropped, after the SVME – purchasing managers’ index in Switzerland fell to a reading of 54.6 in August from a reading of 57.4 in the previous month. Meanwhile, the gross domestic product in Switzerland expanded 0.5% (QoQ) in the second quarter of 2013, compared to a 0.3% rise expected by markets. Consumer prices index dropped 0.1% (MoM) in August, compared to a flat growth expected by analysts. It was followed by a drop in Swiss industrial production for the second quarter of this year. During the period, the pair traded at a high of 0.9456 and a low of 0.9311. The first support is at 0.9307, and the next at 0.9236. Resistance exists first at 0.9452, and then at 0.9526.

The pair is expected to trade on the cues from the release of producer and import prices from Switzerland.

USD CAD
Last week, the USD traded 1.25% lower against the CAD and closed at 1.0399. The Canadian Dollar strengthened, after the Bank of Canada (BoC) held its policy rate unchanged at 1.0% for the twenty-fifth consecutive period. The BoC stated that low interest rates would remain appropriate as long as inflation and growth in Canada remain subdued. Further supporting the CAD was economic report showing that jobs gains in Canada rose more than market forecast in August. Unemployment rate dropped to 7.1% in August from 7.2% in the previous month. Additionally, Ivey purchasing managers’ index rose to a reading of 51.9 in August from a reading of 45.7 in July. USDCAD traded at a high of 1.0561 and a low of 1.0380 in the previous week. The first support is at 1.0332, with the next at 1.0266. The first resistance is at 1.0513, while the next is at 1.0628.

Canada would release data on building permits, housing starts and capacity utilization this week, which would be key driver for CAD movements.

AUD USD
AUD traded 3.26% higher against the USD last week, and closed at 0.9190, after the RBA provided no indications of an interest rate cut, while keeping current benchmark cash rate unchanged at 2.5%. Adding to the Aussie’s rise were reports showing that the Australian economy expanded more than market expectations in the second quarter of 2013. Economic data showed that building permits in Australia rose 10.8% (MoM) in July, compared to a 6.3% drop in June. Meanwhile, current account deficit in Australia widened to A$9.35 billion in the second quarter of 2013 and trade balance also showed a deficit for July. During the week, the pair traded at a high of 0.9217 and a low of 0.8934. The first support is at 0.9010, and the next at 0.8831. The first resistance is at 0.9293, and the next at 0.9397.

Key Australian economic indicators slated for release this week include unemployment rate, Westpac consumer confidence and business conditions data.

Gold
In the prior week, Gold traded 0.47% lower against the USD and closed at USD1388.79, as worries over military attack by the US on Syria receded, fading the precious metal’s safe haven appeal. The yellow metal traded at a high of 1416.50 and a low of 1358.60 in the previous week.

Gold is expected to find support at 1359.43 and the next at 1330.06. The first resistance is at 1417.33, while the next is at 1445.86.

Crude Oil
Oil prices traded 2.45% higher against the USD in the last week and closed at USD110.31, amid a rise in risk appetite and as data indicated a drop in crude oil inventories. The American Petroleum Institute reported that the US crude oil inventories declined 4.16 million barrels for the week ended 30th August. Additionally, the Energy Information Administration reported that the US crude oil inventories fell 1.8 million barrels for the week ended 30th August. Oil traded at a high of 110.70 and a low of 105.67 in the previous week.

Oil has its first major support at 107.09, while the next support exists at 103.86. The first resistance is at 112.12, and the next at 113.92.

Week of September 3rd, 2013

Weekly Forex Update
The greenback advanced against most of its major peers, as rise aversion spurred across currency markets over the possibility of a US led military strike on Syria.
While worries over the situation in Syria hogged limelight during the week, the US President, Obama, over the weekend, asked Congress to approve military strikes against Syrian government. The German Chancellor, Angela Merkel, stated that the country would not participate in any military action against Syria, while the British Prime Minister, David Cameron, lost a vote endorsing military action against Syria.
Meanwhile on the data front, annualized US gross domestic product accelerated sharply in the second quarter of 2013. Additionally, the number of Americans filing new claims for unemployment benefits fell last week. Meanwhile, durable goods orders in the US dropped more-than-expected in July.
The Pound was also pressurized on the back of dovish comments by the Bank of England (BoE), Governor, Mark Carney, that the central bank is ready to boost stimulus if expectations for higher interest rates affects recovery adversely.
Investors are now eyeing rate decisions by the European Central Bank (ECB) and the BoE. The ECB and the BoE are expected to hold the current record-low interest rate of 0.50%. On the data front, the IFO economic indicators in Germany and consumer confidence, business climate and industrial confidence indices for the Euro-zone showed better-than-expected readings for month of August. Additionally, manufacturing purchasing managers index (PMI) in the Euro-zone rose better-than-expected, while that in France and Germany showed downbeat figures for the same month.
The Yen traded higher amid heightened risk aversion, following worries over a possible military strike by the US on Syria. Meanwhile, the Bank of Japan (BoJ) Deputy Governor, Kikuo Iwata, on Wednesday reiterated the central bank’s goal of achieving 2.0% inflation within two years time. Earlier in the week, he stated that the effects of monetary easing on the Japanese economy would clearly show up later this year.
Commodity sensitive currencies such as the Canadian Dollar and the Australian Dollar also slid against the greenback, amid possibility of a military attack against Syria.
This week would be crucial for markets across the US, Europe and Asia as the world’s most prominent central banks have monetary policy meetings. Markets expect that Canadian, European, the UK and the Japanese central banks would leave their benchmark interest rates unchanged.

EUR USD
Last week, the EUR traded 1.29% lower against the USD and closed at 1.3209. The greenback garnered strength last week, as prospects of the US military attack on Syria dented investor sentiment. The Euro started the week on a negative note, after members of Silvio Berlusconi’s centre-right party in Italy warned that they would bring down the government if their centre-left coalition allies voted next month to expel the former Prime Minister from Parliament, thus giving rise to chances of early elections in the country. On the data front, the IFO economic indicators in Germany showed better-than-expected readings for month of August. Meanwhile, consumer and retail prices in Germany rose less than expected, while unemployment rate remained steady in August. Meanwhile manufacturing purchasing managers index (PMI) dropped unexpectedly in August. In Euro-zone, consumer confidence, business climate and industrial confidence indices showed upbeat figures for August. Manufacturing PMI rose more-than-expected in August. During the week, the pair traded at a high of 1.3400 and a low of 1.3173. The pair is expected to find its first support at 1.3121, with the next support expected at 1.3034. The first resistance is at 1.3348, and the next at 1.3488.

Hogging in spotlight this week would be the European Central Bank (ECB) rate decision along with other important economic indicators such as gross domestic product, producer prices, and retail sales from the Euro-zone.

GBP USD
In the last week, GBP traded 0.50% lower against the USD and closed at 1.5495. The Pound declined after the BoE Governor, Mark Carney, stated that officials are ready to add stimulus if investor expectations for higher interest rates rise too far to hamper economic recovery in the nation. Meanwhile, escalating geopolitical tensions in Syria provided strong support to the US Dollar. Economic data in the UK was positive with CBI distributive trades survey index showing more than expected rise in August, followed by rise in house prices and mortgage approvals. Additionally, Hometrack housing prices growth accelerated further in August, followed by a rise in manufacturing PMI for the same month. The pair traded at a high of 1.5614 and a low of 1.5428 in the previous week. GBPUSD is expected to find its first support at 1.5411, with the next at 1.5326. Resistance exists first at 1.5597, and then at 1.5698.

Market spotlight this week would be on the BoE rate decision along with economic data on trade balance, manufacturing and industrial production from the UK.

USD JPY
The USD traded 0.52% lower against the JPY over the past week, closing at 98.16. The Japanese Yen traded higher following a rise in risk aversion. Meanwhile, the Bank of Japan (BoJ) Deputy Governor, Kikuo Iwata, on Wednesday reiterated the central bank’s goal of achieving 2.0% inflation within two years time. Separately, the BoJ board member, Yoshihisa Morimoto, cautioned that if the withdrawal of funds from emerging markets picked up on fears of a reduction in Fed stimulus, it would be negative for the global economy. In economic news, annual retail trade in Japan dropped 0.3% in July, compared to a 1.6% rise in the previous month. Preliminary industrial production advanced 3.2% (MoM) in July, less than the 3.6% rise expected by markets. Additionally, consumer prices and employment data was also strong for July. Meanwhile, overall household spending in Japan rose 0.1% (YoY) in July, less than market expectation of a 0.3% rise. The pair traded at a high of 98.86 and a low of 96.82. The pair is expected to find its first support at 97.03, with the next support expected at 95.90. The first resistance is at 99.08, and the next at 99.99.

BoJ rate decision scheduled to release this week would gather increased investor attention. Data releases this weeek include gross domestic product, and leading and coincident indices.

USD CHF
USD traded 0.97% higher against the CHF and closed at 0.9308 in the last week. Yesterday, the Swiss National Bank (SNB) President, Thomas Jordan, in a newspaper interview stated that there was no reason to give up the ceiling on the Swiss currency. In Switzerland, UBS consumption indicator remained unchanged at 1.41 in July, compared to the previous month. Employment level rose to 4.16 million in the second quarter of 2013, from a level of 4.15 million recorded in the previous quarter, but less than the market expectation of a rise to 4.17 million. KOF Leading Indicator rose to 1.36 in August from 1.25 in July. Meanwhile, manufacturing PMI dropped more than market expectations in August. During the period, the pair traded at a high of 0.9333 and a low of 0.9171. The first support is at 0.9208, and the next at 0.9109. Resistance exists first at 0.9370, and then at 0.9433.

The pair is expected to trade on cues from the release of Swiss gross domestic product data for the second quarter of this year followed by release of consumer price data for August.

USD CAD
Last week, the USD traded 0.20% higher against the CAD and closed at 1.0531, as possibility of the US military action against Syria, prompted investors to seek the safety of the greenback. The US Dollar rose further, after economic data showed that the US economy expanded at faster than expected pace in the second quarter of the year. In Canada, current account deficit widened to C$14.6 billion in the second quarter of 2013, while the industrial product prices rose 0.3% (MoM) in July, compared to a 0.4% rise expected by markets. Additionally, gross domestic product expanded 1.7% (QoQ) in the second quarter of 2013, compared to a 1.5% expansion expected by analysts. USDCAD traded at a high of 1.0559 and a low of 1.0471 in the previous week. The first support is at 1.0482, with the next at 1.0432. The first resistance is at 1.0570, while the next is at 1.0608.

Investors are awaiting Bank of Canada (BoC) interest rate decision along with release of employment reports and trade balance data from Canada.

AUD USD
AUD traded 1.46% lower against the USD last week, and closed at 0.8900, as tensions about Syria eroded demand for riskier currencies. Also pressurizing the Aussie were comments by the Reserve Bank of Australia board member, John Edwards that the Australian dollar is still too strong and is restricting economic recovery. During the week, the pair traded at a high of 0.9072 and a low of 0.8891. The first support is at 0.8837, and the next at 0.8773. The first resistance is at 0.9018, and the next at 0.9135.

With a series of Australian economic releases on deck this week, including gross domestic product and trade balance data, trading in the pair is expected to be influenced by the resulting cues from these releases.

Gold
In the prior week, Gold traded 0.10% lower against the USD and closed at USD1395.41. The yellow metal traded higher initially in the week, as concerns over a possible US military action against Syria fuelled demand for precious metals as safe-haven investment. However, these concerns eased, after fears of an immediate strike receded, leading to profit booking late in the week. Separately, data from the International Monetary Fund showed that central banks continued to add to their gold reserves. The yellow metal traded at a high of 1433.83 and a low of 1389.52 in the previous week.

Gold is expected to find support at 1378.68 and the next at 1361.94. The first resistance is at 1422.99, while the next is at 1450.56.

Crude Oil
Oil prices traded 1.26% higher against the USD in the last week and closed at USD107.67, as mounting geopolitical worries about a military attack by the US on Syria, raised concerns of supply disruptions. However, gains were trimmed at end of the week, as fears of such a possible attack eased. Separately, the American Petroleum Institute (API) reported that US crude oil supplies rose by 2.5 million barrels for the week ended August 23. Additionally, the Energy Information Administration reported that the US crude oil inventories increased 3.00 million barrels for the week ended August 23. Oil traded at a high of 112.24 and a low of 105.56 in the previous week.

Oil has its first major support at 104.74, while the next support exists at 101.81. The first resistance is at 111.42, and the next at 115.17.

Week of August 26th, 2013

Weekly Forex Update

Last week, the EUR traded broadly higher against its key peers after manufacturing and services activity in the Euro-zone, including Germany and Italy, showed broad expansion in August, suggesting that growth was taking root in the region. Additionally, German economy rebounded in the second quarter of 2013, in comparison to a contraction in the previous quarter.

Further supporting the Euro were comments by the European Central Bank (ECB) policymaker, Ewald Nowotny, on Friday that he did not see any reason for a rate cut. Meanwhile, German Finance Minister, Wolfgang Schaeuble, indicated that the ECB should raisi interest rates once the economy improves.

Separately, Fitch Ratings reaffirmed Netherlands’ “AAA” rating, stating that the country’s strong economic fundamentals and account surpluses continue to support it. However, the country’s outlook continued to be negative, reflecting growing government debt and continuing recession.

The greenback traded higher broadly, after the Fed minutes showed that policymakers broadly agreed with the view to moderate the asset purchase program even as they remained divided about when to taper its bond buying program.

The Federal Reserve Bank of Dallas President, Richard Fisher, stated that the central bank’s monetary policy has helped US manufacturers and the economy was now capable of handling a reduction in stimulus. Meanwhile, indications from the meeting of key central bank policymakers at Jackson Hole revealed a division on the timing of ending the stimulus measures.

In the US economic news, housing data was mixed last week, while Markit manufacturing PMI showed upbeat readings. Meanwhile, new claims for jobless benefits increased for the week ended August 17.

The Pound closed lower against the USD last week, following dovish comments by the Bank of England (BoE) member, Martin Weale, that more asset purchases would be needed to boost the UK economic growth. The UK currency saw a tame bounce after the UK gross domestic product in the second quarter this year expanded more than market expectations.

The Yen lost grounds against the greenback, after economic reports showed an expansion in Japanese trade deficit. Further weighing on the Yen were other Japanese economic reports showing drop in leading and coincident index, and decline in all industry activity index. During the weekend, the Bank of Japan (BoJ) Governor, Haruhiko Kuroda, stated that the central bank’s bond-buying effort has started producing results.

The Canadian Dollar was dragged down by disappointing Canadian economic data, fuelling concerns about the nation’s economic growth.

In Australia, the Reserve Bank of Australia’s (RBA) minutes for August 6 meeting revealed that the Australian economy was still growing slower than expected, and is expected to continue to do so. The RBA policymakers opined that the central bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further.

EUR USD

Last week, the EUR traded 0.34% higher against the USD and closed at 1.3382, as manufacturing and services indices continued to show inspiring readings in August, thus brightening the outlook for the common currency bloc. The German manufacturing PMI rose to a reading of 52.0 in August from 50.7 in July. It was followed by rise in services PMI to a six-month high in August. Also, manufacturing and services PMI’s in the Euro-zone showed better-than-expected readings in August. Additionally, the German gross domestic product (GDP) expanded 0.9% (YoY) in the second quarter of 2013, compared to a 1.6% contraction in the previous quarter. However, gains were trimmed in the middle of the week, as the greenback strengthened after Fed minutes showed that policymakers broadly agreed with the view to moderate the asset purchase program by year end. Earlier in the week, the Bundesbank stated that ECB’s pledge to keep borrowing costs low does not rule out higher interest rates to curb inflation. During the week, the pair traded at a high of 1.3453 and a low of 1.3297. The pair is expected to find its first support at 1.3302, with the next support expected at 1.3221. The first resistance is at 1.3458, and the next at 1.3533.

This week’s European economic calendar is filled with IFO economic indicators and consumer prices data from Germany, money supply data from the Euro-zone and retail sales from Italy.

GBP USD

In the last week, GBP traded 0.43% lower against the USD and closed at 1.5573, after the BoE policymaker, Martin Weale, commented that the central bank has not ruled out possibility of fresh stimulus measures for smooth economic recovery. The Pound received a positive start to the week, after CBI lifted its economic growth forecast for 2013 from 1.0% to 1.2% on signs of a pick-up in business confidence. It stated that optimism about performance across the services, construction and manufacturing sectors has added to hopes that recovery is gathering pace. In economic news, the Rightmove house price index in the UK rose 5.5% annually in August, compared to a 4.8% rise in July. Additionally, UK GDP rose 1.5% (YoY) in the second quarter of 2013, compared to a 1.4% rise expected by markets. The pair traded at a high of 1.5719 and a low of 1.5539 in the previous week. GBPUSD is expected to find its first support at 1.5502, with the next at 1.5430. Resistance exists first at 1.5682, and then at 1.5790.

With the UK economic calendar almost empty this week, the Pound is expected to take cues from the external factors.

USD JPY

The USD traded 1.13% higher against the JPY over the past week, closing at 98.68, after the Fed minutes showed that policymakers were in “broad agreement” with the view to moderate the asset purchase program. The Yen came under pressure, after data showed that trade deficit in Japan widened in July, compared to previous month. In economic news, the leading economic index in Japan dropped to a reading of 107.2 in June, from 110.7 in the previous month. Additionally, coincident index declined to 105.5 in June, from 106.0 in the previous month. Moreover, all industry activity index declined 0.6% (MoM) in June, following an upwardly revised 1.2% rise in May. The pair traded at a high of 99.16 and a low of 96.91. The pair is expected to find its first support at 97.34, with the next support expected at 95.99. The first resistance is at 99.59, and the next at 100.50.

The pair is expected to trade on the cues from the release of corporate service price index, National consumer prices and industrial production data from Japan.

USD CHF

USD traded 0.46% lower against the CHF and closed at 0.9219 in the last week. In Switzerland, trade surplus fell more than expected to CHF2.38 billion in July from a surplus of CHF2.8 billion in June. Market had forecasted the surplus to decline to CHF2.6 billion. Exports declined 1.9% in July, while imports climbed 3.2% for the same month. Meanwhile, M3 money supply increased 10.8% (YoY) in July following an 11.3% increase in June. Separately, the Swiss National Bank’s monthly bulletin showed that Swiss Francs held by foreign banks with Swiss counterparts declined 3.0% to CHF99.8 billion in June. During the period, the pair traded at a high of 0.9291 and a low of 0.9147. The first support is at 0.9147, and the next at 0.9075. Resistance exists first at 0.9291, and then at 0.9363.

Trading trends in the pair are expected to be determined by release of UBS consumption indicator from Switzerland this week.

USD CAD

Last week, the USD traded 1.79% higher against the CAD and closed at 1.0510, after the Fed minutes indicated a broad agreement on the possibility of tapering the stimulus program. Meanwhile, the Canadian Dollar was pressurized by weak Canadian economic data. Wholesale sales in Canada fell 2.8% (MoM) in June, compared to a 2.2% rise in May. Market had expected wholesale sales to drop 0.7%. Retail sales fell 0.6% (MoM) in June, compared to a 0.3% drop expected by markets. Additionally, consumer prices inflation in Canada rose less than market expectations in July. USDCAD traded at a high of 1.0570 and a low of 1.0315 in the previous week. The first support is at 1.0360, with the next at 1.0210. The first resistance is at 1.0615, while the next is at 1.0720.

Important economic events on the market radar include gross domestic product for the second quarter of this year, current account balance and Ivey purchasing managers index from Canada.

AUD USD

AUD traded 1.82% lower against the USD last week, and closed at 0.9032. In Australia, Westpac leading index showed flat growth in June, compared to a 0.2% rise in May. Additionally, CB leading economic index dropped 0.2% in June, compared to a flat reading in the previous month. Meanwhile in China, HSBC/Markit manufacturing PMI rose to a reading of 50.1 in August, from a reading of 47.7 in July. Additionally, conference board leading economic index rose 1.4% in July, compared to a 0.8% rise in June. During the week, the pair traded at a high of 0.9235 and a low of 0.8931. The first support is at 0.8897, and the next at 0.8762. The first resistance is at 0.9201, and the next at 0.9370.

Australian economic data slated for this week include private sector credit for July and private capital expenditure for the second quarter of this year.

Gold

In the prior week, Gold traded 1.45% higher against the USD and closed at USD1396.85, amid continued physical demand from India and China. However, the gains were limited as the greenback surged after release of Federal Reserve minutes on Wednesday. Separately, the World Gold Council reported that net global gold demand dropped 23% in the second quarter of 2013 totaling US$39 billion. The World Gold Council also forecasted that gold imports by India would rise to 1,000 tonne in 2013, up from 860 tonne in 2012. The yellow metal traded at a high of 1400.38 and a low of 1352.07 in the previous week.

Gold is expected to find support at 1365.82 and the next at 1334.79. The first resistance is at 1414.13, while the next is at 1431.41.

Crude Oil

Oil prices traded 1.05% lower against the USD in the last week and closed at USD106.33, amid continued uncertainty about Fed’s plans for tapering its stimulus measures. However, losses were limited, amid upbeat PMI’s from the Euro-zone and China. Also escalating tensions in the Middle East continued to provide support to oil prices. The American Petroleum Institute reported that the US oil stockpiles fell 1.2 million barrels for the week ended August 16. Additionally, the Energy Information Administration reported that the US crude oil inventories declined by 1.4 million barrels for the week ended August 16. Oil traded at a high of 107.80 and a low of 103.50 in the previous week.

Oil has its first major support at 103.95, while the next support exists at 101.58. The first resistance is at 108.25, and the next at 110.18.

Week of August 19th, 2013

Weekly Forex Update

The greenback traded mostly higher against most of the key currencies, amid continued uncertainty about the Federal Reserve’s stance on trimming its bond purchases program.

Fed officials, including the Federal Reserve Bank of Atlanta President, Dennis Lockhart, and the Federal Reserve Bank of St Louis President, James Bullard, last week hinted that the Federal Reserve should be more cautious in deciding the timing of tapering its stimulus program. This follows last week’s comments by several key Fed officials calling for a near term start to curtail the central bank’s bond buying program and led to further uncertainty regarding the timing of Fed action.

Meanwhile, economic data in the US was mixed with retail sales growth, consumer confidence and housing starts trailing market expectations. However, initial jobless claims in the US dropped more than market forecasts, dropping to lowest level since 2007. This week, markets are now eyeing the release of minutes from the Federal Reserve last meeting, to get cues about timing of tapering quantitative easing program.

The common currency for the Euro-zone ended marginally lower against the greenback. The EUR was supported by inspiring European economic data, which suggested nascent recovery in the single-currency bloc. The Euro-zone economy exited recession in the second quarter of 2013, after six quarters of contraction. Also, German and French economies recorded better-than-expected growth in the second quarter of 2013, helped by robust domestic demand. Additionally, ZEW survey economic indicators from Germany and Euro-zone showed better-than-expected readings.

Sterling closed higher last week, buoyed by upbeat house prices and employment data from the UK. The Royal Institution of Chartered Surveyors’ (RICS) house price balance showed the best reading since November 2006 and one of the sharpest improvements over a three-month period since the survey began in 1978. Additionally, employment and retail sales data from the UK released on Wednesday and Thursday, boosted economic outlook for the nation.

In Asia, the Japanese Yen traded lower early in the week, amid media reports that Prime Minister Shinzo Abe, is considering to lower the corporate tax. However, the Japanese officials dismissed this media report later in the week.

Commodity sensitive currencies such as Canadian Dollar and Australian Dollar too declined against the greenback last week. Canadian Dollar was also pressurized by poor Canadian manufacturing shipments data released on Friday.

EUR USD

Last week, the EUR traded marginally lower against the USD and closed at 1.3336. The Euro traded lower at start of the week, following last Sunday’s report from German weekly magazine, Der Spiegel that Bundesbank expects that international creditors would have to agree a new bailout for Greece by early next year. However, losses were trimmed later in the week, amid a flurry of encouraging economic data from the Euro-zone, suggesting that the European economy is gradually gaining momentum. Gross domestic product in the Euro-zone, Germany and France expanded more than market expectations in the second quarter of 2013. Also, non-seasonally adjusted trade and current account surplus in the Euro-zone expanded in June. During the week, the pair traded at a high of 1.3381 and a low of 1.3205. The pair is expected to find its first support at 1.3234, with the next support expected at 1.3131. The first resistance is at 1.3410, and the next at 1.3483.

This week the market awaits data on Markit purchasing managers index (PMI) numbers, which would provide a fresh perspective on the region’s economy. Manufacturing and service sector activity is expected to grow at a stronger pace in the month of August. Also, producer prices and gross domestic product from Germany are slated to release this week.

GBP USD

In the last week, GBP traded 0.83% higher against the USD and closed at 1.5641, amid positive UK economic data. The RICS house price balance rose to 36% in July from 21% in June. Additionally, the number of people claiming jobseeker’s allowance dropped by 29,200 in July to 1.4 million, the ninth consecutive monthly drop. Separately, the Bank of England minutes showed that policymakers unanimously decided to retain the size of quantitative easing at £375 billion and the record low 0.50% interest rates. Meanwhile, policymakers approved forward guidance in a split vote. The pair traded at a high of 1.5659 and a low of 1.5422 in the previous week. GBPUSD is expected to find its first support at 1.5489, with the next at 1.5337. Resistance exists first at 1.5726, and then at 1.5811.

Investors are eyeing gross domestic product data from the UK scheduled this week. Market participants would also track BBA mortgage approvals, index of services and public sector net borrowing data from the UK.

USD JPY

The USD traded 1.30% higher against the JPY over the past week, closing at 97.58. The Yen came under pressure, amid reports that Japanese Prime Minister Shinzo Abe is looking at the option of cutting corporate taxes to boost economic growth. Also, poor economic growth figures from Japan further weighed on the currency. Gross domestic product in Japan rose 0.6% (QoQ) in the second quarter of 2013, compared to a 0.9% rise expected by markets. Industrial production in Japan dropped 3.1% (MoM) in June, while capacity utilization in Japan fell 2.3% (MoM) in June. Meanwhile, the Japanese Finance Minister, Taro Aso, soothed the expectations of tax cuts stating that cutting corporate tax rates would not have an immediate impact. The pair traded at a high of 98.66 and a low of 95.98. The pair is expected to find its first support at 96.15, with the next support expected at 94.72. The first resistance is at 98.84, and the next at 100.09.

Japanese economic calendar is light this week with only all industry activity index and corporate service price index scheduled for release.

USD CHF

USD traded 0.40% higher against the CHF and closed at 0.9262 in the last week. In Switzerland, producer and import prices advanced at a faster pace of 0.5% (YoY) in July, after rising 0.2% in June. Market had expected producer and import prices to rise 0.4%. Meanwhile, the ZEW indicator of economic expectations index rose to 7.2 in August, compared to a rise to 10.0 forecasted by markets. In July economic expectations index stood at 4.8. During the period, the pair traded at a high of 0.9397 and a low of 0.9217. The first support is at 0.9187, and the next at 0.9112. Resistance exists first at 0.9367, and then at 0.9472.

The pair is expected to trade on the cues from the release of Swiss trade balance as well as imports and exports data ahead in this week.

USD CAD

Last week, the USD traded 0.47% higher against the CAD and closed at 1.0325, amid lingering speculation of an early alteration of bond buying program by the Federal Reserve. Economic data released in Canada disappointed with manufacturing sales dropping 0.5% (MoM) in June, in comparison to market expectations for a 0.5% gain, and following a 0.6% rise in May. USDCAD traded at a high of 1.0371 and a low of 1.0280 in the previous week. The first support is at 1.0280, with the next at 1.0234. The first resistance is at 1.0371, while the next is at 1.0416.

Trading trends in the pair are expected to be determined by the release of consumer price index, wholesale sales and retail sales from Canada. Traders would also be monitoring release of minutes of US Federal Reserve meeting, to get for hints about tapering of its quantitative easing program.

AUD USD

AUD traded 0.15% lower against the USD last week, and closed at 0.9199. The Australian Dollar found support initially in the week, after Westpac consumer confidence index rose 3.5% in August, compared to a 0.1% drop in July. Losses in the AUD were capped following speculation of additional stimulus in China. Meanwhile, consumer inflation expectations dropped to 2.3% in August, from 2.6% in the previous month. During the week, the pair traded at a high of 0.9223 and a low of 0.9058. The first support is at 0.9097, and the next at 0.8995. The first resistance is at 0.9262, and the next at 0.9325.

The Reserve Bank of Australia’s minutes to be released tomorrow is likely to receive increased market attention. Other economic releases on the deck this week include Westpac leading index and Conference Board (CB) leading index from Australia as well as CB leading economic index and HSBC manufacturing PMI from China.

Gold

In the prior week, Gold traded 4.75% higher against the USD and closed at USD1376.87. The yellow metal prices advanced, after reports showed that gold consumption in China rose to 570 tonnes in the first half of 2013, a 54% rise from the year-ago period. The gains were capped in middle of the week, after the Indian government hiked import duties on gold for the third time in 2013. However, rise in physical buying of precious metal in India ahead of upcoming festive and marriage season, continued to support gold prices. The yellow metal traded at a high of 1379.70 and a low of 1316.04 in the previous week.

Gold is expected to find support at 1335.37 and the next at 1293.88. The first resistance is at 1399.03, while the next is at 1421.20.

Crude Oil

Oil prices traded 1.41% higher against the USD in the last week and closed at USD107.46, amid lingering supply concerns on back of escalating violence in the Middle East. Further supporting oil prices were reports showing a drop in US oil inventories. The American Petroleum Institute reported that the US oil inventories fell by 999,000 barrels for the week ended August 9. Additionally, the Energy Information Administration stated that the US crude oil inventories fell by 2.8 million barrels in the week ended August 9, compared to expectations for a decline of 1.5 million barrels. Oil traded at a high of 108.17 and a low of 105.03 in the previous week.

Oil has its first major support at 105.60, while the next support exists at 103.75. The first resistance is at 108.74, and the next at 110.03.

Week of August 12th, 2013

Weekly Forex Update

The greenback witnessed weekly declines against its major peers, amid ongoing uncertainty about when the Federal Reserve would start reducing its bond purchases. Also, strong economic data from Europe and industrial production growth in China supported the rise in high yield and riskier currencies. However, comments by senior Fed officials including Charles Evans, Sandra Pianalto and Richard Fisher showed some Fed officials continued to hold that the Fed needed to taper its bond purchases by the end of the year.

In Europe, encouraging economic data last week lifted sentiment in the region. Economic indicators in the Euro-zone’s major economies showed upbeat readings with services sector performing better than market expectations in July. Additionally, industrial production and trade surplus in Germany showed better than expected growth in June.

The Fitch’s maintained Germany’s “AAA” rating long-term, amid hopes that German economic recovery is gaining traction.

Demand for the Sterling was boosted, buoyed by inspiring economic data from the UK, fuelling optimism that the UK’s economic recovery is gathering momentum. Manufacturing and production sectors expanded, surpassing market expectations in June, suggesting that the UK economy has picked up pace in the second quarter. Also, service sector activity and house prices in the UK rose more than analyst’ forecasts.

The Bank of England (BoE), in its inflation report indicated that it would keep its record low interest of 0.5%, as long as unemployment remains above 7.0%. The central bank also forecast that the economy would grow 1.4% in 2013 and 2.5% in 2014, up from its earlier estimates of 1.2% and 1.7% respectively.

Across the Asia Pacific, the Bank of Japan (BoJ) decided to keep its monetary policy unchanged, retaining its plan to increase the monetary base at an annual pace of ¥60-70 trillion and interest rate unchanged at 0.1%.

The Australian Dollar ended higher, even as the Reserve Bank of Australia (RBA) cut its official interest rate to 2.5%. The AUD paced gains after the RBA refrained from providing any indications of a further ease in its monetary policy. The Aussie was also supported by stronger economic data in China, the biggest market for Australian commodities exports.

Commodity sensitive Canadian Dollar was also supported by upbeat Chinese economic data. However the gains were trimmed, amid poor Canadian employment data released on Friday.

EUR USD

Last week, the EUR traded 0.41% higher against the USD and closed at 1.3340, on back of batch of positive economic indicators, which raised expectations of a slowly reviving European economy. Markit services purchasing manager indices (PMI) across the Euro-zone and France showed better-than-expected readings in July. German factory orders rose 3.8% (MoM) in June, compared to a 0.5% drop in the previous month. Industrial production in Germany showed a better-than-expected rise in June, followed by expansion in trade surplus and a rise in current account surplus in June. The common currency found further support, after the Fitch rating agency affirmed Germany’s “AAA” with a stable outlook, citing that risks from contingent liabilities from the Euro-zone crisis have eased. Separately, the European Central Bank (ECB) member, Peter Praet, stated that the central bank is ready to reduce interest rates further if inflation outlook so warrants. During the week, the pair traded at a high of 1.3401 and a low of 1.3232. The pair is expected to find its first support at 1.3248, with the next support expected at 1.3155. The first resistance is at 1.3417, and the next at 1.3493.

This week’s European economic calendar is filled with multiple important economic releases such as gross domestic product, consumer prices, trade and current account balance data as well as industrial production from the Euro-zone. Also in spotlight is the German gross domestic product, consumer prices and ZEW economic indicators.

GBP USD

In the last week, GBP traded 1.49% higher against the USD and closed at 1.5513, amid a stream of upbeat UK economic data. Markit services PMI in the UK rose to a reading of 60.2 in July from 56.9 in June. Halifax House Prices in the UK rose 0.9% (MoM) in July, compared to a 0.5% rise expected by markets. Industrial and manufacturing production in the UK rebounded more than market forecasts in June. Economic data continued to be encouraging at end of the week, with the UK trade deficit narrowing in June and NIESR gross domestic product estimate accelerating further for the three months ended July. The pair traded at a high of 1.5575 and a low of 1.5205 in the previous week. GBPUSD is expected to find its first support at 1.5287, with the next at 1.5061. Resistance exists first at 1.5657, and then at 1.5801.

Bank of England minutes would be the major event in the UK this week, along with the release of consumer and producer prices, retail price index and unemployment rate.

USD JPY

The USD traded 2.61% lower against the JPY over the past week, closing at 96.33, amid a broad weakness in the greenback. The BoJ in its monthly report stated that it expects to see moderate growth in exports and industrial production in the coming months. The central bank sees the Japanese economy recovering moderately on the back of the boost in domestic as well as overseas demand. Japanese economic data released last week showed that the leading economic index fell to 107.0 in June from 110.7 in the previous month. Additionally, the coincident index fell to 105.2 in June from 106.0 in May. Trade deficit narrowed in June, while the current account surplus contracted in the same month. The pair traded at a high of 99.17 and a low of 95.81. The pair is expected to find its first support at 95.03, with the next support expected at 93.74. The first resistance is at 98.40, and the next at 100.46.

With light Japanese economic calendar for this week, the BoJ monetary policy minutes would be important event.

USD CHF

USD traded 0.67% lower against the CHF and closed at 0.9225 in the last week, despite dismal economic data from Switzerland. Swiss economic data released last week showed that the consumer confidence index fell to a reading of -9.0 for the period of three months ended July, from a reading of -5.0 for three month ended April. Consumer price index (CPI) dropped 0.4% (MoM) in July, following a 0.1% rise recorded in June. Meanwhile, seasonally adjusted unemployment rate remained steady at 3.2% in July. Over the weekend, the Swiss National Bank (SNB) Vice President, Jean-Pierre Danthine, stated that the central bank would abolish its Franc ceiling once it starts raising interest rates. During the period, the pair traded at a high of 0.9336 and a low of 0.9174. The first support is at 0.9154, and the next at 0.9083. Resistance exists first at 0.9316, and then at 0.9407.

Swiss economic data slated this week includes producer and import prices, ZEW Expectations index and Real retail sales.

USD CAD

Last week, the USD traded 1.09% lower against the CAD and closed at 1.0277, amid lingering uncertainty over when the Fed would start tapering its asset purchases. However, the losses were limited as some Fed official opined that tapering asset purchase program early was possible. The Canadian Dollar registered losses on Friday, on back of poor Canadian employment data. The Canadian economy lost 39,400 jobs in July, while the unemployment rate rose to 7.2% in July from 7.1% in June. Other Canadian economic reports during the week showed that trade deficit contracted in June, while building permits showed a sharp drop in June. Additionally, Ivey purchasing managers index fell to a reading of 45.7 in July from a reading of 56.6 in June. USDCAD traded at a high of 1.0447 and a low of 1.0274 in the previous week.

The first support is at 1.0218, with the next at 1.0160. The first resistance is at 1.0391, while the next is at 1.0506.

AUD USD

AUD traded 3.41% higher against the USD last week, and closed at 0.9213, after the RBA refrained from indicating any further easing in monetary policy following its 25 basis point cut in interest rates. Further supporting the Aussie was positive Chinese economic data, which painted an upbeat picture for the economy. Chinese exports and imports both grew at faster-than-expected pace in July. Additionally, industrial production too rose more than analysts’ expectations in the same month. In Australia, TD Securities Inflation rose 0.5% (MoM) in July, compared to a flat in June. House Price Index rose better than market forecasts in the second quarter of 2013, while trade surplus expanded less-than-expected in June. During the week, the pair traded at a high of 0.9217 and a low of 0.8847.
The first support is at 0.8968, and the next at 0.8722. The first resistance is at 0.9338, and the next at 0.9462.

Australian economic releases on deck today include National Australia Bank’s business confidence index, Westpac consumer confidence index and consumer inflation expectation.

Gold

In the prior week, Gold traded 0.20% higher against the USD and closed at USD1314.40, on back of softer US Dollar. Also supporting gold prices was strong Chinese economic data, suggesting that demand from the nation could increase, amid signs of a pickup in the economy. The yellow metal traded at a high of 1321.20 and a low of 1273.02 in the previous week.

Gold is expected to find support at 1284.55 and the next at 1254.69. The first resistance is at 1332.73, while the next is at 1351.05.

Crude Oil

Oil prices traded 0.91% lower against the USD in the last week and closed at USD105.97. Oil prices came under pressure, after Libya, which holds Africa’s largest oil reserves, indicated that its production is improving following export disruptions last week. Concerns over supply disruptions also soothed, on that signs Iran-West tensions may ease, after expectations rose that Iran’s new President would negotiate with the West over Tehran’s disputed nuclear program. The American Petroleum Institute reported that the US oil inventories declined 3.7 million barrels for the week ended August 2. The Energy Information Administration reported that oil inventories declined by 1.3 million barrels to 363.3 million barrels for the week ending August 2, against the expected drop of 2 million barrels. Meanwhile, the International Energy Agency lowered its global oil demand forecast to 1.1 million barrels per day (mbd) in 2014, from 1.2 mbd projected earlier. Oil traded at a high of 107.69 and a low of 102.22 in the previous week.

Oil has its first major support at 102.90, while the next support exists at 99.82. The first resistance is at 108.37, and the next at 110.76.

Week of August 5th, 2013

Weekly Forex Update

The US Dollar ended higher against its major peers last week. The US Dollar traded lower earlier in the week, after the US Federal Reserve offered no fresh hints on whether it would start to reduce its monetary stimulus soon.

Macro economic data from the US showed that the gross domestic product expanded more than market expectations in the second quarter of 2013. Number of Americans making their first claims for jobless benefits fell last week to the lowest level in more than five years. Additionally, the US manufacturing sector reached its highest production level of the year in July, while non-farm payrolls indicated an addition of 162,000 jobs in July, a slimmer gain than expectations.

Also on Friday, St. Louis Federal Reserve Bank President, James Bullard, stated that the central bank should adopt a wait and watch approach and analyze data over the coming months before taking a final decision on its bond buying program.

The Euro closed marginally higher against the US Dollar, pushed by robust economic data in the Euro-zone and Germany. Manufacturing activity in Germany ticked up in July, followed by rise in consumer prices. In the Euro-zone, business climate index, services sentiment index and the consumer confidence index showed upbeat readings, while monthly producer prices remained flat in June.

However, gains in the EUR were capped, after the European Central Bank (ECB) President, Mario Draghi, hinted that monetary policy would remain loose for an extended period. The ECB also left interest rates at a record low 0.5%.

In the UK, the Bank of England (BoE) headed by Mark Carney, retained the pace of asset purchase facility at £375 billion and interest rate at a record low of 0.50%. Also, mixed economic data further pressurized the Pound.

Meanwhile in Asia, the Japanese central bank Governor, Haruhiko Kuroda, supported plan to raise the national sales tax, intended to reduce the budget deficit, stating that the Japanese economy would not suffer significant setback if the tax to be doubled to 10% is raised in two stages beginning in April.

The Aussie witnessed heavy selling pressure, as comments by the Reserve Bank of Australia (RBA), Glenn Stevens, fuelled expectations of an interest rate cut at the central bank’s meeting this week. Additionally, a batch of dismal Australian economic data further supported this speculation.

EUR USD

Last week, the EUR traded 0.07% higher against the USD and closed at 1.3285, amid a spate of encouraging economic data from Europe. In Germany, the Gfk consumer confidence index rose more-than-expected in August. Also, consumer prices growth ticked up more than market forecasts in July, while the number of unemployed people in dropped in July. Meanwhile, business climate index, services sentiment index and the consumer confidence index in the Euro-zone showed upbeat readings, while monthly producer prices showed flat growth in June. However, gains were trimmed, after the ECB President, Mario Draghi, reaffirmed commitment to keep borrowing costs low for as long as Euro-zone struggles to recover. The central bank kept its interest rates unchanged at 0.5%. Separately, the German government reaffirmed its opposition on Wednesday to a second haircut on Greek sovereign debt. Earlier in the week, the International Monetary Fund approved a €1.72 billion tranche for Greece after a fourth review. During the week, the pair traded at a high of 1.3346 and a low of 1.3189. The pair is expected to find its first support at 1.3201, with the next support expected at 1.3116. The first resistance is at 1.3358, and the next at 1.3430.

Economic data this week would reveal information on manufacturing and service sector activities in the Euro-zone, gross domestic product in Italy and industrial production, trade balance and factory orders in Germany.

GBP USD

In the last week, GBP traded 0.63% lower against the USD and closed at 1.5286. The Pound came under pressure earlier in the week, after the UK mortgage approvals fell unexpectedly in June, followed by a drop in net lending to individuals in June. However, losses were trimmed, after the UK economic data at end of the week showed that Markit manufacturing purchasing manager’ index (PMI) rose in July. Additionally, Nationwide housing prices and construction PMI also showed rise in July. Separately, the BoE decided to keep interest rates unchanged at 0.5% and also maintained pace of asset purchases at £375 billion. The pair traded at a high of 1.5415 and a low of 1.5102 in the previous week. GBPUSD is expected to find its first support at 1.5120, with the next at 1.4955. Resistance exists first at 1.5433, and then at 1.5581.

In the UK, economic releases scheduled for the week include industrial production, manufacturing production and trade balance data. Also, the BoE is set to release its quarterly inflation report.

USD JPY

The USD traded 0.72% higher against the JPY over the past week, closing at 98.91. Earlier in the week, the greenback traded lower, after the Federal Reserve gave no hints on timing of tapering its bond buying program. The Yen declined after the annual housing starts in Japan rose 15.3% in June, compared to a 15.8% rise expected by markets. Also, industrial production in Japan fell 3.3% (MoM) in June, compared to a 1.2% drop forecasted by analysts. The pair traded at a high of 99.97 and a low of 97.58. The pair is expected to find its first support at 97.67, with the next support expected at 96.43. The first resistance is at 100.06, and the next at 101.21.

Bank of Japan interest rate decision is likely to receive increased market attention, along with other Japanese economic data due to be released later in the week.

USD CHF

USD traded marginally higher against the CHF and closed at 0.9287 in the last week. Economic reports from Switzerland showed that UBS consumption indicator dropped to 1.44 in June from 1.45 in May. Meanwhile, the KOF leading indicator rose to 1.23 in July from 1.15 in June. During the period, the pair traded at a high of 0.9390 and a low of 0.9228. The first support is at 0.9213, and the next at 0.9140. Resistance exists first at 0.9375, and then at 0.9464.

Swiss economic releases on the deck this week are SECO consumer climate index, consumer prices data and unemployment rate.

USD CAD

Last week, the USD gained 1.03% against the CAD and closed at 1.0390, amid a broadly higher US Dollar and as economic growth in Canada disappointed markets. Initial jobless claims in the US fell to 326K for the week ended July 26, in comparison to a drop to 345K forecasted by markets. Additionally, Markit manufacturing PMI in the US rose to a reading of 53.7 in July from 53.2 in June. Meanwhile in Canada, gross domestic product rose 0.2% (MoM) in May, compared to a 0.3% rise expected by markets, while both industrial product price index and raw material price index showed more-than-expected growth in June. USDCAD traded at a high of 1.0404 and a low of 1.0245 in the previous week. The first support is at 1.0289, with the next at 1.0187. The first resistance is at 1.0448, while the next is at 1.0505.

With a series of Canadian economic releases this week, including employment data, housing starts and trade balance, trading in the pair is expected to be influenced by the resulting cues from these releases.

AUD USD

AUD traded 3.79% lower against the USD last week, and closed at 0.8909, after the RBA Governor, Glenn Stevens, stated that lower inflation has provided scope for further interest rate cuts. Further weighing on the Aussie was disappointing Australian economic data showing an unexpected drop in building permits in June. Additionally, the AiG performance of manufacturing index dropped to 42.0 in July, while producer prices rose less-than-expected in the second quarter of 2013. During the week, the pair traded at a high of 0.9289 and a low of 0.8870. The first support is at 0.8756, and the next at 0.8604. The first resistance is at 0.9175, and the next at 0.9442.

Investors are eying the RBA’s interest rate decision, along with other key releases in Australia and China.

Gold

In the prior week, Gold traded 1.62% lower against the USD and closed at USD1311.75, as the greenback strengthened, following strong jobless claims and manufacturing data from the US on Thursday. Gold prices traded higher initially in the week, following weakness in the greenback, amid lack of indications by the Fed on the timing of altering its bond buying program. Separately, the Indian Finance Minister indicated that gold imports in India rose in July, despite the government’s efforts to stifle it. The yellow metal traded at a high of 1339.74 and a low of 1283.30 in the previous week.

Gold is expected to find support at 1283.45 and the next at 1255.16. The first resistance is at 1339.89, while the next is at 1368.04.

Crude Oil

Oil prices traded 2.18% higher against the USD in the last week and closed at USD106.94. Oil prices garnered strength, after the Federal Reserve offered no hints on when it would scale back its asset purchase program. Additionally, upbeat manufacturing data from China, Euro-zone and the US raised energy demand prospects. Separately, the American Petroleum Institute (API) reported that the US crude inventories decreased by 740,000 barrels for the week ended July 26. Meanwhile, the Energy Information Administration (EIA) reported that the US crude oil inventories rose 400,000 barrels for the week ended July 26. Oil traded at a high of 108.82 and a low of 102.67 in the previous week.

Oil has its first major support at 103.47, while the next support exists at 99.99. The first resistance is at 109.62, and the next at 112.29.

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Week of July 29th, 2013

Weekly Forex Update

The US dollar traded lower against the key currencies last week, as mixed economic numbers out of the US spurred speculation that the Federal Reserve would continue with its current pace of asset purchases. In the US, the Richmond Federal manufacturing index dropped more-than-expected in July, while initial jobless claims rose unexpectedly for week ended July 19.

Meanwhile, economic figures from Europe were strong, thus giving a lift to the 17-nation common currency. Markit reported that its purchasing managers’ indices (PMI), a broad gauge of economic activity, across the Euro-zone, Germany and France climbed better than market forecasts in July, suggesting that the European economy is growing again. Also, the IFO business climate indicators in Germany were upbeat in July.

Meanwhile, Greece’s next tranche of international bailout was approved by the Euro-zone on Friday. Commenting on the bailout approval, the German Finance Minister, Wolfgang Schaeuble, over the weekend stated that pressure must be maintained on Greece to stick to its austerity plans.

An acceleration in UK‘s economic expansion in the second quarter of 2013 led the Sterling higher, indicating that the British recovery is gaining traction. Following the release of economic numbers, the UK Prime Minister David Cameron stated that the figures were encouraging and showed the UK was on the right track.

Currency movements in the Pound this week would be influenced by the Bank of England’s policy decision, with markets awaiting sound-bites on Governor Mark Carney’s forward guidance on the future path of interest rates.

Among the Asian currencies, the Japanese Yen witnessed gains, stemming from Japanese election results last week and upbeat economic assessment of the nation by the Japanese government. The Japanese government upgraded its assessment for the economy for the third straight month.

This week would be crucial for currency markets with important economic data as well as interest rate decisions lined up. The US preliminary reading of gross domestic product and non-farm payrolls would give more insights about the health of the economy and thus expectations about the future stance of the Fed regarding its asset purchase program. In Europe, the central bank’s rate decision would be closely monitored following upbeat European economic data last week.

EUR USD

Last week, the EUR traded 1.07% higher against the USD and closed at 1.3276, as economic data from Europe’s major economies sparked hopes that the Euro-zone growth is picking up. PMI survey results showed that manufacturing and service sector activities across the Euro-zone, France and Germany ticked up in July, surpassing, analysts expectations. Also, the German IFO business climate indicators rose further in July, beating market consensus for the third consecutive month. The EUR gained support early in the week, after the Portuguese President Anibal Cavaco Silva, on last Sunday rejected calls for elections to resolve the political crisis shaking the nation. The pair ended higher, as the greenback tumbled following mixed US economic data which fuelled speculation that the Federal Reserve would continue with its accommodative monetary policy stance in the near term. During the week, the pair traded at a high of 1.3298 and a low of 1.3142. The pair is expected to find its first support at 1.3179, with the next support expected at 1.3083. The first resistance is at 1.3335, and the next at 1.3395.

This week includes many important releases from the Euro-zone, such as the unemployment and consumer prices data from the Euro-zone as well as consumer prices and manufacturing activity data from Germany. Also in spotlight would be the European Central Bank interest rate decision.

GBP USD

In the last week, GBP traded 0.79% higher against the USD and closed at 1.5383, after economic reports showed that the gross domestic product in the UK expanded 0.6% (QoQ) in the second quarter of 2013, in line with analysts’ expectations, suggesting that economic growth in the UK has started to pick up. Additionally, the index of services in the UK ticked up more than market forecasts for the three months ended May. The UK currency gained traction earlier in the week, after the UK Prime Minister, David Cameron, on Monday stated that an improving economy may enable the government to cut taxes. The greenback was pressurized by mixed US economic data, which kept alive expectations that the Fed would continue stimulating the economy. The pair traded at a high of 1.5436 and a low of 1.5263 in the previous week. GBPUSD is expected to find its first support at 1.5285, with the next at 1.5188. Resistance exists first at 1.5458, and then at 1.5534.

Amidst a flurry of major economic releases in the UK, the BoE interest rate decision would be at the centre of attention.

USD JPY

The USD traded 2.02% lower against the JPY over the past week, closing at 98.20. The Yen traded higher, following Japanese elections results last week. The Yen found added support after the Japanese cabinet office upgraded its assessment of the economy for the third straight month. Separately, the Bank of Japan (BoJ) policy board member, Takehiro Sato, painted a much brighter picture of the economy, stating that the central bank is prepared to take additional measures, if required, to boost economic growth. Other economic data releases showed that the annual corporate service price index growth in Japan accelerated further in June. It was followed by better-than-expected growth in annual consumer prices for the month of July. However, trade deficit in Japan contracted less-than-expected in June. The pair traded at a high of 100.47 and a low of 97.96. The pair is expected to find its first support at 97.28, with the next support expected at 96.36. The first resistance is at 99.80, and the next at 101.39.

This week’s Japanese economic calendar is loaded with releases including the unemployment rate, industrial production and housing data.

USD CHF

USD traded 1.34% lower against the CHF and closed at 0.9286 in the last week, as dovish consumer sentiment and weekly jobless claims from the US dampened expectations that the Federal Reserve would taper its monetary easing program. During the period, the pair traded at a high of 0.9409 and a low of 0.9262. The first support is at 0.9229, and the next at 0.9172. Resistance exists first at 0.9376, and then at 0.9466.

Trading trends in the pair are expected to be determined by release of UBS consumption indicator, the KOF leading indicator, real retail sales and PMI from Switzerland.

USD CAD

Last week, the USD traded 0.81% lower against the CAD and closed at 1.0284, as mixed US economic reports raised hopes that the US Federal Reserve would not taper its asset purchase program soon. The Canadian Dollar gained after retail sales rose 1.9% (MoM) in May, compared to 0.3% rise expected by markets. USDCAD traded at a high of 1.0365 and a low of 1.0253 in the previous week. The first support is at 1.0236, with the next at 1.0189. The first resistance is at 1.0348, while the next is at 1.0413.

Canadian economic calendar is light this week, with only industrial product price and raw material price index scheduled for release.

AUD USD

AUD traded 0.71% higher against the USD last week, and closed at 0.9260, amid a broad weakness in the US Dollar. The Aussie traded lower earlier in the week, as economic data from China, Australia’s largest trading partner, indicated that the manufacturing sector activity slowed to an 11-month low in July, suggesting the world’s second-largest economy is still losing momentum. Also weighing on the Aussie was tepid Australian consumer prices data for the second quarter of 2013. During the week, the pair traded at a high of 0.9320 and a low of 0.9128. The first support is at 0.9152, and the next at 0.9044. The first resistance is at 0.9344, and the next at 0.9428.

In Australia, investors await release of building permits, producer prices and retail sales data. Also on the market radar is manufacturing data from China, which would give hints about the momentum in the Chinese economy, Australia’s largest trading partner.

Gold

In the prior week, Gold traded 2.87% higher against the USD and closed at USD1333.30, on weakness in the greenback, as economic data out of the US last week raised expectations that Fed would continue with its loose policy measures in the foreseeable future to boost economic growth. Meanwhile, the World Gold Council has indicated that China is set to overtake India as the world’s largest consumer of the metal. The yellow metal traded at a high of 1348.65 and a low of 1309.07 in the previous week.

Gold is expected to find support at 1312.03 and the next at 1290.76. The first resistance is at 1351.61, while the next is at 1369.92.

Crude Oil

Oil prices traded 3.14% lower against the USD in the last week and closed at USD104.66, as uninspiring US economic reports raised concerns about oil demand in world’s largest oil consumer. Demand prospects also faded, following weak Chinese economic data. The American Petroleum Institute reported that the US oil inventories fell 1.4 million barrels for the week ended July 19. Additionally, the Energy Information Administration reported that the US crude oil inventories dipped 2.80 million barrels for the week ended July 19. Oil traded at a high of 108.79 and a low of 103.90 in the previous week.

Oil has its first major support at 102.78, while the next support exists at 100.89. The first resistance is at 107.67, and the next at 110.67.

Week of July 22nd, 2013

Weekly Forex Update
The US Dollar traded lower against the key currencies around the globe, as traders bet that altering monetary stimulus programs is not a possibility in the near term. The Federal Reserve Chairman, Ben Bernanke, concluded the two day testimony to the Congress stating that tapering the massive stimulus program is not predetermined and stressed that monetary policy would remain accommodative in the foreseeable future.
Economic data in the US showed that initial jobless claims were lower than market expectations for the week ended July 12. It was followed by an unexpected increase in the Philadelphia Federal manufacturing survey index for July. Additionally, Moody’s Investors Service upgraded the US credit rating to “Stable” from “Negative”, citing improvement in the Federal government’s debt trajectory. Despite these positive developments, expectations of continuing monetary easing kept the pressure on the greenback.
The G20 leaders on Saturday, agreed to prioritize boosting global economic growth and jobs than to reduce large budget deficits at the summit in Moscow, citing fragile economic recovery.
In updates from the Euro-zone, the Greek Parliament on Thursday approved a new austerity bill containing massive job cuts in the public sector to receive further international bailout aid. In Portugal, President, Anibal Cavaco Silva, on Sunday backed the government of Prime Minister, Pedro Passos Coelho, to stay in power until its term ends in 2015 and reaffirmed that he would not call early elections. This move comes following disagreement between Portugal’s three main parties on Friday on how to proceed with tough austerity measures.
The Sterling found support, after minutes of the Bank of England’s (BoE) July meeting showed that policymakers including the new Governor, Mark Carney, unanimously voted to keep its bond-purchase target at £375 billion. Additionally, encouraging macro-economic data from the UK released at end of the week provided further support to the UK currency.
Moving on to Asia, the Japanese Prime Minister, Shinzo Abe, won majority in the upper house of Parliament giving him control of both chambers as he seeks to revamp economic growth.
Meanwhile, the AUD gained sharply during the week after minutes of the Reserve Bank of Australia (RBA) July 2 meeting revealed that policymakers opined that the current monetary policy stance was appropriate for the time being.

EUR USD
Last week, the EUR traded 0.57% higher against the USD and closed at 1.3135, following Ben Bernanke’s testimony and following positive economic data from Europe. Trade surplus in the Euro-zone expanded to €15.2 billion in May, up from a downwardly revised surplus of €14.1 billion in April. The consumer price index (CPI) in the Euro-zone increased by 1.6% in June year-on-year, following a 1.4% rise in May, marking a rise for a second consecutive month. Gains in the EUR were capped after the Fitch Ratings Agency downgraded European Financial Stability Facility (EFSF) to “AA+” from “AAA” as a result of its downgrade of France last week. Additionally, the ECB policymaker, Joerg Asmussen, echoed his earlier stance that central bank’s monetary policy would remain expansive as long as necessary. During the week, the pair traded at a high of 1.3178 and a low of 1.2993. The pair is expected to find its first support at 1.3026, with the next support expected at 1.2917. The first resistance is at 1.3211, and the next at 1.3287.

With a series of Europe economic releases this week, including manufacturing and services purchasing manager’ indices in the Euro-zone and France as well as IFO indicators on business climate, current assessment and economic expectations in Germany, the pair is expected to be influenced by the resulting cues from these releases.

GBP USD
In the last week, GBP traded 1.04% higher against the USD and closed at 1.5262, after the minutes of the BoE July meeting revealed that policymakers voted unanimously 9-0 against any further quantitative easing measures. Additionally, annual Rightmove house price index accelerated at higher pace in July, compared to previous month. Further supporting the Pound was Thursday’s economic data from the UK showing better-than-expected rise in the annual retail sales. The Pound started the week on a rough note, amid tepid consumer prices data from the UK. CPI in the UK rose 2.9% annually in June, lower than 3.0% rise expected by markets. The pair traded at a high of 1.5283 and a low of 1.5028 in the previous week. GBPUSD is expected to find its first support at 1.5099, with the next at 1.4936. Resistance exists first at 1.5354, and then at 1.5446.

Gross domestic product and the house prices data are the major economic events from the UK this week, which would influence the GBPUSD pair.

USD JPY
The USD traded 0.84% higher against the JPY over the past week, closing at 100.22. The Fed Chief, Ben Bernanke, during the last week indicated that the central bank had no firm timetable for cutting back on its bond purchases and the money policy would remain accommodative in the near term. Meanwhile, the minutes of the Bank of Japan’s meeting held on June 10 and 11 showed that board members reiterated their determination to end the 15 year deflation. On the macro front, the leading economic index in Japan rose to a reading of 110.7 in May, while the coincident economic index stood at 106.0 in May. Meanwhile, all industry activity index rose 1.1% (MoM) in May, compared to a 1.2% rise expected by markets. The pair traded at a high of 100.88 and a low of 98.89. The pair is expected to find its first support at 99.11, with the next support expected at 98.00. The first resistance is at 101.11, and the next at 101.99.

The pair is expected to trade on the cues from the release of corporate service price index and merchandise trade balance data in Japan.

USD CHF
USD traded 0.57% lower against the CHF and closed at 0.9413 in the last week. In Switzerland, the ZEW economic expectations index rose to a reading of 4.8 in July from a reading of 2.2 in June. Additionally, trade surplus expanded to CHF2.73 billion in June, from CHF2.2 billion in May. Market had expected a surplus of CHF2.41 billion. The Swiss National Bank President, Thomas Jordan, stated that he has no intention to change or scrap the Franc ceiling of 1.20 versus the Euro. During the period, the pair traded at a high of 0.9535 and a low of 0.9358.

The first support is at 0.9336, and the next at 0.9258. Resistance exists first at 0.9513, and then at 0.9612.

USD CAD
Last week, the USD traded 0.22% lower against the CAD and closed at 1.0368. The Loonie witnessed losses earlier in the week, following comments by the Bank of Canada Governor, Stephen Poloz, that there is significant slack in the Canadian economy and that the inflation outlook remains muted. He also indicated that the considerable monetary policy stimulus currently in place would be appropriate. However, the Loonie closed higher for the week amid a broad weakness in the US dollar. Data released on Friday showed that the consumer price index (CPI) rose 1.2% (YoY) in June, in line with market expectation and following a 0.7% increase in May. USDCAD traded at a high of 1.0444 and a low of 1.0354 in the previous week. The first support is at 1.0333, with the next at 1.0299. The first resistance is at 1.0423, while the next is at 1.0479.

In Canadian economic release this week is retail sales data for month of May.

AUD USD
AUD traded 1.50% higher against the USD last week, and closed at 0.9195, as the minutes of the RBA July 2 meeting revealed that policymakers opined that the current monetary policy stance was appropriate for the time being. The Aussie rose further, after the People’s Bank of China on Friday announced the removal of the floor on lending rates offered by financial institutions to boost economic growth. During the week, the pair traded at a high of 0.9294 and a low of 0.9035. The first support is at 0.9055, and the next at 0.8916. The first resistance is at 0.9314, and the next at 0.9434.

With light Australian calendar this week, the domestic consumer price index data would be keenly tapped by the market participants.

Gold
In the prior week, Gold traded 0.81% higher against the USD and closed at USD1296.10, after the Fed Chairman, Ben Bernanke, concluded his two day testimony indicating that the Fed did not have a fixed plan for the reduction in asset purchase program and that it would be totally dependent upon economic conditions. He further reiterated to keep ultra loose monetary policy in place for time being. News emerged on Friday that Gold jewellery exports from India tumbled 70% in June, given the import restrictions on gold used for jewellery exports. The yellow metal traded at a high of 1300.88 and a low of 1270.44 in the previous week.

Gold is expected to find support at 1277.40 and the next at 1258.70. The first resistance is at 1307.84, while the next is at 1319.58.

Crude Oil
Oil prices traded 1.98% higher against the USD in the last week and closed at USD108.05, amid remarks by the Fed chief and upbeat jobless claims from the US. Further supporting oil prices was a weekly report by the American Petroleum Institute (API) which indicated that crude stock piles in the US fell 2.6 million barrels for week ended July 12. Meanwhile, in its monthly report, the API indicated that production in the US jumped 15.0% to 7.22 million barrels a day in June, the highest June output since 1991. Moreover, the Energy Information Administration reported that oil inventories dropped 6.90 million barrels to 367.0 million barrels, for week ended July 12. Oil traded at a high of 109.32 and a low of 104.65 in the previous week.

Oil has its first major support at 105.36, while the next support exists at 102.67. The first resistance is at 110.03, and the next at 112.01.

Week of July 15th, 2013

Weekly Forex Update
The dollar recorded a weekly drop against most of its peers, after minutes of the Federal Open Markets Committee’s (FOMC) latest meeting showed that many policy makers wanted to see more evidences of employment picking up before they would support slowing bond purchases. Also, the Federal Reserve Chairman, Ben Bernanke, stated that the stimulus measures would be kept in place for the foreseeable future.
Macro-economic data from the US showed that the initial jobless claims unexpectedly increased in the week ended July6, while the Reuters/Michigan consumer sentiment index showed a drop in July.
The EURUSD pair closed higher last week, as the US dollar was hit on back of dovish comments by the Federal Reserve Chairman, Ben Bernanke. The common currency started the week on a positive note on news of an agreement on Greece’s bailout by the European finance ministers. However, gains were limited after S&P Ratings Services cut Italy’s sovereign rating and after the European Central Bank (ECB) Executive board member, Jorg Asmussen, echoed remarks by the ECB President, Mario Draghi, last week, to keep interest rates low for the foreseeable future.
On Friday, the Fitch Ratings Agency downgraded French credit rating to “AA+” from “AAA”, over concerns about lack of growth and debt pileup. Additionally, the Standard & Poor’s rating agency affirmed the “AAA” credit rating for Germany, stating that the economy could withstand any shocks from the Euro-zone crisis.
Sentiment towards the Sterling remained downbeat broadly last week, though it ended higher against the dollar, as disappointing figures for manufacturing and industrial output and the trade balance from the UK dented hopes that the economic recovery was gathering momentum. The Bank of England policy meeting minutes to be released on July 17 would serve as catalyst for further movement in the Pound.
The Yen ticked up against the greenback, after the Bank of Japan (BoJ) upgraded its assessment of the Japanese economy for the seventh consecutive month, stating that the economy has started to recover moderately and signaled that no additional easing steps are on the cards in the near term.
The greenback also lost against the commodity sensitive currencies such as the Loonie, and the NZD, as well as against commodities such as Gold and Oil, following release of the FOMC minutes. The Aussie, however reversed its gains and ended flat against the greenback following dovish comments on growth by the Chinese Finance Minister, Lou Jiwei. The official media later corrected the growth figures from a growth of 7% to a growth of 7.5%.
This week interest rate decisions from the Bank of Canada and minutes of latest policy meeting from the Bank of Japan, the Reserve Bank of Australia and the Bank of England would be keenly awaited.

EUR USD
Last week, the EUR traded 1.79% higher against the USD and closed at 1.3061. The greenback came under a sell-off, after the Fed Chairman, Ben Bernanke, stated that monetary policy would remain accommodative in the foreseeable future. The Euro received a positive start to the week, after the Euro-zone finance ministers approved €3.0 billion as aid package to Greece in two tranches, even as it imposed strict conditions to restructure the economy. The gains were however trimmed, after the S&P lowered Italy’s sovereign credit rating to “BBB” from “BBB-plus”. Further weighing on the Euro, were comments by the ECB Executive board member, Jorg Asmussen, that the central bank may keep interest rates low beyond 12 months. Economic data showed that trade and current account surplus in Germany contracted in May. Annual consumer prices in Germany, France and Italy rose at higher pace in June. During the week, the pair traded at a high of 1.3207 and a low of 1.2754. The pair is expected to find its first support at 1.2808, with the next support expected at 1.2554. The first resistance is at 1.3261, and the next at 1.3460.

Economic data to be released in Europe includes consumer price, economic sentiment index in the Euro-zone, current and economic situation index and import price index in Germany.

GBP USD
In the last week, GBP traded 1.36% higher against the USD and closed at 1.5104. The US Dollar declined last week, following comments by the Federal Reserve Chairman, Ben Bernanke, that the American economy still needed stimulus. Earlier in the week, the Pound witnessed losses after economic data showed that annual industrial production fell 2.3% in May, compared to a 1.5% drop expected by markets. Manufacturing production fell 2.9% (YoY) in May, compared to a 1.6% drop forecasted by analysts. Additionally, goods trade deficit rose to £8.5 billion in May, compared to £8.4 billion in April. However, dollar weakness led the Pound higher. The pair traded at a high of 1.5223 and a low of 1.4813 in the previous week. GBPUSD is expected to find its first support at 1.4870, with the next at 1.4637. Resistance exists first at 1.5280, and then at 1.5457.

The BoE minutes would be major event in the UK this week, followed by release of producer and consumer prices, employment data and retail sales from the UK.

USD JPY
The USD traded 1.78% lower against the JPY over the past week, closing at 99.38, after the FOMC minutes released on Wednesday showed that the US central bank would continue to pursue an accommodative monetary policy in near term. The Yen found support, after the BoJ upgraded its view of the economy and left monetary policy unchanged. Data released from Japan showed that preliminary machine tool orders dropped 12.4% in June, while the tertiary industry rose 1.2% (MoM) in May, compared to a 0.5% drop in the previous month. Domestic corporate goods price index rose 0.1% (MoM) in June, while consumer confidence index eased to 44.3 in June from 45.7 in May. The pair traded at a high of 101.54 and a low of 98.24. The pair is expected to find its first support at 97.90, with the next support expected at 96.43. The first resistance is at 101.20, and the next at 103.01.

Market spotlight this week would be on the BoJ minutes as well as trade balance data from Japan.

USD CHF
USD traded 1.76% lower against the CHF and closed at 0.9467 in the last week. In Switzerland, industrial production advanced 3.0% (QoQ) in the first quarter of 2013, in comparison to a 1.7% rise in the previous quarter. Seasonally adjusted unemployment rate remained stable at 3.2% in June from the previous month. Meanwhile, annual retail sales advanced 1.8% in May, against the expected 1.9% rise and slower than the revised 3.1% rise reported in the previous month. During the period, the pair traded at a high of 0.9752 and a low of 0.9405. The first support is at 0.9331, and the next at 0.9194. Resistance exists first at 0.9678, and then at 0.9888.

With economic calendar in Switzerland light this week, ZEW expectations index would be the only key release.

USD CAD
Last week, the USD traded 1.78% lower against the CAD and closed at 1.0391, following the Fed Chairman Ben Bernanke’s statement that the US economy still requires monetary stimulus to bolster economic growth. On the data front, building permits in Canada surged 4.5% (MoM) in May to C$7.3 billion. Market had expected building permits to drop 5.0% in May. The Bank of Canada’s (BoC) business outlook survey index declined to a reading of 9.0 in the second quarter of 2013, from a reading of 24.0 in the previous quarter. Housing starts in Canada dropped less than expected in June, while the New housing price index rose less than expected in May. USDCAD traded at a high of 1.0587 and a low of 1.0324 in the previous week. The first support is at 1.0281, with the next at 1.0171. The first resistance is at 1.0544, while the next is at 1.0697.

Canadian economic reports this week include the BoC interest rate decision, consumer price index and manufacturing shipments data.

AUD USD
AUD traded a marginal 0.08% lower against the USD last week, and closed at 0.9059, after the Chinese Finance Minister, Lou Jiwei, stated that China’s economy is expected to grow at 7.0% in 2013, lower than the government’s official forecast rate at 7.5%. However, the Chinese Finance Ministry later corrected the figure to 7.5%. Initially in the week, the AUD traded higher, amid inspiring jobs data from Australia. Australian economy added 10,300 jobs in June, compared to expectations for a 2,500 decline, and following a 700 fall the previous month. In China, annual consumer prices index rose 2.7% in June, compared to 2.1% rise in May. Additionally, trade surplus widened to $27.1 billion in June, from a revised surplus of $20.4 billion in May. During the week, the pair traded at a high of 0.9307 and a low of 0.8998. The first support is at 0.8936, and the next at 0.8812. The first resistance is at 0.9245, and the next at 0.9430.

The RBA meeting minutes to be released this week would form a key catalyst for the movements in Aussie, along with Westpac leading index and the business confidence index.

Gold
In the prior week, Gold traded 5.11% higher against the USD and closed at USD1285.70, on weakness in the greenback, following dovish comments by the Federal Reserve Chairman, Ben Bernanke that the Fed’s ultra-loose monetary policy will stay in place for now. The yellow metal traded at a high of 1298.72 and a low of 1215.89 in the previous week.

Gold is expected to find support at 1234.82 and the next at 1183.94. The first resistance is at 1317.65, while the next is at 1349.60.

Crude Oil
Oil prices traded 2.64% higher against the USD in the last week and closed at USD105.95, as an assurance on its monetary stimulus support by the Federal Reserve lifted hopes for higher energy demand. Additionally reports showing drop in oil inventories further supported oil prices. The American Petroleum Institute (API) reported that crude oil inventories dropped by 9 million barrels in the week ending July5, above market expectations for a decline of 3.8 million barrels. The Energy Information Administration (EIA) reported that crude stock piles in the US dropped by 9.87 million barrels in the week ended July5. However, gains were curtailed, after the International Energy Agency (IEA) projected increased supply from sources outside the Organization of Petroleum Exporting Countries (OPEC). Oil traded at a high of 107.45 and a low of 102.13 in the previous week.

Oil has its first major support at 102.90, while the next support exists at 99.86. The first resistance is at 108.22, and the next at 110.50.

Week of July 8th, 2013

Weekly Forex Update
Last week, the greenback closed higher against most of the major currencies, following continued fears of tapering of bond purchases by the US Fed, which were reinforced by the encouraging US jobs data on Friday.
The US economy added 195,000 jobs in June, compared to market expectations at 160,000 job additions. The unemployment rate stood at 7.6%, in comparison to expectations to move down to 7.5%. Meanwhile, trade deficit in the US widened further in May, while MBA mortgage applications dropped for week ended June28.
The Federal Reserve Chairman, Ben Bernanke’s, speech this week would be closely watched by traders for clues on the tapering of bond buying, following the latest better-than-expected US employment reports.
The Euro traded lower against the greenback, following the European Central Bank (ECB) President, Mario Draghi’s, indication of keeping interest rates low for an extended period. Further weighing on the common currency was the political stalemate in Portugal.
Over the weekend, the EU and Greek officials stated that Greece would reach a deal with its international creditors on its latest bailout review before a meeting of Euro-zone finance ministers today to decide on further aid.
The Pound reversed gains witnessed earlier in the week, after the Bank of England (BoE) maintained its benchmark interest rates and kept its quantitative-easing target at £375 billion. In the statement following the rate decision under the leadership of new Governor, Mark Carney, the BoE signaled that it would keep interest rates at a record low in the near term.
Asian currencies were also hit last week as upbeat US jobs data and signs Chinese growth is slowing, bolstered case of funds following out of Asia.
The Aussie lost grounds against the greenback, after the Reserve Bank of Australia (RBA) maintained its interest rates at 2.75%, and kept doors open for further rate cuts. The RBA added that although the Aussie has depreciated significantly in the past few months, it remains high and a lower level would help provide a rebalancing of economic growth.
Economic data from China was dovish, while trade surplus in Australia contracting in May and retail sales rose less-than-expected. In China, manufacturing and services sector activities were lackluster in June, leading to fears that the world’s second-largest economy is losing momentum.

EUR USD
Last week, the EUR traded 1.44% lower against the USD and closed at 1.2831, as the ECB President, Mario Draghi, underlined once again that the central bank’s policy stance would remain accommodative as long as needed to spur economic growth. The ECB kept its key interest rate at record low 0.50% for the second consecutive month. The Euro came under pressure earlier in the week, on back of mounting political tensions in Portugal, following resignation of the country’s foreign minister and finance ministers in protest over government austerity policies. Separately, Standard & Poor’s and Fitch both upgraded Cyprus credit rating, while S&P revised Portugal’s sovereign credit outlook downward to ‘Negative’ from ‘Stable’. On the data front, the Euro-zone economy contracted more than initially expected in the first quarter of 2013. Additionally, services PMI in Euro-zone, Germany and Italy rose lower than the preliminary reading in June. During the week, the pair traded at a high of 1.3079 and a low of 1.2806. The pair is expected to find its first support at 1.2732, with the next support expected at 1.2632. The first resistance is at 1.3005, and the next at 1.3178.

With a series of European economic releases today, including industrial production, investor confidence from the Euro-zone and trade and current account data from Germany, trading in the pair is expected to be influenced by the resulting cues from these releases.

GBP USD
In the last week, GBP traded 2.06% lower against the USD and closed at 1.4901, after the BoE Monetary Policy Committee maintained the size of stimulus unchanged at £375 billion and kept interest rate unchanged at 0.50%. The BoE further stated that it has not intentions to raise interest rates in the near term. The Pound witnessed gains initially in the week, after both the manufacturing sector and the services activity rose to their highest level in more than two years in June. Additionally, Halifax house prices increased for the fifth consecutive month in June. The British Chambers of Commerce, on Tuesday, stated that the UK economic recovery is gaining strength, but warned that there are still some risks both in the country as well as abroad that could derail the economic recovery. The pair traded at a high of 1.5306 and a low of 1.4858 in the previous week. GBPUSD is expected to find its first support at 1.4737, with the next at 1.4574. Resistance exists first at 1.5185, and then at 1.5470.

Data slated for release this week includes trade balance, industrial production and leading economic index from the UK.

USD JPY
The USD traded 2.03% higher against the JPY over the past week, closing at 101.18. The Bank of Japan (BoJ) Governor, Haruhiko Kuroda, stressed that the central bank’s aggressive monetary stimulus is working. He further stated that Japanese economic recovery is on track with signs that inflation expectations are picking up. In economic news, the leading index in Japan rose to a reading of 110.5 in May from an upwardly revised reading of 107.7 in April. The coincident index moved up to a reading of 105.9 in May from a revised reading of 105.1 in April. Meanwhile, the annual labor cash earnings growth remained flat in May and monetary base expanded less than market anticipations in June. The pair traded at a high of 101.20 and a low of 99.18. The pair is expected to find its first support at 99.84, with the next support expected at 98.49. The first resistance is at 101.86, and the next at 102.54.

Market participants are eyeing the BoJ interest rate decision later this week, along with other important economic releases from Japan such as trade balance, industrial production and machinery orders.

USD CHF
USD traded 2.12% higher against the CHF and closed at 0.9637 in the last week. In Switzerland, SVME PMI recorded growth for the third month in a row in June, but at a slower than market expectation. Additionally, the consumer price index fell 0.1% (YoY) in June compared with forecast for a 0.4% decline and following a 0.5% drop in May. During the period, the pair traded at a high of 0.9663 and a low of 0.9436. The first support is at 0.9494, and the next at 0.9352. Resistance exists first at 0.9721, and then at 0.9806.

This week, Switzerland is set to release data on unemployment rate, industrial production and retail sales.

USD CAD
Last week, the USD traded 0.73% higher against the CAD and closed at 1.0579, as positive US jobs figures released on Friday reinforced the view that the US economic recovery is gaining momentum and that the Fed would begin tapering bond buying in the near term. In Canada, trade deficit narrowed to $303 million from a previously reported deficit of $951 million in April. Ivey seasonally adjusted purchasing managers’ index fell more-than-expected in June. Employment figures indicated that the Canadian economy lost 400 jobs in June, less than the expected 3,000 decline, after a 95,000 increase the previous month. The unemployment rate remained unchanged at 7.1% in June. USDCAD traded at a high of 1.0611 and a low of 1.0472 in the previous week. The first support is at 1.0497, with the next at 1.0415. The first resistance is at 1.0636, while the next is at 1.0693.

Housing data and building permits reports would be released in Canada this week.

AUD USD
AUD traded 1.00% lower against the USD last week, and closed at 0.9066. The RBA decided to keep its key overnight cash rate unchanged at 2.75%, while the RBA Governor, Glenn Stevens, stated that the Aussie remains at a high level and a further depreciation would help to foster economic growth. Economic data in Australia showed that trade surplus narrowed in May, while retail sales rose less-than-expected in the same month. In China, the HSBC services sector PMI rose in June, while the official non-manufacturing PMI showed a drop in June. During the week, the pair traded at a high of 0.9255 and a low of 0.9036. The first support is at 0.8983, and the next at 0.8900. The first resistance is at 0.9202, and the next at 0.9338.

Australian Dollar movements this week would be influenced by National Australia Bank’s business conditions data out from Australia and gross domestic product from China, Australia’s largest trading partner.

Gold
In the prior week, Gold traded 0.92% lower against the USD and closed at USD1223.20, as the greenback strengthened, following inspiring jobs data from the US which raised speculation that the Fed would start tapering its stimulus measures. Last week, a leading broker downgraded its gold price forecast to $1,393 per ounce in 2013, from $1,483 forecasted earlier. The yellow metal traded at a high of 1267.68 and a low of 1208.58 in the previous week.

Gold is expected to find support at 1198.63 and the next at 1174.05. The first resistance is at 1257.73, while the next is at 1292.25.

Crude Oil
Oil prices traded 6.90% higher against the USD in the last week and closed at USD103.22, after a drop in crude inventories and following political tensions in the Middle East. Oil prices received a boost as protests in Egypt fanned concerns about supply disruptions in the Middle East. Additionally, better-than-expected US employment data also contributed to oil’s rally, raising the prospects for oil demand. The American Petroleum Institute reported that US crude stock piles fell by 9.0 million barrels in the week ended June28. Additionally, the Energy Information Administration reported that crude oil inventories fell 10.30 million barrels for the week ended June28. Oil traded at a high of 103.64 and a low of 96.07 in the previous week.

Oil has its first major support at 98.31, while the next support exists at 93.41. The first resistance is at 105.88, and the next at 108.55.

Week of July 1st, 2013

Weekly Forex Update
Last week, the greenback closed higher against most of the major currencies, as uncertainty over tapering the Federal Reserve’s stimulus program continued to sour investor sentiment. The US policy makers, including the President of the Richmond Fed, Jeffrey Lacker, sought to ease concerns that the US central bank is moving towards ending quantitative easing soon. Meanwhile, Fitch Ratings on Friday affirmed the US “AAA” rating, but held the ‘Negative‘outlook for the country, citing high debt levels.
Data released last week showed that the US annualized gross domestic product (GDP) expanded at less than market expectations in the first quarter of this year. Additionally, initial and continuing jobless claims fell less-than-expected for week ended June 22 and June 15 respectively, while the Reuters/Michigan consumer sentiment index recorded a better than expected reading.
Meanwhile, the Euro-zone common currency ended the first six months of 2013 lower against the dollar. Euro came under pressure last week following comments by the European Central Bank (ECB) Chief, Mario Draghi that the central bank would continue with its accommodative monetary policy in the near term. At end of the week, the European leaders struck an agreement on handling youth unemployment and promoting investment for small and medium-sized enterprises.
The Pound slid against the greenback, as economic reports showed that the UK economy expanded less than market expectations in the first quarter of 2013. Additionally, comments by the Bank of England (BoE) Governor, Mervyn King, that the economy was weak reinforced bets that the central bank would keep monetary policy loose. Earlier in the week, the BoE policy maker, David Miles, stated that the economy remained weak and renewed his call for more asset purchases.
The BoE policy meeting later this week on Thursday, the first in the post-Mervyn King era, would be closely watched with former Bank of Canada Governor, Mark Carney, taking over the reins.
Commodity sensitive currencies such as the Canadian Dollar and the Aussie also declined against the greenback. Demand for the commodity currencies was undermined due to worries over the credit crunch in China. However, the drop was limited as the worries faded after the People’s Bank of China (PBOC) stated that liquidity in the Chinese financial system is reasonably good and the recent risks are manageable.

EUR USD
Last week, the EUR traded 0.91% lower against the USD and closed at 1.3019, amid comments by the ECB President, Mario Draghi, that the central bank’s policy would remain accommodative in the near term and the bank has no intention to alter interest rates for the time being. Additionally, the ECB board member, Benoit Coeure, ruled out any possible rise in rates any time soon. Losses were trimmed after the European Union Finance Ministers on Wednesday finalized a deal on bank resolution stating that it would bolster investor confidence and help overcome the Euro-area financial crisis. On the data front, consumer and industrial confidence indices in the Euro-zone showed upbeat readings in June, while services sentiment showed disappointing figures in June. Additionally, retail sales in Germany rose more-than-expected month-on-month in May. During the week, the pair traded at a high of 1.3152 and a low of 1.2984. The pair is expected to find its first support at 1.2951, with the next support expected at 1.2884. The first resistance is at 1.3119, and the next at 1.3220.

A key economic event this week would be the ECB interest rate decision. Other important economic events include Euro-zone manufacturing and services purchasing managers indices (PMI), Euro-zone producer prices and German factory orders data.

GBP USD
In the last week, GBP traded 1.39% lower against the USD and closed at 1.5214, after the UK GDP rose less than market forecasts. GDP in the UK rose 0.3% (YoY) in the first quarter of 2013, compared to a 0.6% rise forecasted by markets. Additionally, current account deficit in the UK widened to £14.51 billion in the first quarter of 2013, while total business investment fell 16.5% (YoY) in the first quarter of 2013, following a 0.7% increase in the previous quarter. Additionally, the Chancellor of the Exchequer, George Osborne, announced new round of spending-cuts with plans to raise £11.5 billion in savings from government budgets. The pair traded at a high of 1.5479 and a low of 1.5164 in the previous week. GBPUSD is expected to find its first support at 1.5092, with the next at 1.4971. Resistance exists first at 1.5407, and then at 1.5601.

Hogging the spotlight this week would be the BoE interest rate decision, Halifax house prices and Markit manufacturing and services PMI’s.

USD JPY
The USD traded 1.42% higher against the JPY over the past week, closing at 99.17, amid speculation that the Federal Reserve would start tapering its bond buying program from September. Economic reports from Japan showed that National consumer price index fell 0.3% annually in May, while the unemployment rate remained steady at 4.1% in May. Industrial production rose 2.0% (MoM) in May, in comparison to 0.2% rise anticipated by analysts. Additionally, annualized housing starts growth was better-than-expected in May. The pair traded at a high of 99.50 and a low of 96.96. The pair is expected to find its first support at 97.59, with the next support expected at 96.01. The first resistance is at 100.12, and the next at 101.08.

Economic events scheduled this week include leading and coincident indices, labor cash earnings and monetary base in Japan.

USD CHF
USD traded 1.03% higher against the CHF and closed at 0.9437 in the last week. The Swiss National Bank (SNB) Governing board member, Fritz Zurbruegg, stated that the currency floor of CHF1.20 per Euro is necessary, amid continued uncertainty in the region. In Switzerland, the USB consumption indicator rose to a reading of 1.46 in May from a downwardly revised reading of 1.43 in April. Additionally, the KOF leading index rose to a reading of 1.16 in June from a downwardly revised reading of 1.09 in May. During the period, the pair traded at a high of 0.9489 and a low of 0.9312. The first support is at 0.9336, and the next at 0.9236. Resistance exists first at 0.9513, and then at 0.9590.

Trading trends in the pair are expected to be determined by release of consumer price index and SVME purchasing managers’ index in Switzerland.

USD CAD
Last week, the USD traded 0.43% higher against the CAD and closed at 1.0502, amid a broad strength in the dollar. In economic releases, Canadian GDP rose 0.1% (MoM) in April, in line with market expectations and compared to a 0.2% rise in the previous month. Industrial product price index remained flat in May, compared to a 0.1% rise expected by markets. Additionally, raw material price index rose 0.2% in May, in comparison to a 0.6% rise expected by markets. USDCAD traded at a high of 1.0558 and a low of 1.0421 in the previous week. The first support is at 1.0429, with the next at 1.0357. The first resistance is at 1.0566, while the next is at 1.0631.

The pair is expected to trade on the cues from the release of employment data, trade balance and Ivey PMI in Canada.

AUD USD
AUD traded 0.96% lower against the USD last week, and closed at 0.9158, on concerns over credit crunch in China. However, these concerns were soothed, after the People’s Bank of China downplayed those fears stating that it had helped some banks and showed readiness to act again to ease credit conditions. The losses were also capped, following results of the Australian elections in which former Prime Minister, Kevin Rudd was re-elected after his predecessor, Julia Gillard was ousted. During the week, the pair traded at a high of 0.9347 and a low of 0.9112. The first support is at 0.9064, and the next at 0.8971. The first resistance is at 0.9299, and the next at 0.9441.

Amidst a flurry of economic releases in Australia, the RBA interest rate decision would remain in focus for this week.

Gold
In the prior week, Gold traded 4.77% lower against the USD and closed at USD1234.57, as the greenback strengthened, following lingering uncertainty on when Federal Reserve would begin tapering its monetary stimulus program. Gold also came under pressure, after a leading broker cut its 2013 economic growth forecasts for China, world’s second largest consumer of gold. Separately, the Reserve Bank of India (RBI) on Thursday, further tightened gold import norms by ruling out any credit transactions for imports unless they were intended to make jewellery for export. The yellow metal traded at a high of 1301.78 and a low of 1180.50 in the previous week.

Gold is expected to find support at 1176.12 and the next at 1117.67. The first resistance is at 1297.40, while the next is at 1360.23.

Crude Oil
Oil prices traded 2.80% higher against the USD in the last week and closed at USD96.56. Oil prices advanced, after three pipelines in Alberta, Canada’s main oil producing province, were shut due to flood, thus threatening exports to the United States. Oil prices found added support as concerns over Chinese credit crunch eased later in the week, thus raising demand prospects. Separately, the American Petroleum Institute (API) reported that crude stock piles slid 28,000 barrels to 392 million for the week ended June21. Meanwhile, the Energy Information Administration (EIA) reported that crude stock piles rose 18,000 barrels to 394.1 million barrels for the week ended June21. Oil traded at a high of 97.82 and a low of 92.67 in the previous week.

Oil has its first major support at 93.55, while the next support exists at 90.53. The first resistance is at 98.70, and the next at 100.83.

Week of June 24th, 2013

Weekly Forex Update
The greenback advanced against the basket of the world’s major currencies, including the EUR, GBP and the JPY, after the Federal Reserve considered toning down the pace of bond purchases over the coming months. The Federal Reserve also upgraded its outlook for unemployment and economic growth for the US, stating that downside risks to the outlook had diminished.
Economic data from the US was mixed, with housing starts and building permits recording readings below expectations in May. Mortgage applications dropped for the week ended June14, while initial jobless claims rose. Meanwhile, annual consumer prices rose less than forecast in May, while the Philadelphia Federal manufacturing index surged unexpectedly for June.
The Euro was pulled down by the strength in the greenback following cues from the US Fed, and amid uninspiring manufacturing purchasing managers’ index (PMI) data from Germany, even as the broad reading for the Euro-zone composite PMI recorded a 15 month high.
The common currency dipped further at end of the week, after reports released on Friday showed that Greece’s Democratic Left party quit the coalition government over the closure of national broadcaster ERT, thus plunging the nation into fresh turmoil.
Meanwhile, a separate report released on Friday showed that the European Union finance ministers failed to reach an agreement on how to share the cost of bank collapses, as Germany and France disagreed on rules to face future crises. Though ministers agreed that savers with less than €100,000 on deposits should be protected, disagreements continued on deposits above that amount.
Initially in the week, the European Central Bank (ECB) President, Mario Draghi, stated that the central bank would not hesitate to use interest rates and non-standard measures to boost the region’s economic growth.
The GBP came under pressure, after the minutes of the Bank of England’s (BoE) latest meeting showed that the nine-member monetary policy committee voted 6-3 kept its target for asset purchases at £375 billion in June. Among the three members voting in favor of raising the size of the buying program by £25 billion was the outgoing Governor, Mervyn King. All of the members also voted not change the 0.50% interest rate.
Asian currencies such as the Malaysian Ringgit and the Indian Rupee crumbled as the Federal’s announcement of tapering bond buying and fresh evidences of a slowdown in China, fanned speculation of capital moving out of Asia’s emerging economies.
The possibility of curtailment of the bond buying program of the US Federal Reserve also sent other riskier currencies namely the Loonie and the Aussie lower against the greenback. The Loonie was also pressurized, amid tepid Canadian economic data released on Friday. The Aussie also fell as the Reserve Bank of Australia’s (RBA) minutes showed the central bank’s readiness to lower interest rates if required.

EUR USD
Last week, the EUR traded 1.51% lower against the USD and closed at 1.3139, amid the broad strength in the greenback following guidance by the US Federal Reserve that the bond buying program might be curtailed in the near future. PMI readings in Europe were broadly ahead of market expectations, even as the manufacturing PMI for Germany disappointed. Additionally, producer prices in Germany dropped further in May, following a drop in April. The Euro fell further on Friday, after news emerged that Greece’s Democratic Left party pulled out of ruling coalition as talks to resume state television broadcasts collapsed. The International Monetary Fund (IMF) warned on Wednesday that Spain faces prospects of high unemployment and sluggish economic growth lasting years and thus Spain and Europe should take immediate steps to generate growth and jobs to reduce the nation’s crippling 27.0% unemployment rate. During the week, the pair traded at a high of 1.3418 and a low of 1.3098. The pair is expected to find its first support at 1.3019, with the next support expected at 1.2898. The first resistance is at 1.3339, and the next at 1.3538.

In the European market, spotlight would be on the European Council meeting outcome. Other important economic indicators to watch include consumer prices, IFO economic indicators and unemployment data from Germany.

GBP USD
In the last week, GBP traded 1.75% lower against the USD and closed at 1.5428, following cues from the US Federal Reserve that it could soon curtail its bond buying program. Additionally, the BoE minutes of meeting held in June showed that policymakers voted 6-3 for holding monetary policy unchanged, with the outgoing BoE Governor and two other policymakers voting for additional purchases of GBP 25 billion. Also, the nine policymakers voted unanimously to keep interest rates unchanged at 0.50%. The Pound had traded higher earlier in the week, amid a batch of positive economic data from the UK. Annual Rightmove house price index growth ticked up further in June. Additionally, consumer and retail prices growth surged further in May. The pair traded at a high of 1.5752 and a low of 1.5367 in the previous week. GBPUSD is expected to find its first support at 1.5279, with the next at 1.5131. Resistance exists first at 1.5664, and then at 1.5901.

Data slated this week from the UK includes gross domestic product, index of services and BBA mortgage approvals.

USD JPY
The USD traded 3.71% higher against the JPY over the past week, closing at 97.78, after the Federal Reserve indicated that the central bank could begin to reduce the size of monetary stimulus later this year. The Bank of Japan Governor, Haruhiko Kuroda, stated that financial markets would stabilize over time although unstable currently. He added that Japanese economy is recovering on pick up in exports due to a weaker Yen. Monetary policy would be adjusted as needed, while monitoring both upside and downside risks to economy and price stability. In economic news in Japan, tertiary industry index remained unchanged in April, compared to a 0.2% drop in March. Meanwhile, trade deficit widened to ¥993.92 billion in May, while industrial production rose less-than-expected in April. The pair traded at a high of 98.34 and a low of 94.24. The pair is expected to find its first support at 95.24, with the next support expected at 92.69. The first resistance is at 99.33, and the next at 100.88.

The pair is expected to trade on cues from the release of industrial production, retail trade and housing starts data from Japan.

USD CHF
USD traded 1.27% higher against the CHF and closed at 0.9341 in the last week. The Swiss National Bank (SNB) kept the target range for the three-month Libor unchanged at 0.0-0.25%. The central bank further stated that it would retain the currency ceiling at CHF1.2 per Euro, as risks to the economy from external developments remains high. In Switzerland, ZEW survey economic expectations index remained unchanged at a reading of 2.2 in June. Meanwhile, merchandise trade surplus increased to CHF2.22 billion in May, from CHF1.7 billion in the previous month. During the period, the pair traded at a high of 0.9369 and a low of 0.9174. The first support is at 0.9220, and the next at 0.9100. Resistance exists first at 0.9415, and then at 0.9490.

This week’s Swiss economic calendar includes releases such as UBS consumption indicator and the KOF leading indicator.

USD CAD
Last week, the USD traded 2.80% higher against the CAD and closed at 1.0457, after the Federal Reserve Chairman, Ben Bernanke, announced that the central bank would start trimming stimulus by end of 2013. CAD declined further after economic data released at end of the week showed that consumer price index in Canada rose at slower pace than market expectations in May. It was followed by less-than-expected growth in retail sales. The Bank of Canada (BoC) Governor, Stephen Poloz, stated that capacity needs to be rebuilt and business confidence has to be strengthened to drive Canadian economic growth in coming years. USDCAD traded at a high of 1.0490 and a low of 1.0146 in the previous week. The first support is at 1.0239, with the next at 1.0020. The first resistance is at 1.0583, while the next is at 1.0708.

There is relatively light data flow in Canada this week, with the release of country’s gross domestic product being the major economic event.

AUD USD
AUD traded 3.68% lower against the USD last week, and closed at 0.9247, after the RBA June 4 meeting minutes showed that central bank could still allow for additional monetary easing if required. The Aussie fell further after the manufacturing PMI in China, Australia’s largest trading partner, contracted in June. Additionally, announcement by the Federal Reserve to scale back asset purchases further weighed on riskier currencies. On the economic front, the Conference Board (CB) leading index in Australia rose 0.3% in April, while the Westpac leading indicator rose 0.6% (MoM) in April, compared to a 0.1% rise in March. During the week, the pair traded at a high of 0.9643 and a low of 0.9162.

The first support is at 0.9058, and the next at 0.8870. The first resistance is at 0.9539, and the next at 0.9832.

Gold
In the prior week, Gold traded 6.78% lower against the USD and closed at USD1296.40, as the greenback strengthened, amid the US Federal Reserve’s announcement of tapering bond buying by end of this year and end it by 2014. On Friday, a well-known broker lowered its one-month gold prices forecast by 12.3% to $1,250 an ounce. The yellow metal traded at a high of 1392.11 and a low of 1269.45 in the previous week.

Gold is expected to find support at 1246.53 and the next at 1196.66. The first resistance is at 1369.19, while the next is at 1441.98.

Crude Oil
Oil prices traded 3.94% lower against the USD in the last week and closed at USD93.93. Oil prices traded strong earlier in the week, amid lingering supply concerns stemming from the geopolitical tensions in Syria. Further supporting oil prices were reports showing fall in oil stockpiles. However, oil prices turned sharply lower after the Federal Reserve hinted to pull back the $85 billion bond purchase program. Worries of deepening slowdown in China, the world’s second largest oil consumer, also affected prices adversely. The American Petroleum Institute (API) reported that that US crude oil supplies dropped 4.3 million barrels for the week ended June 14. Meanwhile, the Energy Information Administration reported that the crude stock piles increased by 313,000 barrels for week ended June 14. Oil traded at a high of 99.01 and a low of 93.12 in the previous week.

Oil has its first major support at 91.70, while the next support exists at 89.46. The first resistance is at 97.59, and the next at 101.24.

Week of June 17th, 2013

Weekly Forex Update
The greenback lost ground against the basket of key currencies for the week ending June 14, following mixed economic data and amid uncertainty over the Federal Reserve’s stance on winding up its asset purchase program at the Federal Open Market Committee (FOMC) meeting scheduled this week. Adding to selling pressure was a report from the IMF, cutting its US growth forecast to 2.7% for 2014. Meanwhile, the World Bank cut its global growth outlook, on expectations of weaker growth in Europe and a recent slowdown in some emerging markets.
Earlier in the week, Standard & Poor’s upgraded its outlook for the US credit rating to “Stable” from “Negative”, thus reducing threat of near term downgrade. However, economic data in the US was mixed during the week. While retail sales picked up in May and initial jobless claims dropped for week ended June 7, producer prices rose more than analysts’ expectations in May, while industrial production was flat for the month.
Despite oscillating between gains and losses during the last week, the Euro finished on a positive note for the fourth straight week amid broad dollar weakness and as economic data showed that inflationary pressures in Germany, France and Euro-zone remained well anchored. Additionally, the European Central Bank, in its monthly report remained cautiously optimistic, as it indicated that despite the prevalent weakness, the Euro region should stabilize and recover in the course of the year, albeit at a subdued pace.
Separately, the two day German constitutional court hearings on the legality of the European Central Bank’s (ECB) Outright Monetary Transactions (OMT) program last week ended with no conclusions, with the court’s decision not expected until after Germany’s election on September 22.
In the UK, house prices rose at their fastest pace in nearly three years in May. Additionally, annual industrial production fell less-than-expected in April, followed by a less-than-expected drop in manufacturing production month-on-month in April.
The Yen found support, after the Bank of Japan (BoJ) made no changes to its aggressive monetary easing policy, maintaining interest rate at 0.1% and the size of asset purchase programme unchanged at ¥60 trillion to ¥70 trillion. The pair found further support, after the Japanese government on Thursday upgraded its assessment on the nation’s economy.
Meanwhile, the BoJ minutes showed that policymakers voted unanimously to keep policy unchanged. The minutes also revealed a policy maker suggesting the central bank to specify a two-year limit for its unprecedented monetary easing to help quell bond-market volatility.
Other risk sensitive currencies such as Aussie, Kiwi and the Loonie ended higher during the last week, amid inspiring data from the respective regions.
The Reserve Bank of New Zealand (RBNZ) last week kept its official cash rate (OCR) unchanged at 2.5% and reassured to hold it steady in 2013.

EUR USD
The Euro managed to hold its previous three weeks of gains to finish 0.88% higher against the USD and closed at 1.3340, as the greenback weakened. On the economic front, consumer price indices in Germany, France and the Euro-zone rose further in May, compared to the previous month. Additionally, industrial production in the Euro-zone rose unexpectedly in April. In its latest monthly report, the European Central Bank (ECB) opined that the central bank’s accommodative policies are expected to boost economic recovery in the Euro-zone. Moreover, Standard & Poor’s affirmed Spain’s credit rating at “BBB-”, citing nation’s strong commitment to implement comprehensive fiscal and structural reforms. During the week, the pair traded at a high of 1.3391 and a low of 1.3176. The pair is expected to find its first support at 1.3214, with the next support expected at 1.3087. The first resistance is at 1.3429 and the next at 1.3517.

Markets are focused on Wednesday’s Federal Reserve policy meeting for indication on when the US central bank may start to unwind its easing policies. Additionally, data on manufacturing and service sector activity in the Euro-zone, Germany and France would be closely watched by traders.

GBP USD
In the last week, GBP traded 0.93% higher against the USD and closed at 1.5703, following the release of positive economic data from Britain. The RICS house price balance in the UK climbed at its fastest level in three years in May. Additionally, the number of people filing for unemployment benefits in the UK fell for the seventh consecutive month in a row in May, while unemployment rate remained steady in April. Additionally, industrial and manufacturing production in the UK fell less-than-expected in April. Meanwhile, NEISR indicated that the UK economy grew an estimated 0.6% in the three months ended May. To add to the positive tone, the OECD indicated that the nation is expected to remain in the growth mode as recovery gathers pace. However, the BoE policymaker, Paul Fisher, warned that the economic risks in the UK remain and that growth could likely remain weak in the near term. The pair traded at a high of 1.5738 and a low of 1.5494 in the previous week. GBPUSD is expected to find its first support at 1.5552, with the next at 1.5401. Resistance exists first at 1.5796, and then at 1.5889.

During this week, minutes from the Bank of England’s latest policy meeting would receive increased market attention, along with release of consumer, retail and producer prices in the nation.

USD JPY
The USD traded 3.23% lower against the JPY over the past week, closing at 94.28. The Japanese Yen gained traction, after the BoJ maintained its interest rate unchanged at 0.1% and did not raise its asset purchase program. The JPY was further boosted, after the Japanese government upgraded its economic assessment of the country stating that Prime Minister’s plan is helping the economy improve. Meanwhile, the BoJ, in its latest monthly economic survey indicated a positive outlook for the economy, which it expects to return to a moderate recovery path. In economic news, the M3 money supply in Japan advanced 2.8% annually in May, while the business survey index (BSI), a gauge of sentiment at large manufacturing industries, advanced to 5.0 in the second quarter of 2013. The pair traded at a high of 99.33 and a low of 93.79. The pair is expected to find its first support at 92.27, with the next support expected at 90.26. The first resistance is at 97.81 and the next at 101.34.

Trading trends in the pair are expected to be determined by the release of industrial production and trade balance data for Japan.

USD CHF
USD traded 1.36% lower against the CHF and closed at 0.9224 in the last week. The Swiss Franc started the week in red, as economic indicators showed that Swiss unemployment rate rose to 3.2% in May. However, the losses were reversed, after the State Secretariat for Economic Affairs (SECO) upgraded the Swiss growth estimate to 1.4% for 2013 from 1.3% forecasted previously. Other Swiss economic reports released last week showed that real retail sales in Switzerland rose 3.3% (YoY) in April, following 0.8% drop in March, while producer and import prices fell 0.3% (MoM) in May, compared to a 0.1% rise expected by markets. During the period, the pair traded at a high of 0.9420 and a low of 0.9129. The first support is at 0.9095, and the next at 0.8967. Resistance exists first at 0.9386, and then at 0.9549.

In limelight this week would be the Swiss National Bank interest rate decision along with Swiss economic reports on imports, exports and the economic expectations index.

USD CAD
Last week, the USD traded 0.41% lower against the CAD and closed at 1.0172. The Loonie rose against the greenback, after Canadian housing starts rose at their fastest pace in more than a year in May. Further supporting the gains were upbeat readings on capacity utilization and new housing price index for April. USDCAD traded at a high of 1.0253 and a low of 1.0134 in the previous week. The first support is at 1.0120, with the next at 1.0067. The first resistance is at 1.0239, while the next is at 1.0305.

Data slated in the week ahead includes consumer price inflation, wholesale sales and retail sales from Canada.

AUD USD
AUD traded 1.11% higher against the USD in the last week, and closed at 0.9600, amid positive economic data from Australia. A survey by National Australia Bank (NAB) revealed that the business conditions index rose to -4.0 in May from -6.0 in April. Additionally, Westpac consumer confidence index rose in June following a drop in May. The employment data from Australia also showed encouraging figures with the number of employed persons increasing unexpectedly in May, while the unemployment rate dropped to 5.5% in May from 5.6% in April. During the week, the pair traded at a high of 0.9667 and a low of 0.9324.The first support is at 0.9394, and the next at 0.9187. The first resistance is at 0.9737, and the next at 0.9873.

The pair is expected to trade on the cues from the release RBA meeting’s minutes on Tuesday, which is expected to provide valuable insights into economic conditions from the central bank’s perspective.

Gold
In the prior week, Gold traded 0.55% higher against the USD and closed at USD1390.70, as the greenback weakened. Meanwhile, rising geopolitical tensions in the Middle East also boosted the yellow metal’s safe-haven appeal. The yellow metal traded at a high of 1395.10 and a low of 1366.19 in the previous week. Gold is expected to find support at 1372.89 and the next at 1355.09. The first resistance is at 1401.80, while the next is at 1412.91.

Gold traders would be awaiting the outcome of the Federal Open Market Committee meeting on Tuesday and Wednesday.

Crude Oil
Oil prices traded 1.62% higher against the USD in the last week and closed at USD97.78, lifted by fears that US intervention in Syria would stoke further conflict in Middle East. Oil prices came under pressure initially in the week, after the American Petroleum Institute reported a 9.0 million barrel rise in crude stockpiles, while the Energy Information Administration (EIA) reported that oil inventories rose 2.5 million barrels for the week ended June 7. Also, the EIA lowered its oil demand forecast for 2013 and 2014, while the Organization of the Petroleum Exporting Countries (OPEC) downgraded its world oil demand forecast by 10,000 barrels per day (bpd) to 780,000 bpd for 2013. Also, oil demand concerns rose, after the World Bank lowered its global economic growth outlook. However, oil prices pared its losses following an announcement by the US President, Barack Obama that it would provide arms to Syrian rebel groups, raising fears of the conflict spreading to the rest of the Middle East. Oil traded at a high of 98.25 and a low of 94.04 in the previous week.

Oil has its first major support at 95.13, while the next support exists at 92.48. The first resistance is at 99.34 and the next at 100.90.

Week of June 10th, 2013

Weekly Forex Update
The greenback traded lower against the key currencies, as disappointing ISM data from the US raised expectations that the Federal Reserve would continue with current pace of bond buying program. Manufacturing and construction purchasing manager indices (PMI) remained in contraction zone and trade deficit widened in April. The MBA mortgage applications slid further last week, while factory orders rose less-than-expected for April. However, the greenback rose on Friday, after economic reports showed that non-farm payrolls rose more than analysts forecast in May, again raising uncertainty about the stance of the Federal Reserve.
The EUR closed higher against the greenback, following the European Central Bank’s (ECB) decision to keep interest rates unchanged. Economic data from the Euro-zone showed that retail sales and services and manufacturing PMI’s for April were dismal. Meanwhile, trade and current account surplus in Germany expanded more than analysts’ expectation.
Separately, the Bundesbank on Friday downgraded German growth forecast to 0.3% in 2013, from 0.4% forecasted in December, citing difficult conditions in the region that could continue to hinder German economic growth.
The Pound traded higher against the greenback, after the Bank of England (BoE) refrained from adding further to its asset purchases at Governor Mervyn King’s final meeting, while also maintaining interest rates steady. Further supporting the Pound was economic data showing that manufacturing and services activity and home prices beat market forecasts, thus boosting confidence in the economy.
In Asia, the Japanese Yen rallied against the US dollar, after the Japan’s Prime Minister, Shinzo Abe, revealed plan to lift nation’s long-term growth prospects, though it fell short of market expectations. Additionally, comments by Japanese Finance Minister, Taro Aso’s that the government would not intervene in the currency markets soon to weaken the currency, added to the Yen’s rise.
The Aussie failed to gain traction, even as the Reserve Bank of Australia (RBA) decided to keep key interest rates constant at 2.75%, following downbeat economic growth in the nation. The Australian Dollar also fell after the Reserve Bank of Australia (RBA) Governor, Glenn Stevens, indicated that the central bank remains open to further rate cuts should the economic situation demand further easing.
Over the weekend, trade surplus widened in May in China, with imports showing a drop due to sluggish domestic and overseas demand. Export figures rose less-than-forecasted in May. Additionally, annual consumer inflation slowed in May.

EUR USD
Last week, the EUR traded 1.87% higher against the USD and closed at 1.3224, on back of ECB’s decision to keep its interest rate steady at 0.5%, following reduction in the previous month. The central bank however cut the region’s growth forecast with bank’s President, Mario Draghi, stating that the economy would shrink 0.6% in 2013 compared with the previous forecast of a 0.5% decline. Meanwhile, in economic data, gross domestic product (GDP) in the Euro-zone continued to contract in the first quarter of 2013. Retail sales and producer prices in the Euro-zone recorded a drop in April. Also, manufacturing and services PMI’s showed dismal readings last month. Earlier in the week, Fitch Ratings downgraded Cyprus’s credit rating by one notch to “-B”. During the week, the pair traded at a high of 1.3306 and a low of 1.2954. The pair is expected to find its first support at 1.3017, with the next support expected at 1.2809. The first resistance is at 1.3369 and the next at 1.3513.

In spotlight this week is the ECB monthly report, along with other important economic indicators such as industrial output, consumer price index and wholesale price index from Germany, France and the Euro-zone.

GBP USD
In the last week, GBP traded 2.47% higher against the USD and closed at 1.5558, following the Bank of England’s (BoE) decision to keep interest rates unchanged at 0.5% and asset purchases at £375.0 billion. Also, a flurry of positive economic data from the UK added support to the GBPUSD pair. The manufacturing and services PMI witnessed gains in May. Moreover, construction activity in the UK entered an expansion phase in May, while the BRC like-for-like retail sales in the UK rebounded more than forecast in the same month. Additionally, goods trade deficit gap narrowed more-than-expected in April, adding to signs that the country’s economic growth would gather pace in the second quarter. The pair traded at a high of 1.5685 and a low of 1.5196 in the previous week. GBPUSD is expected to find its first support at 1.5274, with the next at 1.4991. Resistance exists first at 1.5763, and then at 1.5969.

In the week ahead, economic releases scheduled includes industrial and manufacturing production followed by employment data in the UK.

USD JPY
The USD traded 3.22% lower against the JPY over the past week, closing at 97.43. The Japanese Yen strengthened against the greenback, after Japan’s Prime Minister, Shinzo Abe, unveiled details of plan for lifting the country’s long-term growth prospects, though it fell short of market expectations. Further lifting the Yen were comments from Japanese Finance Minister, Taro Aso’s that the government would not intervene in the currency markets in near term. In economic news, monetary base in Japan spiked up 31.6% annually in May to ¥154.141 trillion, following 23.1% rise in April. Total labor cash earnings increased 0.3% (YoY) in April to ¥273,427, while the index of leading economic indicators rose to its highest level in nearly six years in April. The pair traded at a high of 100.77 and a low of 94.97. The pair is expected to find its first support at 94.68, with the next support expected at 91.93. The first resistance is at 100.47 and the next at 103.52.

The BoJ interest rate decision and the central bank’s monetary policy meeting minutes would be major events in this week. Also, industrial production and consumer confidence data from Japan would be on trader’s radar.

USD CHF
USD traded 2.60% lower against the CHF and closed at 0.9351 in the last week. Economic data released in Switzerland, indicated that consumer price index (CPI) edged up 0.1% (MoM) in May, while on an annual basis the deflationary trend eased in May. Additionally, SVME purchasing managers’ index (PMI) in Switzerland rose to a reading of 52.2 in May from 50.2 in April, while Switzerland’s foreign currency reserves widened to CHF441.4 billion in May from CHF436.1 billion recorded in April. Market had expected foreign currency reserves to rise to CHF440.50 billion. During the period, the pair traded at a high of 0.9625 and a low of 0.9226. The first support is at 0.9176, and the next at 0.9002. Resistance exists first at 0.9575, and then at 0.9800.

Swiss economic calendar this week includes unemployment rate, real retail sales and producer and import prices which would be catalyst for the Swiss Franc’s movement this week.

USD CAD
Last week, the USD traded 1.48% lower against the CAD and closed at 1.0214. The Canadian Dollar had a rough start to the week, as economic data indicated that trade deficit in Canada widened in April. However, losses were pared on back of upbeat building permits, Ivey PMI and employment data. Ivey PMI posted a fourteen-month high in May, while employment change recorded a rise of 95K people employed for the same month, against the expectations for a rise of 15K people. Moreover, nation’s unemployment rate fell to 7.1% in May from 7.2% in the previous month. USDCAD traded at a high of 1.0381 and a low of 1.0165 in the previous week. The first support is at 1.0126, with the next at 1.0037. The first resistance is at 1.0342, while the next is at 1.0469.

Trading trends in the pair are expected to be determined by economic release of housing starts and capacity utilization in Canada.

AUD USD
AUD traded 0.80% lower against the USD in the last week, and closed at 0.9495, after the release of disappointing GDP data in Australia. The GDP report revealed that the Australian economy grew 0.6% sequentially for the first quarter of 2013, lower than market forecasts. Also, services sector activity in Australia plunged to a thirteen month low in May. The Australian Dollar also fell after the Reserve Bank of Australia (RBA) Governor, Glenn Stevens, indicated that the central bank remains open to further rate cuts should the economic situation demand further easing. During the previous week, the RBA maintained cash rate unchanged at 2.75%. During the week, the pair traded at a high of 0.9794 and a low of 0.9428. The first support is at 0.9351, and the next at 0.9206. The first resistance is at 0.9717, and the next at 0.9938.

Economic data releases this week in Australia, includes unemployment rate, National Australia Bank’s business confidence, Westpac consumer confidence and consumer inflation expectations.

Gold
Gold prices failed to hold its crucial $1400 per ounce level in the previous week, giving away its mid week gains to finish 0.35% lower against the USD at 1383.05. Despite a weaker US Dollar, the yellow metal remained under pressure, after the Reserve Bank of India (RBI) extended an import ban, already applied to banks, to all nominated agencies, premier and star trading houses, thus spurring demand concerns from the nation, world’s largest gold consumer. Also, the government raised the import duty on gold by another two percentage points to 8% to reduce its current account deficit. The yellow metal traded at a high of 1423.90 and a low of 1377.93 in the previous week.

Gold is expected to find support at 1366.02 and the next at 1348.99. The first resistance is at 1411.99, while the next is at 1440.93.

Crude Oil
Oil prices jumped 4.62% against the USD for the week ended May 7, and closed at USD96.22, aided by a weak US Dollar and amid drop in the US stockpiles. During last week, the American Petroleum Institute (API) reported that crude inventories dropped 7.8 million barrels for the week ended May 31. The US Energy Information Administration (EIA) reported that oil supplies fell 6.3 million barrels to 391.3 million barrels for the week ended May 31. Traders’ sentiment was also boosted by encouraging job growth numbers in the US for May. Oil prices also logged gains for the week, buoyed in part by tensions in the Middle East. Oil traded at a high of 96.39 and a low of 91.32 in the previous week.

Oil has its first major support at 92.90, while the next support exists at 89.57. The first resistance is at 97.97, and the next at 99.71.

Week of June 3rd, 2013

Weekly Forex Update
During the week ending May 31, the forex market witnessed high volatility on uncertainty whether the Federal Reserve would pull back its monetary easing or not, following the release of a mixed batch of macroeconomic data.
The week started on a quiet note with a UK and US public holiday. The greenback rose early in the week on upbeat consumer confidence and house prices data from the US. However, the currency ended mixed for the week against its key peers as weak labor data underpinned prospects that the Fed would continue with its current program.
The Euro ended the week in positive territory against the greenback despite experiencing a string of negative news flow during the week. The Standard and Poor’s rating agency warned that France should deliver its proposed budget cuts to protect its “AAA” rating. Economic data released from the region was also uninspiring.
The Bank of Canada kept interest rates unchanged at 1.00% and indicated that current stimulus program is appropriate for the time being. The currency retreated against the dollar, despite better than expected economic growth in the nation.
In the last week, the movements in the Japanese Yen was heavily influenced by the debt market after Japan’s government bond yields jumped to the highest level in a year. This raised fears about the flexibility of the central bank in providing further stimulus. The currency gave up some gains in the middle of the week after the advisor to the Japanese Prime Minister Shinzo Abe, Koichi Hamada stated that the Bank of Japan (BoJ) would provide further stimulus, if necessary, to drive an economic revival.
In addition, the forex markets were influenced by weak growth forecasts with the International Monetary Fund (IMF) cutting its Chinese growth forecast to 7.75% for 2013, citing a feeble global economy. On global front, the Organization for Economic Cooperation and Development (OECD) trimmed its forecasts for the world’s economy to 1.9% in 2013, lower than the 2.0% growth estimated earlier.
Sentiment in the commodity market was mixed with gold leading gains amid uncertainty regarding the probable curtailing of the US Federal Reserve’s QE3 program and on expectations for unprecedented demand for gold from Asian countries. Crude Oil traded weak, with reports indicating a record high growth in inventories and fragile global economic outlook.

EUR USD
Last week, the EUR traded 0.37% higher against the USD and closed at 1.2981. Economic news in the Euro region was uninspiring after unemployment in Italy rose to a record high, while the number of people unemployed in Germany increased unexpectedly by more than three times by 21K in May, from a revised 6K recorded in the previous month. The seasonally-adjusted unemployment rate in the Euro-zone for April was at 12.2%, up from 12.1% the month before. Meanwhile, Euro-zone consumer price inflation came in well below the ECB’s target. However, a few confidence indicators from the Euro bloc came in fairly better than expected, pointing to a modest recovery in the region. During the week, the pair traded at a high of 1.3062 and a low of 1.2837. The pair is expected to find its first support at 1.2858, with the next support expected at 1.2735. The first resistance is at 1.3083 and the next at 1.3185.

This week, the ECB’s interest rate decision followed by the monetary policy statement by the central bank’s President is likely to get prominent attention, while manufacturing PMI and GDP data from Europe are also awaited.

GBP USD
In the last week, GBP traded 0.31% higher against the USD and closed at 1.5183, amid uncertainty in the future stance of the US Fed. In economic data, CBI retail sales balance in the UK dropped unexpectedly to a reading of -11.0 in May, from a reading of -1.0 recorded in the previous month. Also, Nationwide house price index indicated that housing market conditions in the nation improved in the month of May. However, in contrast, the number of mortgage approvals in the UK dropped unexpectedly in April. The pair traded at a high of 1.5240 and a low of 1.5008 in the previous week. GBPUSD is expected to find its first support at 1.5047, with the next at 1.4912. Resistance exists first at 1.5279, and then at 1.5376.

This week, market participants would track Halifax house prices for clarity on the housing market conditions in the UK along with manufacturing and services PMI data. The Bank of England’s interest rate decision is also awaited, the outcome of which would determine much of the trend in the Sterling.

USD JPY
The USD traded 0.32% lower against the JPY over the past week, closing at 100.67. The Japanese currency edged up against the US Dollar after the nation’s bond yields rose to the highest level in the year. During last week, the International Monetary Fund stated that it supports the Bank of Japan’s initiatives to reach its proposed 2% inflation goal through “sweeping enhancements” to its monetary-policy framework. Meanwhile, the National consumer price inflation figures in Japan recorded a 0.7% drop annually in the month of April, while the Tokyo Core CPI posted a gain for the first time in almost two years. The pair traded at a high of 102.57 and a low of 100.22. The pair is expected to find its first support at 99.74, with the next support expected at 98.81. The first resistance is at 102.08 and the next at 103.49.

With the Japan’s economic docket fairly light this week, the pair is expected to trade on cues from trends in the greenback.

USD CHF
USD traded 0.04% higher against the CHF and closed at 0.9601 in the last week. Economic data from Switzerland indicated that, that the number of people employed rose to 4.15 million in the first quarter of 2013, from 4.12 million people recorded in the previous quarter. Also data indicated that the Swiss economy grew by a seasonally adjusted 0.6% (QoQ) in Q1 2013, faster than the revised 0.3% growth recorded in the previous month. During the period, the pair traded at a high of 0.9791 and a low of 0.9510. The first support is at 0.9477, and the next at 0.9353. Resistance exists first at 0.9758, and then at 0.9915.

Trading trends in the pair are expected to be determined by economic release of unemployment rate, real retail sales and producer and import prices in Switzerland ahead in the week.

USD CAD
Despite data indicating that Canadian economic growth was stronger-than-forecast in March, the Canadian Dollar finished in the red, with the USD rising 0.47% to close at 1.0367 for the week ending on May 31. Statistics Canada reported that the nation’s GDP expanded by 0.2% in March, above expectations for a 0.1% increase. Earlier, the Loonie came under pressure, after the Bank of Canada kept interest rates unchanged at 1.00% and indicated that current stimulus program is appropriate for the time being, after which some modest withdrawal will likely be required. USDCAD traded at a high of 1.0422 and a low of 1.0291 in the previous week. The first support is at 1.0298, with the next at 1.0229. The first resistance is at 1.0429, while the next is at 1.0491.

Economic data scheduled this week includes building permits, housing starts and unemployment rate data in Canada.

AUD USD
AUD traded 0.86% lower against the USD in the last week, and closed at 0.9572. The Australian Dollar recorded losses against the US currency following downbeat manufacturing PMI and business sentiment data from China, Australia’s biggest trading partner. Additionally, economic news indicted that HIA new home sales recorded a slower growth in the month of April, compared to the previous month. During the week, the pair traded at a high of 0.9699 and a low of 0.9527. The first support is at 0.9500, and the next at 0.9427. The first resistance is at 0.9672, and the next at 0.9771.

The Reserve Bank of Australia (RBA) is due to decide on its interest rate later this week, amid modest speculation of another 25bps interest rate cut to a new record low of 2.5%. This suggests the focus will be on the tone of the policy statement accompanying the rate decision.

Gold
In the prior week, Gold traded 0.28% higher against the USD and closed at USD1387.92, amid uncertainty in the stance of the US Federal reserve regarding its monetary policy. Forecasts for exceptional levels of demand from Asian countries especially from China and India triggered a rally in the yellow metal. The World Gold Council (WGC) stated that gold demand in Asia will reach a quarterly record high during the April to June period. The yellow metal traded at a high of 1422.10 and a low of 1373.63 in the previous week.

Gold is expected to find support at 1366.34 and the next at 1345.75. The first resistance is at 1414.81, while the next is at 1442.69.

Crude Oil
Oil prices traded 2.07% lower against the USD in the last week and closed at USD91.97, on reduced prospects for global demand after the OECD cut its global growth estimates for 2013. Also, weekly crude oil inventory data from the US Energy Information Administration (EIA) indicated that crude oil supplies in the world’s largest consumer rose 3 million barrels to 397.6 million barrels for the week ended May 24. Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) in its meeting on Friday decided to leave its production targets unchanged at 30 million barrels per day for the third consecutive meeting, as widely expected. Oil traded at a high of 95.92 and a low of 91.56 in the previous week.

Oil has its first major support at 90.35, while the next support exists at 88.77. The first resistance is at 94.71 and the next at 97.49.

Week of May 28th, 2013

Forex Market Update
The greenback came under pressure initially in the last week after the Federal Reserve officials, James Bullard and William Dudley, backed the central bank’s asset buying program and stated that the current monetary easing is the best solution for the US economy.
However, on Wednesday, the US Dollar rallied against most of its peers, after the Federal Reserve Chairman, Ben Bernanke opined that the central bank might begin discussing ways of scaling back its ultra loose policy stance in the next few meetings, if the domestic economy continues to sustain momentum. However, he expressed caution that cutting back the monetary easing too soon would harm the nation’s economy.
Following the Chairman Ben Bernanke testimony, the minutes of the Federal Reserve Bank’s (Fed) latest monetary policy meeting indicated that some policymakers were of the view that the central bank should begin unwinding its asset purchases programme as early as June.
The Euro paced gains against the US Dollar, as upbeat PMI data from the Euro zone raised hopes of a rebound in the region’s economic recovery. Adding to the positive tone, the German sentiment indices came in better than expected for June, further supporting the currency.
The outlook for Sterling remained clouded after weaker-than-expected inflation in the UK suggested more room for monetary easing by the Bank of England (BoE) to bring the economy back on track. The minutes of the latest BoE meeting reported that the board members remained split 6-3, voting in favor of holding the benchmark interest rate at 0.5%. However, the Sterling pared some of its losses after GDP data confirmed that the UK economy managed to dodge a triple dip recession for the first quarter of 2013.
In Japan, the Bank of Japan (BoJ) left monetary policy unchanged at its policy meeting, as widely expected. The bank also upgraded its economic outlook, saying growth had started picking up.
Over the weekend, the minutes released by BoJ for the April 26 meeting, revealed that board members had considerable differences in opinion over the stimulus plans. Some of the members cautioned that bold easing measures could have unwarranted side effects including a rise in borrowing costs.
Separately, the Swiss National Bank (SNB) Chief, Thomas Jordan, indicated that the central bank could impose negative interest rates if required. Meanwhile Moody’s Investors Service affirmed the Swiss sovereign debt at “Aaa”, and kept the outlook “Stable”.
The Australian and Canadian Dollar fell during the last week as the greenback strengthened following speculation that the Federal Reserve would scale back its asset purchase program this year. Sentiment towards the commodity currencies soured further after data showed that manufacturing activity in China contracted for the first time in seven months in May.

EUR USD
Last week, the EUR traded 0.82% higher against the USD and closed at 1.2933. The European Central Bank (ECB) President, Mario Draghi stated that the economic conditions in the Euro-zone are challenging and he is ready to cut borrowing costs further, if the economic outlook worsens. The Euro rose after trade surplus in the Euro-zone widened more-than-expected in March to €25.9 billion as compared to a surplus of €14.6 billion recorded in the previous month. Also, manufacturing PMI activity indices in France, Germany and Euro-zone slightly rose in May, but remained in the contraction territory. Moreover, Gfk Group reported that German consumer confidence would jump to the highest in more than 5 1/2 years in June. Meanwhile, in its latest monthly report, Germany’s Bundesbank has indicated that it expects economic activity to improve sharply in the second quarter. During the week, the pair traded at a high of 1.2999 and a low of 1.2818. The pair is expected to find its first support at 1.2834, with the next support expected at 1.2736. The first resistance is at 1.3015 and the next at 1.3098.

Economic releases taking center stage during this week includes unemployment rate and consumer price index from the Euro-zone.

GBP USD
In the last week, GBP traded 0.23% lower against the USD and closed at 1.5136, as uncertainty over whether the Federal Reserve would scale back its easing program this year supported the greenback. The outlook for Sterling remained fragile after weaker-than-expected inflation data in the UK suggested more room for monetary easing by the Bank of England (BoE) to bring the economy back on track. Also, retail sales in the UK declined 1.3% (MoM) in April, while public sector net borrowing rose by £8.0 billion in April. Meanwhile, the minutes of the latest BoE meeting revealed that 6 out of 9 Monetary Policy Committee (MPC) members voted unanimously to keep interest rates unchanged at a record low 0.5%. The GBP received some support after the revised GDP data confirmed that the UK managed to escape contraction for the first quarter of 2013, expanding 0.3% sequentially and in line with earlier estimate.
The pair traded at a high of 1.5283 and a low of 1.5014 in the previous week.

GBPUSD is expected to find its first support at 1.5006, with the next at 1.4875. Resistance exists first at 1.5275, and then at 1.5413.

USD JPY
The USD traded 2.14% lower against the JPY over the past week, closing at 100.99. The Japanese Yen registered gains against the US Dollar amid rising concerns that the recent surge in yields on Japanese Government Bonds (JGBs) would limit monetary policy options of the Bank of Japan. In its policy meeting held last week, the Bank of Japan held its monetary policy unchanged at the end of its two-day meeting and stated that the Japanese economy was improving. Moreover, the minutes released over the weekend revealed that a few board members expressed concerns that the central bank would not be able to reach its 2% inflation goal by 2016. The pair traded at a high of 103.75 and a low of 100.66. The pair is expected to find its first support at 99.85, with the next support expected at 98.71. The first resistance is at 102.94 and the next at 104.89.

With a series of Japan economic releases during the week, including retail trade and consumer price index, trading in the pair is expected to be influenced by the resulting cues from these releases.

USD CHF
USD traded 1.37% lower against the CHF and closed at 0.9597 in the last week. On the data front, the Swiss money supply M3 rose 10.2% (YoY) in April, compared to a 9.9% rise in the previous month. The International Monetary Fund in a report indicated that the Swiss National Bank needs to maintain its policy of defending its exchange-rate floor as it looks to avoid fresh inflows into the nation and battle deflationary trends. Moreover, it stated that introducing negative interest rates on banks’ excess deposits could help cool Switzerland’s real-estate market. On Thursday, the Moody’s affirmed Switzerland’s “Aaa” rating with a “Stable” outlook, citing the government’s high economic and financial strength. During the period, the pair traded at a high of 0.9840 and a low of 0.9590. The first support is at 0.9511, and the next at 0.9426. Resistance exists first at 0.9761, and then at 0.9926.

In the week ahead, traders are eyeing data on gross domestic product and KOF leading indicator in Switzerland.

USD CAD
Last week, the USD traded 0.34% higher against the CAD and closed at 1.0319, after the minutes of the last FOMC meeting indicated that the central bank might slow down its asset purchases in the near term. The Loonie also weakened as crude oil, Canada’s biggest export, witnessed a price fall last week. Moreover, the Canadian Dollar came under pressure after retail sales stagnated in March, boosting speculation that the Bank of Canada will move away from its bias to raise interest rates. USDCAD traded at a high of 1.0395 and a low of 1.0216 in the previous week. The first support is at 1.0225, with the next at 1.0131. The first resistance is at 1.0404, while the next is at 1.0489.

Along with the Bank of Canada’s crucial rate decision during the week, markets keenly await data on gross domestic product from Canada.

AUD USD
AUD traded 0.83% lower against the USD in the last week, and closed at 0.9655. The Australian Dollar came under pressure, after reports showed that Australian consumer confidence slumped by the most in 17 months in May. Additionally, concerns over China’s economic outlook increased after manufacturing PMI contracted in May, further weighing on trading sentiment towards the Aussie Dollar. Separately, the minutes of the Reserve Bank of Australia’s (RBA) latest monetary policy meeting indicated that the board members felt that it was appropriate to trim the nation’s benchmark interest rate in order to spur economic growth, citing a benign inflation outlook, sustained strength in the Aussie and slowdown in mining business. During the week, the pair traded at a high of 0.9844 and a low of 0.9592.

The first support is at 0.9550, and the next at 0.9445. The first resistance is at 0.9802, and the next at 0.9949.

Gold
In the prior week, Gold traded 2.14% higher and closed at USD1386.65, as physical buying remained strong in Asia. Data from the International Monetary Fund showed that Russia, Turkey and Kazakhstan expanded its gold reserves for the seventh straight month in April. Gains were capped as the Fed Chairman, Ben Bernanke, indicated that a decision to scale back the central bank’s current asset purchase program could be taken in the “next few meetings” depending on economic data. Meanwhile, minutes from the central bank’s May meeting indicated that a “number” of policymakers were prepared to taper bonds purchases as soon as June. The yellow metal traded at a high of 1414.75 and a low of 1338.85 in the previous week.

Gold is expected to find support at 1345.42 and the next at 1304.18. The first resistance is at 1421.32, while the next is at 1455.98.

Crude Oil
Oil prices traded 1.91% lower in the last week and closed at USD94.15, as concerns over a weaker outlook for global economic growth dampened the demand prospects for crude oil. On the inventory front, the US Energy Information Administration reported that crude supplies declined 338,000 barrels for the week ended May 17. Meanwhile, the American Petroleum Institute (API) indicated that crude oil inventories rose 532,000 barrels in the week ending May 17. Oil traded at a high of 97.11 and a low of 92.21 in the previous week.

Oil has its first major support at 91.87, while the next support exists at 89.59. The first resistance is at 96.77 and the next at 99.39.

Week of May 20th, 2013

Weekly Forex Update
The US Dollar extended its winning streak for the week ending May 17, closing at its strongest level in nearly three years against other major currencies, on broad optimism over the strength of the US economy and amid growing anticipation that the Federal Reserve will move to wind down its bond-buying program.
During the week, the greenback came under some selling pressure on Thursday, following a rise in US weekly jobless claims, mixed signals from the housing market, and data showing a contraction in Philadelphia region’s manufacturing activity in May. However, the USD rebounded after San Francisco Federal Reserve President, John Williams opined that the Fed could slow the pace of buying $85 billion a month in bonds, possibly as early as the summer if the economy expands in line with forecasts.
The greenback extended its gains on Friday, after a bigger-than-expected increase in the University of Michigan consumer sentiment index signaled a better outlook for consumer spending in the US. Also, the Conference Board’s leading economic index rose in April to its highest level in nearly five years.
Ahead in the week, markets are expected to keep an eye on US durable goods order data, wherein a positive reading would support the case for an earlier withdrawal of monetary easing by the Fed. Additionally, existing and new home sales data for April due later this week will provide insights into the state of the nation’s housing market. Investors will closely scrutinize the minutes of the FOMC meeting and the Fed Chief, Ben Bernanke’s testimony later in the week, for cues on the central bank’s policy stance going forward.
The Euro lost ground against the US Dollar as a lack of decisive triggers prompted investors to adopt a cautious approach. Economic data in the Euro-zone was very weak, as GDP and PMI numbers continued to miss market expectations. Recent comments from the European Central Bank policymakers regarding negative deposit rates also proved to be a dampener for the Euro.
In the UK, jobless claims declined for April, while the unemployment rate unexpectedly slipped for the three months ended March. The BoE Governor, Mervyn King, in his last quarterly inflation report before he is set to be succeeded by Mark Carney in July 2013, predicted that UK’s growth would be faster and inflation lower than what was expected three months earlier, though he still warned that the recovery could not be taken for granted.
The Australian Dollar staged a sharp decline against the greenback on dismal economic data in China, Australia’s largest trading partner, and after the Australian Treasurer, Wayne Swan stated that the nation would grow 2.75% over the next year, less than the earlier forecast for 3.0%.
The Canadian Dollar registered heavy losses on Friday, after economic data showed that Canada’s annual inflation rate fell sharply in April, far below expectations and well below the Bank of Canada’s target range, boosting the case for relaxing monetary policy.

EUR USD
Last week, the EUR traded 1.15% lower against the USD and closed at 1.2839, hovering near its recent lows, amid speculation that the ECB was checking banks’ preparedness to handle a potential cut in its deposit rates to below zero. Also, ECB board members, Joerg Asmussen and Benoit Couere, indicated that monetary policy will remain accommodative. Investors also added favorable bets on the dollar, as debate over whether the Federal Reserve would wind down its asset buying programme later this year gathered pace. Economic data released in Europe was also not inspiring, with economic activity across the region falling by 0.2% in the first three months of 2013, while inflation in the 17-nation region fell 0.1% in April, slowest in three years.

During the week, the pair traded at a high of 1.3029 and a low of 1.2797. The pair is expected to find its first support at 1.2748, with the next support expected at 1.2656. The first resistance is at 1.2980 and the next at 1.3120.

GBP USD
Despite upbeat jobless claims data in the UK and unexpected decline in the nation’s unemployment rate, the GBP slipped 1.23% against the USD in the last week, closing at 1.5169, as comments from the US Fed policymakers continued to signal that a withdrawal of the current monetary stimulus remains on the cards, dragging high yield currencies lower. During the week, the Bank of England (BoE) Governor, Mervyn King offered some good news for the British economy, after the central bank predicted in its quarterly inflation report that the nation’s growth would be faster and inflation lower than it had expected three months earlier. The pair traded at a high of 1.5385 and a low of 1.5158 in the previous week. GBPUSD is expected to find its first support at 1.5090, with the next at 1.5010. Resistance exists first at 1.5317, and then at 1.5464.

A raft of key economic releases from the UK due this week will provide further insights into the pace of the nation’s recovery. Traders would also keenly focus on the BoE minutes due this week. Given an improvement in economic data released in recent weeks, it would be interesting to see if the minutes show a less dovish voting pattern.

USD JPY
The USD traded 1.56% higher against the JPY over the past week, closing at 103.21. The Yen lost steam against the US Dollar as prospects for the Bank of Japan to maintain its accommodative stance for a longer period rose, after Japan escaped criticism about its aggressive monetary easing programme at the G-7 finance ministers meeting. Meanwhile, the greenback rallied during the last week, in part due to speculation that the Federal Reserve might terminate its current round of quantitative easing, amid signs of an improved economic landscape in the US. However, the Yen registered handsome gains on Thursday, after Japanese first quarter GDP data surpassed market estimates, providing a boost to Prime Minister Shinzo Abe’s reform efforts. The pair traded at a high of 103.31 and a low of 101.26. The pair is expected to find its first support at 101.88, with the next support expected at 100.54. The first resistance is at 103.93 and the next at 104.64.

In the week ahead, investors will be focusing on Bank of Japan’s interest rate decision to be followed by the press conference by Governor Haruhiko Kuroda.

USD CHF
USD traded 1.66% higher against the CHF and closed at 0.9727 in the last week, as traders continued to increase their positions in the greenback on rising perceptions that the US Federal Reserve is getting closer to taper its existing bond buying program. On the economic front, real retail sales in Switzerland dropped 0.9% (YoY) in March, following a revised 2.3% increase recorded in the previous month. Additionally, the Swiss ZEW survey indicator for economic expectations fell sharply to a reading of 2.2 in May, compared to a reading of 20.0 in the previous month. Market had expected it to rise to 25.0 in May. During the period, the pair traded at a high of 0.9761 and a low of 0.9521. The first support is at 0.9578, and the next at 0.9430. Resistance exists first at 0.9818, and then at 0.9910.

With not much on the domestic economic calendar during the week, the direction of the Swiss Franc is likely to be determined by external factors.

USD CAD
Last week, the USD traded 1.79% higher against the CAD and closed at 1.0281, drawing support from comments by Federal Reserve policymakers who indicated that the Fed could curtail its easing program sooner than anticipated. The losses in the Canadian Dollar aggravated on Friday, after softer-than-expected domestic inflation data led investors away from the Loonie. Canada’s consumer price index contracted 0.2% (MoM) in April from March, defying expectations for a 0.1% gain. The country’s core CPI rose 0.1%, less than market expectations for a 0.2% gain, sparking speculation that the Bank of Canada has room to trim interest rates if need be.

USDCAD traded at a high of 1.0313 and a low of 1.0082 in the previous week. The first support is at 1.0138, with the next at 0.9994. The first resistance is at 1.0369, while the next is at 1.0456.

AUD USD
AUD tumbled 2.94% against the USD in the last week, and closed at 0.9730, on disappointing economic data from China, uninspiring domestic federal budget and amid broad strength in the US Dollar. The Australian Dollar witnessed sharp selling pressure, after the Australian Treasurer, Wayne Swan, in his federal budget, indicated that the nation is likely to register a $19.2 billion deficit for the current financial year largely affected by a slowdown in mining activity. During the week, the pair traded at a high of 1.0011 and a low of 0.9711. The first support is at 0.9624 and the next at 0.9517. The first resistance is at 0.9924 and the next at 1.0117.

Ahead this week, data on leading economic indicators and Westpac consumer confidence data is due for release. Traders are likely to focus on the Reserve Bank of Australia (RBA’s) minutes of its most recent policy setting meeting.

Gold
In the prior week, Gold plummeted 6.18% against the USD and closed at USD1359.55, on growing speculation that the Federal Reserve could soon begin to rein in its bond-buying program. Also, data released on Friday showed that the US consumer sentiment hit an almost six-year high in early May, further supporting the view that the Fed could curtail its easing program earlier than previously estimated. Additionally, physical demand for the precious metal showed signs of softening.

The yellow metal traded at a high of 1445.57 and a low of 1355.60 in the previous week. Gold is expected to find support at 1328.24 and the next at 1296.94. The first resistance is at 1418.21, while the next is at 1476.88.

Crude Oil
Oil prices traded almost flat against the USD in the last week to close at USD96.02. Oil prices started the week on a negative note, weighed by concerns over weakening demand in China after nation’s industrial production rose at a slower pace in April. Oil prices also came under pressure, after the International Energy Agency (IEA) indicated that crude oil supply would surge through 2018. However, crude oil prices recouped its losses on rising Middle East concerns after an unsuccessful meeting between United Nations’ nuclear agency officials and Iranian representatives to allow the former to investigate a suspected atomic bomb research, leaving the ongoing diplomacy talks in deadlock. Oil prices climbed further on Friday, supported by a raft of strong economic data from the US. On the inventory front, the Energy Information Administration reported that crude oil inventories declined by 624,000 barrels for the week ended May 10, after the American Petroleum Institute (API) reported one day earlier that crude oil inventories rose more-than-expected by 1.11 million barrels in the week ending May 10.

Oil traded at a high of 96.45 and a low of 92.13 in the previous week. Oil has its first major support at 93.28, while the next support exists at 90.55. The first resistance is at 97.60 and the next at 99.19.

Week of May 13th, 2013

Weekly Forex Update
The US Dollar registered handsome gain against basket of currencies last week, as economic data in the US indicated signs of recovery in the nation’s labor market. The major spurt in the greenback came on Thursday after data indicated that less than expected number of individuals filed for unemployment assistance in the US for the week ended May 4.
The gains in the US Dollar were also supported, after the Philadelphia Federal President Charles Plosser and Chicago Fed Chief Charles Evans, voiced support for discontinuation of monetary easing program.
Meanwhile, finance ministers and central bank governors of the G7 economies reaffirmed their commitment not to seek depreciation of their currencies for domestic gains.
The movement in the USDJPY stole the headlines last week, as the greenback managed to break above the ¥100 mark on Thursday after the release of weekly US jobless data. Additionally, the USD’s climb against the Yen accelerated to above ¥101 on Friday, after the Ministry of Finance’s weekly portfolio data revealed that Japanese investors have finally become net buyers of foreign bonds after selling them for 6 straight weeks.
Meanwhile, comments by the European Central Bank (ECB) Chief, that he is open to negative interest rates in a bid to encourage banks to lend, played on traders mind as the Euro declined sharply against the USD and the other peers. Moreover, the ECB trimmed its 2013 GDP estimate to a contraction of 0.4% from a flat reading expected previously. The central bank also slashed the GDP growth estimate for 2014 to 1.0% from 1.1% estimated previously.
In the UK, industrial and manufacturing production rose more-than-estimated in March, while the NIESR estimates revealed that the Britain’s economy gathered pace in the three months to April, the fastest since September last year. However the agency pointed out that the underlying growth is weaker. Meanwhile, in contrast to the major global central banks adopting aggressive stimulus measures, the Bank of England (BoE) maintained its asset-purchase program at £375 billion ($581 billion) and kept interest rates at a record low.
The Aussie Dollar and the Kiwi Dollar fell sharply against the greenback after central banks in both countries took steps to curb strength in their currencies earlier in the week. The New Zealand Dollar slumped 2.8% for the week, after the Governor of the Reserve Bank of New Zealand, Graeme Wheeler, on Wednesday indicated that the central bank had intervened in the foreign exchange market amid concerns over the strength of its currency. Meanwhile, the week witnessed unexpected interest rate cuts by the Reserve Bank of Australia and the Bank of Korea.

EUR USD
Last week, the EUR traded 0.96% lower against the USD and closed at 1.2983. The latest cut in benchmark interest rates by the ECB and the hint of further possible easing, coupled with the ECB chief’s comment that the central bank was prepared for negative rates if required proved a dampener for the Euro. Also, revised services PMI data released in Europe showed that the region continued to remain in contraction territory, though the extent of contraction reduced in April. The common currency however rebounded during middle of the week after the release of upbeat German factory orders data, successful bond auctions in Portugal and inspiring Chinese trade data. The Euro again fell later, as the greenback enjoyed support stemming from Thursday’s weekly data on jobless claims. During the week, the pair traded at a high of 1.3195 and a low of 1.2935. The pair is expected to find its first support at 1.2880, with the next support expected at 1.2778. The first resistance is at 1.3140 and the next at 1.3298.

Taking a look at this week’s economic calendar, apart from releases across the Atlantic, the Euro-zone’s preliminary data on first quarter gross domestic product and region’s consumer price inflation data would be the key to the EURUSD movement.

GBP USD
In the last week, GBP traded 1.36% lower against the USD and closed at 1.5354. On Friday, the Pound came under pressure after UK trade data disappointed while upbeat jobless claims in the US released on Thursday supported gains in the US Dollar. During last week, signs that the UK economy is gaining traction emerged after monthly industrial activity rose more than expected in March, while the nation’s trade deficit narrowed. Furthermore, the National Institute of Economic and Social Research (NIESR) estimated that the nation grew by 0.8% for the three months period ended April 2013. Also, the Bank of England maintained status quo on expected lines in its policy meeting during the previous week. The pair traded at a high of 1.5599 and a low of 1.5314 in the previous week. GBPUSD is expected to find its first support at 1.5246, with the next at 1.5137. Resistance exists first at 1.5531, and then at 1.5707.

Apart from UK economic data, the Bank of England’s quarterly inflation report and Governor Mervyn King’s speech following the release of the report would generate market interest.

USD JPY
The USD traded 2.52% higher against the JPY over the past week, closing at 101.54. The USDJPY pushed through the 100 level on Thursday and further strengthened on Friday, as the pair moved past the 101 mark in the morning Asian session. On Friday, the greenback was boosted against the yen after data from Japan’s Ministry of Finance revealed that domestic residents were net buyers of overseas assets in the two weeks to May 4, indicating that the Bank of Japan’s easing program has prompted investors to seek out higher yields overseas to compensate for lower yields on Japanese government bonds. The pair traded at a high of 102.00 and a low of 98.58. The pair is expected to find its first support at 99.42, with the next support expected at 97.29. The first resistance is at 102.83 and the next at 104.12.

Ahead in the week, investors would tap data from Japan on preliminary first quarter GDP, industrial production and machinery orders data.

USD CHF
USD rose 2.24% against the CHF and closed at 0.9570 in the last week. The Swiss Franc backtracked against the greenback and the Euro in initial trading, after data revealed that consumer confidence in Switzerland declined by more than expected for April. Moreover, an expected decline in the unemployment rate failed to provide confidence to Swiss Franc investors. Meanwhile, data released on Wednesday indicated that the Swiss economy continued to face deflationary pressures for April, providing adequate room to the Swiss National Bank to introduce additional easing measures.During the period, the pair traded at a high of 0.9629 and a low of 0.9333. The first support is at 0.9392, and the next at 0.9215. Resistance exists first at 0.9688, and then at 0.9807.

During this week, Swiss producer price inflation, a leading indicator of consumer inflation, as well as data on ZEW economic expectations and retail sales would remain on traders’ radar.

USD CAD
Last week, the USD traded 0.34% higher against the CAD and closed at 1.0114. The Loonie staged a sharp decline against its US counterpart on Friday, after data revealed that Canadian employers added fewer jobs than forecast in April, fuelling concern that the nation’s economic recovery is slowing. Statistics Canada reported that net employment rose by 12,500 jobs and the unemployment rate was unchanged at 7.2%. Earlier during the week, economic data indicated that the pace of purchasing activity in the Canadian economy slowed more sharply than expected in April. USDCAD traded at a high of 1.0154 and a low of 1.0012 in the previous week. The first support is at 1.0033, with the next at 0.9951. The first resistance is at 1.0175, while the next is at 1.0235.

On the economic front, market awaits official data on consumer inflation and wholesale sales, a leading indicator of consumer spending scheduled for release later during the week. Investors also keenly await the release of the Bank of Canada’s quarterly review report ahead in the week.

AUD USD
The Aussie Dollar shed 2.96% against the USD in the last week, and closed at 1.0009, slipping below parity for the first time since June, dropping to as low as 99.61 US cents. Market participants reduced their exposure to the Australian Dollar, after the Reserve Bank of Australia (RBA) lowered its key interest rate by 25 basis points to 2.75% in its monetary policy meeting held during the week. Also, the Australian central bank warned in a report on Friday that the country’s decade-long mining boom is beginning to cool, which may result in more economic pain and higher unemployment going forward. Traders speculated that this opens the door to more interest-rate cuts, which will further diminish the appeal of the domestic currency. During the week, the pair traded at a high of 1.0309 and a low of 0.9961. The first support is at 0.9877, and the next at 0.9745. The first resistance is at 1.0225 and the next at 1.0441.

With no major domestic data scheduled for release during the week, the AUD is expected to closely track economic data from China and the Europe for clarity on risk appetite among market participants.

Gold
In the prior week, Gold traded 1.47% lower against the USD and closed at USD1449.10, as the greenback strengthened, following better than expected labor market data in the US. The yellow metal traded at a high of 1479.07 and a low of 1419.71 in the previous week. Gold is expected to find support at 1419.52 and then at 1389.93. The first resistance is at 1478.88, while the next is at 1508.65.

In the week ahead, gold traders would keep an eye on a flurry of US economic reports, including data on retail sales, building permits, jobless claims as well as a closely watched report on consumer sentiment. Any improvement in the US economic data would further increase speculation of an early exit by the US Fed from its current monetary easing program.

Crude Oil
Oil prices traded 0.44% higher against the USD in the last week and closed at USD96.04, as smaller-than-expected rise in US crude inventories and strong trade data from China helped boost the outlook for oil demand. The US Energy Information Administration reported that crude supplies rose 230,000 barrels for the week ended May 3, against expectations for a 1.9 million-barrel climb. This rise was smaller than the 680,000-barrel increase reported by the American Petroleum Institute on late Tuesday. However, oil prices fell later in the week, after the Organization of Petroleum Exporting Countries (OPEC) reported increased output in April and maintained a flat forecast of global demand. In its April report, the OPEC forecast total average oil demand of 89.7 million barrels per day (bpd), up 0.8 million bpd from 2012, unchanged from its March projection. Also the agency reported that production increased to 30.46 million barrels per day in April, marking the highest level in five months and from 30.18 million bpd in March. Oil traded at a high of 97.17 and a low of 93.37 in the previous week.

Oil has its first major support at 93.88, while the next support exists at 91.73. The first resistance is at 97.68 and the next at 99.33.

Week of May 6th, 2013

Forex Market Update

This morning, the greenback is trading mostly higher against its major peers. The Federal Reserve reiterated its aggressive monetary easing stance in its two-day policy meeting that ended yesterday.

The Euro is trading lower, as markets anticipate an interest rate cut from the European Central Bank (ECB) in its policy meeting scheduled later in the day. Also PMI in Europe confirmed that manufacturing activity continue to be weak across the region despite being revised higher. In France borrowing costs fell after a successful bond auction, with the yield for its benchmark 10-year bond slipping to 1.81%.

Meanwhile, the Organisation for Economic Cooperation and Development stated that Italy’s economy would contract by more than expected this year and its public finances would deteriorate in 2013 and 2014. On the other hand, the newly appointed Italy Prime Minister, Enrico Letta stated that Italy will maintain its deficit commitments.

The Bank of Japan (BoJ), in its minutes for the recently held monetary policy meeting, indicated that there was a broad consensus among board members that it was necessary for the central bank to take more aggressive monetary policy measures to stimulate the economy. However, the policy makers also expressed concerns that such a bold move would obliterate the functioning of financial markets.

The Australian Dollar registered losses after manufacturing data in China came in less-than-expected in April, confirming a fragile recovery in China. Also, data revealed that, the number of building permits in Australia dropped in March, indicating a bleak forecast for construction activity in the nation.

EUR USD

Last week, the EUR traded 0.62% higher against the USD and closed at 1.3109. Initially in the week, the Euro received a boost after Italy ended an almost two-month long political gridlock by forming a coalition government. The Democratic Party deputy leader, Enrico Letta, is the Prime Minister of the coalition, which includes Silvio Berlusconi’s People of Freedom party. In the mid week, the Euro plunged after the ECB cut the main refinancing rate by 25bps to 0.50% and as the ECB Chief, Mario Draghi hinted that the central bank has an open mind with regard to negative deposit rates. However the following day, the ECB member, Ewald Nowotny commented that the markets were “over-interpreting” the earlier statement on negative interest rates by the central bank Chief. This aided trading sentiment towards the Euro and helped the Euro in recovering its losses. On the data front, manufacturing PMI data across Europe showed some improvement for April, though it still remains in the contraction phase. Additionally, inflation in the Euro-zone fell to a three-year low while unemployment rose to a record high. During the week, the pair traded at a high of 1.3244 and a low of 1.3031.

The pair is expected to find its first support at 1.3012, with the next support expected at 1.2915. The first resistance is at 1.3225 and the next at 1.3341.

GBP USD

In the last week, GBP traded 0.5% higher against the USD and closed at 1.5565, on the back of reports showing an improvement in the UK manufacturing, construction and housing sectors. In economic news, the UK construction PMI came in better than expected at 49.4 in April, surpassing expectations for a reading of 48.0. Adding to the positive tone, the UK manufacturing PMI improved to 49.8 in April from 48.6 in March. Further boosting sentiment, UK’s services sector recorded its strongest growth, adding to signs that the slow economic recovery may be gaining some traction. On the housing front, house prices rose 0.9% from a year earlier, the biggest annual increase in 14 months, indicating that the nation’s housing activity is garnering momentum. Also, mortgage approvals in the UK climbed more than expected for March. However, early in the week, the GfK indicated that confidence among British consumers declined to -27 in April from -26 in March, the weakest level since December. The pair traded at a high of 1.5608 and a low of 1.5468 in the previous week.

GBPUSD is expected to find its first support at 1.5486, with the next at 1.5407. Resistance exists first at 1.5626, and then at 1.5687.

USD JPY

The USD traded 0.85% higher against the JPY over the past week, closing at 99.04, on signs that the US recovery is gathering pace. On Friday, the pair traded through the 99.00 mark, following upbeat nonfarm payrolls data and amid an unexpected fall in the US unemployment rate. Moreover during the week, the minutes of the Bank of Japan’s latest monetary policy meeting revealed that there was a broad consensus among board members that it was necessary for the central bank to take more aggressive monetary policy measures to end the long bout of deflation. Data released in Japan showed that industrial production growth slowed in March, while retail sales fell further. However, Japan’s unemployment fell to 4.1% for March, the lowest in more than four years. The pair traded at a high of 99.30 and a low of 97.00.

The pair is expected to find its first support at 97.59, with the next support expected at 96.14. The first resistance is at 99.90 and the next at 100.75.

USD CHF

USD traded 0.72% lower against the CHF and closed at 0.9360 in the last week. In Switzerland, the manufacturing sector returned to expansion in April, with the SVME PMI rising to a reading of 50.2 in April, from a reading of 48.3 recorded in the previous month. In a separate report, the UBS real estate bubble index in Switzerland rose to a reading of 1.17 in the Q1 2013, from a reading of 1.11 in the previous quarter. Over the weekend, Swiss National Bank’s Vice President, Jean-Pierre Danthine stated that the central bank’s currency cap remains necessary, and that the central bank would not exclude taking further steps should the crisis in the euro area intensify. During the period, the pair traded at a high of 0.9433 and a low of 0.9246.

The first support is at 0.9260, and the next at 0.9159. Resistance exists first at 0.9447, and then at 0.9533.

USD CAD

Last week, the USD traded 0.89% lower against the CAD and closed at 1.0079. The Canadian Dollar paced gains following the release of stronger-than-expected Canadian gross domestic product data that showed economic growth gained momentum in February. Gains in CAD were also supported by reports that the international merchandise trade balance in Canada unexpectedly swung to a surplus for March, buoyed by a sharp rise in exports, after eleven consecutive months of deficits. In a key development, Stephen Poloz, head of Export Development Canada, has been named as the next Bank of Canada governor. USDCAD traded at a high of 1.0171 and a low of 1.0049 in the previous week.

The first support is at 1.0028, with the next at 0.9978. The first resistance is at 1.0150, while the next is at 1.0222.

AUD USD

AUD traded 0.31% higher against the USD in the last week, and closed at 1.0314, following improved risk appetite among investors. Gains in the Aussie Dollar remained capped as China’s official manufacturing PMI confirmed a slowdown in manufacturing activity. Meanwhile, in releases this morning, the Chinese services PMI also indicated a slowdown in activity in April. On the domestic front, the Australian manufacturing activity plunged to a four year low in April, while the number of Australian home building permits fell sharply in March. On the other hand, the producer price index in Australia rose 1.6% (YoY) in the 1Q 2013, compared to a 1.0% rise recorded in the previous quarter. During the week, the pair traded at a high of 1.0387 and a low of 1.0221.

The first support is at 1.0228, and the next at 1.0141. The first resistance is at 1.0394, and the next at 1.0473.

Gold

In the prior week, Gold traded 0.59% higher against the USD and closed at USD1470.75, amid expectations that the central banks around the world would maintain their monetary stimulus policies. Gold received a boost after the European Central Bank cut its interest rate for the first time in 10 months on Thursday. Prices also rose after the Federal Reserve announced that it remained committed to maintain interest rates at record lows and continue buying bonds to support the US economy. This week, traders await interest rate decisions by the Reserve Bank of Australia and the Bank of England for further cues on where monetary policy is headed globally. The yellow metal traded at a high of 1488.09 and a low of 1440.57 in the previous week.

Gold is expected to find support at 1444.85 and the next at 1418.95. The first resistance is at 1492.37, while the next is at 1513.99.

Crude Oil

Oil prices traded 2.94% higher against the USD in the last week and closed at USD95.54, as upbeat US initial jobless claims and trade deficit data raised demand prospects for crude oil in the world’s top oil consumer. On the inventory front, the EIA reported that crude oil inventories climbed 6.7 million barrels in the week ended April 26, surpassing expectations for an increase of 1 million barrels. Additionally, the American Petroleum Institute (API) reported that crude supplies advanced 5.2 million barrels, in the week ended April 26. Oil traded at a high of 96.04 and a low of 90.11 in the previous week.

Oil has its first major support at 91.75, while the next support exists at 87.97. The first resistance is at 97.68, and the next at 99.83.

Week of April 22nd, 2013

Weekly Forex Update

The greenback held an upper hand against its key counterparts, as uninspiring data from China early in the week rattled market sentiment. Chinese economic growth slowed unexpectedly in the first quarter of 2013, while industrial production came in lower than expected. Also, Moody’s lowered China’s credit outlook to ‘Stable’ from ‘Positive’, citing lack of necessary progress in reducing risks from local-government debt and credit expansion.

The gains in the Dollar were capped, after the Minneapolis Fed President, Narayana Kocherlakota, and the Vice Chairman of the Federal Reserve (Fed), Janet Yellen, voiced support for continuation of monetary easing program. Meanwhile, economic data in the US was mixed.

The Euro started the week lower, as disappointing economic data from China dented investor sentiment. Additionally, reports that German political party, known as the Alternative for Germany, which intends to take Germany out of the Euro, is gaining support, further pushed the Euro lower. Also, the IMF forecasted the region’s economy to shrink more than projected earlier. The Euro tumbled further, on back of dovish comments by the Bundesbank President, Jens Weidmann, that there was a possibility of an interest rate cut in the Euro-zone. However, losses were trimmed, after he indicated at end of the week that rate cuts were only possible if economic data prompted it. Separately, over the weekend, the European Central Bank (ECB) President, Mario Draghi, stated that economic situation in the Euro-zone has not improved since the central bank’s meeting held on 4th April.

The UK Pound declined against the greenback, amid weak unemployment data from the UK. The Bank of England’s (BoE) minutes revealed that policymakers remained divided on extending the quantitative easing (QE) program. Additionally, retail sales in the UK showed disappointing numbers, thus pushing the Pound lower. Meanwhile, Fitch has downgraded UK’s credit rating to ‘AA+’ from ‘AAA’, citing weaker economic and fiscal outlook.

Among the Asian currencies, the Yen traded higher earlier in the week, after economic indicators showed that trade deficit in Japan narrowed in March. However, the gains were reversed, after Japan received G-20 support on its current monetary policy.

The commodity sensitive Canadian Dollar witnessed drop in the last week, after the Bank of Canada (BoC) trimmed its forecast for the nation’s economy. The Australian Dollar suffered losses earlier in the weak, amid poor Chinese GDP and industrial production data. However, it gave up its losses in the latter part of the week, buoyed by upbeat domestic economic data.

EUR USD

Last week, the EUR traded 0.14% lower against the USD and closed at 1.3062. The Euro started the week lower, as risk aversion increased, amid disappointing Chinese data, and following news that the newly founded Alternative for Germany, is gaining strength. A cut in IMF’s growth projection for the nation pressurized the Euro, while reports that Greece and the Troika had reached an agreement which would fetch Greece a €2.8 billion loan tranche and another €7.2 billion for the recapitalization for its banks lent support to the currency. Losses were also trimmed after the Bundesbank President, Jens Weidmann stated that rate cuts in the region were only possible if data worsened, providing support to the Euro. On the macro front, the ZEW indicator of economic sentiment index in Germany declined to 36.3 in April, while the current economic situation index declined to a reading of 9.2 in April. In the Euro-zone, consumer price inflation eased to 1.7% in March, followed by a drop in construction output. During the week, the pair traded at a high of 1.3202 and a low of 1.3001. The pair is expected to find its first support at 1.2975, with the next support expected at 1.2887. The first resistance is at 1.3176, and the next at 1.3289.

The pair is expected to trade on the cues from the release of manufacturing and service sector activity data from the Euro-zone and Germany later in the week.

GBP USD

In the last week, GBP traded 0.73% lower against the USD and closed at 1.5232, after unemployment rate in the UK rose to 7.9% in March from 7.8% in February. Disappointing retail sales in the UK also weighed on the Pound. Additionally, minutes of the last BoE meeting showed that policymakers remained split over monetary policy, with only three out of nine policy members voting to increase bond buying program. On Friday, the Pound tanked 0.33% against the greenback, after Fitch Ratings stripped UK’s long-term foreign and local currency issuer default ratings one step to “AA+” from “AAA”. The pair traded at a high of 1.5386 and a low of 1.5216 in the previous week. GBPUSD is expected to find its first support at 1.5170, with the next at 1.5108. Resistance exists first at 1.5340, and then at 1.5448.

The gross domestic product in the UK to be released later this week, is likely to set tone for the pair, as market participants would check whether the data managed to dodge contraction in Q12013 and escape a triple dip recession.

USD JPY

The USD traded 0.66% higher against the JPY over the past week, closing at 99.55. The Yen found support after trade balance logged the narrowest deficit for nine months, at ¥362.4 billion in March, from a downwardly revised deficit of ¥779.5 billion in February. Meanwhile, consumer confidence index in the nation rose for the third successive month to a reading of 44.8 in March from a reading of 44.2 in February. The gains were pared, after Japanese monetary policies were unopposed in G-20 meeting in the US. The pair traded at a high of 99.70 and a low of 95.80. The pair is expected to find its first support at 97.00, with the next support expected at 94.45. The first resistance is at 100.90, and the next at 102.25.

The BoJ interest rate decision is likely to receive increased market attention in Japan in the week.

USD CHF

USD traded 0.38% higher against the CHF and closed at 0.9333 in the last week. In Switzerland, producer and imports prices declined 0.3% (YoY) in March, compared to a 0.1% rise in the previous month. Additionally, the ZEW survey indicator of economic expectations index rose to a reading of 20.0 in April, compared to a reading of 2.3 in the previous month. The Swiss National Bank’s governing board member, Fritz Zurbruegg, stated that Swiss Franc remains highly valued against the Euro and a further appreciation would harm the economy. Meanwhile, the Swiss National Bank (SNB) Chairman, Thomas Jordan indicated that the Swiss National Bank’s exchange rate cap is still essential. During the period, the pair traded at a high of 0.9340 and a low of 0.9205. The first support is at 0.9245, and the next at 0.9158. Resistance exists first at 0.9380, and then at 0.9428.

Trading trends in the pair are expected to be determined by economic release of UBS consumption indicator in Switzerland ahead in the week.

USD CAD

Last week, the USD traded 1.24% higher against the CAD and closed at 1.0264. The Loonie came under pressure after the Bank of Canada’s (BoC) lowered its 2013 economic growth forecast to 1.5% from the previous estimate of 2.0% and voted to maintain interest rates at 1.0% in April. In Canada, manufacturing shipments rose 2.6% (MoM) to C$49.6 billion in February, compared to a 0.6% decline in January. Market had expected manufacturing shipments to increase by 0.6% in February. Additionally, the consumer price index (CPI) in Canada rose 0.2% (MoM) in March, compared to a 1.2% rise in February. USDCAD traded at a high of 1.0295 and a low of 1.0134 in the previous week.

The first support is at 1.0167, with the next at 1.0070. The first resistance is at 1.0328, while the next is at 1.0392.

AUD USD

AUD traded 2.10% lower against the USD in the last week, and closed at 1.0281, amid poor economic data from Australia and China. Gross domestic product (GDP) in China expanded 1.6% (QoQ) in the first quarter of 2013 compared to a 2.0% expansion expected by markets. Additionally, industrial production growth in China slowed in March. The Aussie fell further, after the RBA minutes of monetary policy meeting on 2nd April revealed that policymakers opined that the inflation outlook makes it possible to cut rates and that the Australian Dollar remained high. However, losses were capped, after housing prices and foreign direct investment in China showed a rise in March. Further supporting the Aussie was upbeat Australian economic data showing that National Australia Bank’s business confidence index rose in the first quarter of 2013. During the week, the pair traded at a high of 1.0526 and a low of 1.0267. The first support is at 1.0190, and the next at 1.0099. The first resistance is at 1.0449, and the next at 1.0617.

Data slated this week includes consumer price index in Australia.

Gold

In the prior week, Gold tanked 5.21% against USD and closed at USD1403.85, following reports that the Cyprus government plans to sell part of its gold reserves in the coming months. The news triggered speculation among traders that central banks around the world would reduce their gold reserves. However, the Bombay Bullion Association reported that gold imports in India, world’s major gold consumer, would surge 20% to around 183.6 tonnes in the April-June quarter triggered by weak prices. The yellow metal traded at a high of 1495.75 and a low of 1321.95 in the previous week.

Gold is expected to find support at 1318.62 and the next at 1233.38. The first resistance is at 1492.42, while the next is at 1580.98.

Crude Oil

Oil prices traded 3.12% lower against USD in the last week and closed at USD88.01. Oil prices declined, as weak economic data from China and the US, world’s largest crude consumers, raised demand concerns. However, oil prices gained after the American Petroleum Institute (API) indicated that crude supplies declined 6.7 million barrels for the week ended April 12. Meanwhile, the Energy Information Administration (EIA) reported that, for the week ended April 12, crude supplies fell 1.2 million barrels. Oil traded at a high of 90.73 and a low of 85.61 in the previous week.

Oil has its first major support at 85.50, while the next support exists at 83.00. The first resistance is at 90.62, and the next at 93.24.

Week of April 15th, 2013

Weekly Forex Update
The greenback traded lower against key currencies last week. Losses in the US dollar were capped after the minutes of Federal Open Market Committee’s (FOMC) meeting held on 20th March, showed that policymakers remained divided over whether to continue with or wind-up the asset purchase program earlier. The minutes also showed that a number of FOMC members saw quantitative easing tapering around midyear and to stop by end of 2013. However, the greenback declined later again as upbeat US jobless claims data eased fears about deterioration in the US labor market and boosted risk appetite. However, losses were capped, as weak US macroeconomic data on Friday led by an unexpected decline in retail sales and a significant deterioration in consumer sentiment fuelled worries about the US economic recovery.
The Euro received a positive start to the week, as encouraging trade and current account balance data from Germany eased worries of recession in the region. Further supporting the shared currency was speculation that central banks across the world would continue with their monetary stimulus programmes to support economic growth. However, gains were capped in the middle of the week, as the greenback rose following release of the US FOMC minutes. Meanwhile, over the weekend, Euro-zone finance ministers agreed to support the €10 billion bailout for Cyprus. Demand for the Sterling was boosted, as positive industrial and manufacturing production data from the UK eased concerns of triple dip recession in the country.
The Yen remained under pressure against the greenback, on back of the Bank of Japan’s (BoJ) asset purchases to beat deflation and spur economic growth. The Japanese currency declined further after the BoJ Governor, Haruhiko Kuroda, reiterated his stance that the central bank would not set a time limit for easing. In a separate report released during the weekend, the US Treasury Department stated that it would pressurize Japan to refrain from competitive devaluation.
The Aussie rallied against the greenback amid inspiring imports data from China, the country’s largest trading partner. However, the rally was capped, after economic reports showed a rise in unemployment rate and loss of jobs in Australia well above market expectations.
Gold prices tumbled after a leading broker downgraded its price forecast on the precious metal. Additionally, the division within the Fed on continuing the bond buying programme beyond this year and news that Cyprus would dispose its gold reserves to contribute to the country’s bailout pressurized the yellow metal.

EUR USD
Last week, the EUR traded 0.52% higher against the USD and closed at 1.3080. The Euro started the week with a positive tone, buoyed by positive economic data from the region. Industrial Production in Germany rose better-than-expected in February, while trade and current account surplus in the nation widened in February. However, gains were trimmed in the middle of the week, as the greenback spiked up after Federal Reserve minutes showed that officials remained divided over how long the central bank should continue with its asset purchase program. Meanwhile, over the weekend, Euro-zone finance ministers at a meeting in Dublin backed the €10 billion bailout for Cyprus. During the week, the pair traded at a high of 1.3139 and a low of 1.2968. The pair is expected to find its first support at 1.2986, with the next support expected at 1.2891. The first resistance is at 1.3157, and the next at 1.3233.

In the week ahead, data coming out from the Euro-zone includes consumer price index, construction output and current account balance.

GBP USD
In the last week, GBP traded marginally higher against the USD and closed at 1.5344, as upbeat industrial and manufacturing production data from the UK receded fears of the nation falling into a triple-dip recession. Industrial production in the UK recovered at a faster-than-expected pace in February, while manufacturing production rebounded in February following a slump in the previous month. Meanwhile, goods trade deficit in the UK worsened in February. Additionally, economic data released at end of the week showed that the conference board (CB) leading index in the UK rose 0.4% in March, following a similar rise in February. The pair traded at a high of 1.5413 and a low of 1.5239 in the previous week. GBPUSD is expected to find its first support at 1.5251, with the next at 1.5158. Resistance exists first at 1.5425, and then at 1.5506.

The BoE minutes are likely to receive increased market attention, along with other economic releases due later in the week.

USD JPY
The USD traded 1.24% higher against the JPY over the past week, closing at 98.89.The Yen came under heavy selling pressure after the BoJ began buying ¥1.2 trillion worth of long-term government bonds under its new monetary easing program to boost economic growth. Separately, the minutes of BoJ monetary policy meeting held on 6thand 7thMarch revealed that the board members are of the view that economic conditions in Japan have stopped deteriorating although some uncertainty still persists and the economy is expected to rebound to a moderate recovery path. Further weighing on the Yen were comments by the BoJ Governor, Haruhiko Kuroda, that the central bank would not set a time limit for easing. The pair traded at a high of 99.96 and a low of 98.29. The pair is expected to find its first support at 98.13, with the next support expected at 97.38. The first resistance is at 99.80, and the next at 100.71.

The pair is expected to trade on the cues from the release of trade balance data, adjusted merchandise trade balance, and all industry activity index later in the week.

USD CHF
USD traded 0.34% lower against CHF and closed at 0.9298 in the last week. In Switzerland, industrial production increased at a slower rate in the fourth quarter of 2012. Additionally, consumer prices growth slowed, while unemployment rate remained steady at 3.1% in March. During the period, the pair traded at a high of 0.9368 and a low of 0.9277. The first support is at 0.9261, and the next at 0.9223. Resistance exists first at 0.9352, and then at 0.9405.

The Swiss Franc is expected to trade on cues from release of producer and import prices and trade balance data from Switzerland ahead in this week.

USD CAD
Last week, the USD traded 0.36% lower against the CAD and closed at 1.0138, as risk appetite improved. The greenback traded higher after the FOMC minutes showed that there was some reluctance among some members of Federal Reserve to extend the bond buying program after 2013. However, better-than-expected global economic data in the middle of the week boosted the CAD. The greenback crept up again after economic data released at end of the week showed that slump in consumer sentiment and retail sales in the US, sparked fresh concerns over the strength of the country’s economic recovery. In Canada, the Bank of Canada’s (BoC) business outlook survey indicated that the overall business lending conditions during the Q12013 dropped largely, reflecting lower demand from corporate borrowers. USDCAD traded at a high of 1.0216 and a low of 1.0081 in the previous week. The first support is at 1.0074, with the next at 1.0010. The first resistance is at 1.0209, while the next is at 1.0280.

Investors are eying BoC interest rate decision, followed by release of consumer price index and wholesale sales in the nation this week.

AUD USD
AUD traded 1.10% higher against USD in the last week, and closed at 1.0501. The Aussie started the week on a negative note, after survey results by the Australian Industry Group (AiG) showed that construction sector activity in Australia fell sharply in March. However, the losses were reversed after economic reports showed that Chinese imports surged in March, a positive news for the Australian economy as it is China’s largest trading partner. However, the gains were limited, amid release of Australian unemployment data. Unemployment rate in Australia rose to 5.6% in March from 5.4% in the previous month. The Australian economy lost 36,100 jobs in March compared to a loss of 7,500 jobs forecasted by markets. During the week, the pair traded at a high of 1.0584 and a low of 1.0350. The first support is at 1.0373, and the next at 1.0244. The first resistance is at 1.0607, and the next at 1.0712.

On the economic landscape this week, are RBA’s minutes of last meeting, along with the release of the Westpac leading index in the nation.

Gold
In the prior week, Gold traded 6.34% lower against USD and closed at USD1481.02.Gold prices came under pressure, after a leading broker downgraded its price forecast on the precious metal. Additionally, the minutes of the US Federal reserve meeting failed to indicate a time line on how long the quantitative easing (QE) program would continue. Gold losses accelerated after news emerged that Cyprus would dispose its gold reserves to contribute to the country’s bailout. The yellow metal traded at a high of 1590.46 and a low of 1478.20 in the previous week.

Gold is expected to find support at 1442.66 and the next at 1404.30. The first resistance is at 1554.92, while the next is at 1628.82.

Crude Oil
Oil prices traded 2.18% lower against USD in the last week and closed at USD90.84. Prices declined after the US Energy Information Administration (EIA) cut its world oil demand forecast for 2013 by 50,000 barrels per day to 960,000 bpd. Also, the International Energy Agency (IEA) lowered its global oil demand outlook in 2013, citing weaker fuel usage in industries, further weighing on oil prices. Oil prices were also impacted by poor retail sales and consumer sentiment data in the US, fuelling worries that the US economic recovery is losing momentum. Separately, the American Petroleum Institute (API) reported that oil inventories rose 5.1 million barrels for the week ended 5th April. Additionally, the US Energy Information Administration (EIA) reported that, crude oil supplies increased 0.3 million barrels for the week ending 5th April. Oil traded at a high of 94.82 and a low of 90.27 in the previous week.

Oil has its first major support at 89.13, while the next support exists at 87.43. The first resistance is at 93.68, and the next at 96.53.

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