QE3 Sinks Dollar, EUR/USD above 1.3000

Last week’s currency trading review

The EUR/USD was in focus during another dramatic week for the FX markets. The FOMC QE3 announcement added to an already buoyant EUR/USD which enjoyed gains above 1.3000 to 1.3160 by the end of US trade Friday. The 3+ big figure move higher highlighted how bearishly the market has taken the opened ended FED QE3 commitment. Positive news out of Europe also helped sustain the rally with Germany’s constitutional court allowing participation in the ESM bailout fund.

XAU/USD was the other big reactor to the FED action. Gold and silver both surged higher with the yellow precious metal now in striking distance of the $1800 level. Investors are flooding to the alternate investment which is seen as a safe haven against central bank printing of money.

Currency Movement last week

EUR/USD was up +2.58% closing at 1.3128, after opening the week at 1.2814.

USD/JPY was down +0.18% closing at 78.36, after opening at 78.22.

GBP/USD was up +1.33% closing at 1.6220 after opening at 1.6005.

AUD/USD was up +1.51% closing at 1.0550 after opening at 1.0391.

This Week’s Trading Preview


Pivot: 1.305

Our preference: Long positions above 1.305 with targets @ 1.317 & 1.3205 in extension.

Alternative scenario: Below 1.305 look for further downside with 1.2975 & 1.293 as targets.

Comment: the pair has broken above its bullish channel upper boundary and remains on the upside.

Key levels
1.311 last

Forex Economic Data Preview

In the States; On Wednesday, August Building Permits forecast at 0.79m vs. 0.81m previously. Housing Starts forecast at 0.77m vs. 0.75m previously. Also on Wednesday, Existing Home Sales forecast at 4.58mil vs. 4.47m previously. On Thursday, Weekly Jobless Claims forecast at 373k vs. 382k previously. Also Flash September PMI forecast at 51.6 vs. 51.5 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; On Tuesday, German September ZEW forecast at -19.4 vs. -25.5 previously. PM Thursday, September German Manufacturing PMI forecast at 45.4 vs. 44.7 previously. September EU Manufacturing forecast at 45.4 vs. 45.1 previously. Also on Thursday, ECB President Draghi speaks. In the UK; on Tuesday, August CPI forecast at 2.5% vs. 2.6% previously. Also BOE Inflation Letter released. On Wednesday, MPC Minutes released from last BOE meeting. On Thursday, August Retail Sales forecast at -0.4% vs. 0.3% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; On Wednesday, BOJ Rate meeting forecast to hold at 0.1%. Focus on the Press Conference afterwards for any new easing measures. In Australia; On Tuesday, RBA Meeting Minutes from September.

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