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Weekly Forex Outlook

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All eyes on FOMC, amidst a heavy data week for the U.S.

Mon, Oct 29 2007, 06:55 GMT
by Easy Forex Team

Easy Forex

Last week’s currency trading review

The Dollar extended three consecutive weeks of losses across the board amidst growing expectation the Federal Reserve would be inclined to cut interest rates on October 31. Economic data did little to douse the expectation of rates being trimmed with poor readings in Housing data (Existing and New home sales), Jobless claims, and Durable Goods all coming worse than expectations, pointing towards U.S. economic slow down. The Euro traded at a fresh record high on to end the week supported by expectations the Federal Reserve will look to cut whilst the ECB will hold rates in the immediate future. Mixed data out of the Eurozone did little to deter investors from sourcing the Euro bloc currency. The Euro closed last week at 1.4385 having opened at 1.4286. The Japanese saw plenty of interest surround consumer prices on Friday, in which confirmed that the economy remains in a state of deflation. This followed the JPY surging on Monday, post G7 summit. The Japanese Yen closed last week at 114.12 having opened at 114.87. The GBP closed the week slightly higher despite growing concerns surrounding the UK financial markets. Speculation surrounded the future monetary movements from the BoE, initially though to hold for the remainder of 2007, before the central bank noted that commercial property and financial markets remained vulnerable, prompting speculators to price in rate cuts. The GBP closed last week 2.0522 having opened at 2.0492. The AUD was one of the best performing currencies through out the week. The Aussie dollar traded at fresh 23 yr highs against the USD, buoyed by surging commodity and energy prices, as well as sturdy inflation readings causing speculation of further rate movements by the RBA. The AUD closed last week at 0.9117 having opened at 0.8900

The forex trading week preview

In the States; in what is a heavy data week scheduled for the US, much focus will surround the FOMC rate announcement on Wednesday the 31st of October. Wednesday proves to be the highlight of the week with GDP, PCE, and PMI. A weighty session will backed up with another heavy data day on Thursday as Jobless claims and Manufacturing ISM are both scheduled for release. Non Farm Payrolls and Unemployment rate round off the week for the U.S. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; data out of the Eurozone takes course on Wednesday with Unemployment rate, Consumer Confidence, CPI whilst Friday sees the release of Manufacturing PMI. In the UK; House prices and consumer confidence start the week on Wednesday. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; As has been the case recently the BoJ have timed their rate announcement to accompany that of the FOMC, set for release Tuesday following the Unemployment rate. We will provide our previews and reviews of these data releases in the daily summary.

In Australia; much of the focus will surround Thursday’s Retail Sales. We will provide our previews and reviews of these data releases in the daily summary.

TECHNICAL COMMENTARY

Euro 1.4410

Initial support at 1.4316 (Oct 26 low) followed by 1.4248 (Oct 25 low). Initial resistance is now located at 1.4469 (This week’s open + last week’s range) followed by 1.4530 (Mar 8, 1995 trend high)

Yen 114.10

Initial support is located at 113.78 (Oct 25 low) followed by 113.26 (Oct 22 low). Initial resistance is now at 115.04 (Oct 23 high) followed by 115.72 (Oct 18 high).

Pound – 2.0540

Initial support at 2.0481 (Oct 26 low) followed by 2.0427 (Oct 24 low). Initial resistance is now at 2.0574 (Oct 26 high) followed by 2.0654 (Jul 26 high)

Australian Dollar – 0.9200

Initial support a 0.9076 (Oct 26 low) followed by 0.9010 (Oct 25 low). Initial resistance is now at 0.9341 (This week’s open + (last week’s range * 1.618) followed by 0.9500 (Round number resistance).

Gold – 785.60

Initial support at 769.80 (Oct 26 low) followed by 762.00 (Oct 25 low). Initial resistance is now at 785.90 (Oct 26 trend high) followed by 790.41 (602.42 plus 542.45 – 730.40)

Published on  Mon, Oct 29 2007, 06:57 GMT