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Daily Forex Outlook

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.S. Dollar Trading held on to its gains after the stronger than expected US services sector

Tue, Feb 6 2007, 01:45 GMT
by Easy Forex Team

Easy Forex

Aussie Retail Sales weaker-than-expected, US ISM non-Manufacturing up.  RBA set to make an announcement on interest rates.

CURRENCY TRADING SUMMARY
                                   

• U.S. Dollar Trading (USD) held on to its gains following key measures of the US services sector coming in stronger than expected suggesting a stable economy. With expectations at 57 and the previous figure of 56.7, non manufacturing figures came in higher at 59, the highest level seen since May 2006. Added to the ISM report (manufacturing) released on Friday, the data reinforced that the Fed will keep interest rates steady for some time to come. Overall, major currencies remained mixed against the USD. In other markets, The NASDAQ was down -5.28 points (-0.21%) and the Dow Jones was up 8.25 points (0.07%). Crude Oil prices fluctuated throughout the day almost reaching US$60 a barrel on the back of ongoing cold weather in the US, before easing upon closing. Oil dropped US$0.14 to US$58.88 a barrel. Looking ahead, Federal Reserves Bernanke is scheduled to talk today with focus on economic well being.

• The Euro (EUR) fell slightly on Monday trading with a low of 1.2914 and a high of 1.2967 before closing at 1.2928 in the New York session. Looking ahead, Retail Sales are set for release out of the Eurozone later on today. Economists predict a figure of 1.10% higher than the previous of 0.50%. In other news, the G7 summit starting on Friday looks to hold key relevance on the strength of the Euro against the JPY, if in indeed it will be a point of discussion. 

• The Japanese Yen (JPY) rose against the USD and the Euro, with investors expecting Finance ministers of the Group of Seven rich nations taking a tougher tone on the currency weakness at their upcoming meeting. Overall the USDJPY traded with a low of 120.24 and a high of 121.19 before closing at 120.33 in the New York session. 
• The Sterling (GBP) continued to depreciate due to a strengthening Dollar. Overall the GBP traded within a range of 1.9537 and a high of 1.9669 before closing the day at 1.9596 in the New York session. In a relatively quiet week in terms of Economic data, BRC sales monitor is set for release later on today with the previous figure coming out at 2.5%, some analysts expecting a stronger figure of 3.0%.   

• The Australian Dollar (AUD) saw retail sales for the month of December being made public with a figure of 0.3%, weaker than expected (0.5%) yet up on the previous month of November (0.2%).Overall, the AUD was slightly stronger against the USD trading within a range of a low 0.7725 and a high 0.7769 before closing at 0.7761 in the New York session (near day highs). Looking ahead, the RBA begins its two day meeting, with an announcement on interest rates expected tomorrow.

• Gold (XAU) rose today on the back of bargain hunting and higher crude oil prices. Gold was up by US$2.90 to US$654.40 an ounce.

TECHNICAL COMMENTARY

• Euro 1.2930

Initial support at 1.2913 (Feb 5 low) followed by 1.2876 (Jan 26 low). Initial resistance is now located at 1.3074 (Feb 2 high) followed by 1.3117 (50% retracement of the 1.3368 to 1.2865 decline)

• Yen 121.20

Initial support is located at 120.10 (Feb 1 low) followed by 119.90 (former resistance from Oct 13, 2006). Initial resistance is now at 121.37 (Feb 2 high) followed by 121.75 (Jan 31 high)

• Pound  1.9600

Initial support at 1.9536 (Feb 5 low) followed by 1.9482 (Jan 31 corrective low). Initial resistance is now at 1.9751 (61.8% retracement 1.9917 to 1.9482 decline) followed by 1.9833 (Jan 24 high)

• Australian Dollar  0.7755

Initial support at 0.7697 (50% retracement of the 0.7414 -0.7982 and Jan 31 low) followed by 0.7631 (61.8% retracement of the 0.7414 – 0.7982 rally). Initial resistance is now at 0.7790 (38.2% retracement of the 0.7940 to 0.7697 decline) followed by 0.7821 (Jan 25 high).

• Gold  648.35

Initial support at 641.10 (Jan 26 low) followed by 639.25 (Jan 24 corrective low). Initial resistance is now at 661.46 (Feb 1 high) followed by 676.35 (Jul 17 reaction high)

Published on  Tue, Feb 6 2007, 01:47 GMT