US CPI data, with a data filled week for the UK. G7 summit looms

Last week’s currency trading review

The Dollar ongoing speculation of interest rate cuts weighed heavy on the USD throughout the week, highlighted by minutes of the FOMC September 18 meeting indicating a unanimous vote for a 50 basis point cut. The Dollar failed to benefit from positive data releases throughout the week best seen in Friday’s positive reading in retail sales. Instead Commodities and high yielding carry trades took center stage. The Euro continued to find support on a hawkish central bank, and positive Industrial Production data leading up to G7 summit, in which views that recent strength in the currency would be a key point of discussion. The Euro closed last week at 1.4175 having opened at 1.4137. The Japanese held it monthly BoJ rate announcement on Thursday in which rate were kept on hold following an 8 to 1 vote. The Japanese Yen was sold off across the board with plenty of market interest in the carry trade. The Japanese Yen closed last week at 117.48 having opened at 116.88. The GBP was scrutinized on revelations of a down turning housing sector, yet losses were capped with BoE Governor King stating that central bank was reluctant to reduce borrowing costs in order to protect lenders exposed in recent market turmoil’s. The GBP closed last week at 2.0343 having opened at 2.0414. The AUD was boosted by on three accounts, with an ongoing demand for commodities, a heavy interest in returning to carry trades, and Thursday labour force data which indicated a 33 year low of Unemployment at 4.2%. The Aud closed last week at 0.8971 having opened at 0.8968.

The forex trading week preview
In the States; heavy data week is scheduled for the US markets with TIC flows and Industrial Production on Tuesday. Wednesday proves crucial to the dollar with housing starts and building permits released ahead of CPI data. On top of the data several Fed officials are scheduled to speak throughout the week which should prove interesting leading into the G7 next weekend. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone; with recent hawkish comments, Tuesday CPI data will hold significant importance, which will be accompanied by the German ZEW survey. In the UK; a busy week is in store for the UK with housing data to begin the week, whilst CPI and takes control on Tuesday. Wednesday the data trend continues with BoE minutes, Unemployment Rate and Jobs data. Thursday also see the release of Retail Sales and GDP for the third quarter. We will provide our previews and reviews of these data releases in the daily summary.

In Japan; Industrial production is out on Monday in otherwise a relatively quiet data week. We will provide our previews and reviews of these data releases in the daily summary. In Australia; will hold an absent data week, with Thursday RBA bulletin the only point of interest. We will provide our previews and reviews of these data releases in the daily summary.

KEY WEEKLY PIVOTAL LEVELS

Euro 1.4170

Initial support at 1.4094 (Oct 10 low) followed by 1.4015 (Oct 9 low). Initial resistance is now located at 1.4241 (Oct 11 high) followed by 1.4282 (Oct 1 trend high)

Yen 117.70

Initial support is located at 117.02 (Oct 11 low) followed by 116.28 (Oct 4 low). Initial resistance is now at 117.79 (Oct 11 high) followed by 117.88 (50% retracement 124.15 to 111.61 decline).

Pound – 2.0335

Initial support at 2.0247 (Oct 12 low) followed by 2.0188 (50% retracement of the 1.9880 to 2.0495 advance). Initial resistance is now at 2.0366 (Oct 12 high) followed by 2.0423 (Oct 11 high)

Australian Dollar – 0.9045

Initial support a 0.8953 (Oct 12 low) followed by 0.8914 (Oct 9 low). Initial resistance is now at 0.9059 (Oct 11 trend high) followed by 0.9118 (0.8052 plus 1.618 of 0.7676 – 0.8335).

Gold – 749.30

Initial support at 741.40 (Oct 11 low) followed by 737.70 (Oct 10 low). Initial resistance is now at 753.70 (Oct 11 trend high) followed by 758.50 (This week’s open + (last week’s range * 0.618)