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UFXBank Forex Outlook: Pound Drops on Poor Data

Written by UFXBank Research Team
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USD Dollar (USD) – The Dollar rose against most of the major currencies in Forex trading after U.S. stocks fell for a second day and Treasuries slid. This sent the 30 year yield to a five month high, which causes a positive momentum for the Dollar. The NASDAQ and Dow Jones decreased by 0.66% and 0.53% respectively. Crude oil weakened by 0.4%, closing at $86.72 a barrel, and Gold (XAU) rose by 0.5% to close at $1410.10 an ounce, a new historic record. Today, the Trade Balance is expected to decline from -46.30B to -45.0B, Unemployment Claims are expected at 450K vs. 457K prior, and the Federal Budget Balance is expected at -153.80B vs. -34.50B prior.

Euro (EUR) – The Euro weakened for a third day against the Dollar as yields on 30 year Treasury bonds rose to a five month high, which bolstered demand for the currency from risk aversive investors.  The EUR/USD has a very strong support level at 1.3700. If the price breaks below this rate, the Dollar will continue with its positive trend and as long as the price is below this level, a short position is preferred. Overall, EUR/USD traded with a low of 1.3751 and with a high of 1.3974. Today, ECB President Trichet will speak.

EUR/USD – Last: 1.3766

Resistance

1.3800

1.4000

1.4085

Support

1.3735

British Pound (GBP) – The Pound fell against the Dollar, after worse than expected data from UK was released yesterday. One example was the Manufacturing Production, which came at 0.1% vs. 0.3% forecast. Also, the Trade Balance that came out at -8.2B vs. -7.9B forecast, supported a weaker pound versus other major currencies. As long as the GBP/USD is trading below 1.6050, the momentum is bearish and a short position is preferred. Overall, GBP/USD traded with a low of 1.5951 and with a high of 1.6184. Today, the BOE Inflation Report will be released and the BOE Gov King Speaks.

GBP/USD - Last: 1.5999

Resistance

1.6020

1.6180

1.6260

Support

1.5965

Japanese Yen (JPY) –The Yen rose against almost every currency except the US Dollar after China said that European countries will struggle with budget deficits, which fueled demand for the yen as a refuge. The USD/JPY is trading around the 81.00 and 81.50 area, and the main resistance line on the daily chart is located at 82.50. If the pair trades above this level, a long position is preferred. Overall, USD/JPY traded with a low of 80.53 and with a high of 81.96. No economic data is expected today.

USD/JPY-Last: 81.77

Resistance

82.00

Support

81.55

81.0

80.50

Canadian dollar (CAD) – The Canadian Dollar continued to weaken versus the Dollar as crude oil, Canada’s biggest export fell after touching a two year high. Canadian stocks also declined, which succeeded to drift the Canadian currency as well. The resistance level of the USD/CAD on the four-hour chart is located at 1.0180. If the USD/CAD crosses this level, a long position is preferred and the momentum will be be positive for the US Dollar .Overall, USD/CAD traded with a low of 0.9980 and with a high of 1.0094. Today, the Trade Balance is expected at -1.4B vs. -1.3B prior.

USD/CAD - Last: 1.0058

Resistance

1.0095

1.0130

Support

1.0045

1.0010

0.9980