Weekly Market Watch - Monday, 24 August 2009

Last Week Recap

The EURO started the week above the 1.40 mark against the Greenback as a raft of positive Euro Zone data propelled the 16 nation currency upwards and onwards. Monday’s release of Euro Zone Trade Balance (actual EUR1 Billion; expected EUR4.6 Billion) and Tuesday German ZEW Survey (actual 56.4; forecast 45) – its highest reading in almost 3 years – pushed the EURO back above the 1.41 level, further adding evidence of a European and global economic recovery. Despite a downturn in equity markets mid week and weaker than expected reading in German Producer Prices (it’s worst reading in 60 years) did little to hamper the EURO ascent against the Greenback with it eventually hitting 4 day high of 1.4267. Thursdays Philadelphia Fed Index release for August came in better than forecast in August with the number coming in at 4.2 compared with a forecast of -2. Fridays Existing Home Sales for the month of July surprised coming in at 7.2% compared with a forecast of 2.3%, however it was the statement from Federal Reserve Chairman Bernanke that really got the market moving. Bernanke speaking at the Fed’s annual symposium indicated that the US has seen the worst of the recession and believes the recovery is well underway. He did however add caution that the pace of the recovery is “likely to be relatively slow at first, with unemployment declining only gradually from high levels.” The Greenback took a hit against a basket of currencies as risk appetite returned following Bernanke’s comments and a move up in equity markets which eventually saw the EURO grinding to a weekly high of 1.4375. Against the Yen, Monday’s release of Japanese GDP showed the local economy grew for the first time in five quarters adding further downside pressure on the big dollar. The Yen remained confined to the 93.50 to 95.50 range for the majority of the week with many traders expecting this continue in the short term. Resistance for USDJPY is found at 94.80 followed by 95.40; Support is found at 94 and second level support at 93.80.