AUD/USD
Range:1.0722 – 1.0779
Support:1.0700
Resistance: 1.0800
Release of the marginally improved retail sales had little initial impact but the aussie did slowly climb to a fresh post float high of $1.0348. Option protection of a $1.0350 barrier clicked in and the pair slipped back to $1.0313, before picking up again towards $1.0340. Stops are reported on a break of the barrier ahead of further barrier talk at $1.0400. Support is reportedly strong towards $1.0275 and the pair is further underpinned by firmer bullion prices. Aussie-yen lost ground on the session after posting a high of Y86.01 on the dollar-yen rally, slipped back to Y85.17 as both components pared back earlier gains, before later recovering to Y85.60.
GBP/USD
Range: 82.57 – 1.6358 – 1.6407
Support: 1.6350
Resistance 1.6430
The focus of attention in the UK this week will be the Inflation Report (Wed) and press conference. What is likely to matter most is whether current market consensus for interest rates (for barely one rate hike by year end) is validated.The Market thinks that it will be validated by the Report suggesting that based upon the market path inflation will return to target over the medium term with balanced risks. By itself, this is likely to be mildly GBP negative as some in the market may consider it confirmation that UK economic prospects have deteriorated.
EUR/USD
Range: 1.4349 – 1.4425
Support: 1.4300
Resistance 1.4450
The euro partially recovered during the Asia session after Friday’s selloff. Friday’s moves were triggered by a report in a German newspaper claiming Greece was considering withdrawing from the Eurozone, and that an emergency meeting of European officials had been called to discuss the issue. A special meeting did take place on Friday night, but participants emphasised that the topic of a potential Greek exit was not discussed. Irish Central Bank Governor Honohan said the growth of Irish debt is an issue, and that the sustainability of that debt depends on Irish growth rates. He stressed however that Ireland would manage to avoid a doomsday scenario. Irish Minister for Energy Rabbitte, said he would like to see an extension in the term of the loans offered to Ireland under the EU/IMF/ECB rescue package. Currently, the average term of maturity of these loans is 7.5 years.
