US equity sell off accelerated last week with it recording a sharp 10% decline spread across 2 weeks. The selloff was accelerated by worries about tightening by central banks worldwide that would bring to an end the availability of easy money.
Gold sold off this week after it failed to breach $1351/oz. barrier which was a major disappointment for the bulls and a resultant sell off saw Gold touching $1309/OZ. after which bargain hunters moved Gold back up to close the week at $1317/oz.
GBPUSD made a high of 1.4068 on Thursday after BoE raised growth prospects and chances of faster than expected rate hikes. But expectations were dampened rather quickly as Friday economic data disappointed. GBPUSD went on to lose all the gains and close at 1.3824.
USDJPY was weak due to excess volatility in global equity markets and continuing JPY strength was forcing exporters to move into hedge their JPY exposure. USDJPY went on to end the week at 108.75.
USDCAD traded strongly last week, Friday’s disappointing jobs data from Canada accelerated the rise to 1.2675 before the fine print revealing a not so drastic picture. Most of the jobs lost were temporary ones while the economy had rather added more permanent jobs than expected, which helped CAD bulls pull USDCAD back below 1.2600 to close at 1.2575.
Next week should start of on a slow note as Japan and US would be closed on Monday for national holidays.
Gold bulls want Gold to make another attempt at $1351/oz., else risk another round of profit booking that should see gold testing support at $1300/oz. The uptrend will never the less be still intact as long as $1285/oz. isn’t breached. US equities did manage to gain 500 pts from the day’s low on Friday which should mean a rebound is in the offing, which if happens would see Gold moving lower.
EURUSD looks set to test support at 1.2100 if the equity meltdown continues.
GBPUSD is stuck between the good news and bad news that keep flowing in and more should be expected coming Tuesday when the Inflation readings are released. The bears look firmly in control after 1.40 was rejected again last week. GBPUSD looks set to test support at 1.36.
USDJPY looks weak on the charts with support at 108.50 and resistance from falling trend line at 109.40. 108.50 was tested and rejected multiple times last week but falling tops mean the bottom should give way pretty soon.
USDCAD end last week at 1.2575 near the resistance at 1.2660, and a rosy domestic economic conditions barring the NAFTA threat would mean that USDCAD should now look to test its first support at 1.2500.