China Trade Data Helps Risk Appetite

U.S. Dollar Trading (USD) was on the back foot as risk appetite picked up in Asia on leaked China Trade Data showing a jump in Exports of 50% vs. 32%. The data is to be officially released later today and could help support the market searching for good news. Crude Oil Inventories showed another draw-down of -1.8mln and help oil and commodities rally. Stocks gave up gain late in the US session as jitters remain and this helped the USD pare loses. In US stocks, DJIA -40 points closing at 9899, S&P -6 points closing at 1055 and NASDAQ -11 points closing at 2158. Looking ahead, Weekly Jobless Claims are forecast at 338k vs. 453k previously and April Trade Balance is forecast at -41bn vs. -40.4bn previously.

The Euro (EUR) broke above 1.2000 as traders went after weak stops above the figure but failed to close above the key level as US stocks slumped into the close. EUR/JPY likewise was able to break above Y110 before the market eased back to close under the key resistance. EUR/USD traded with a low of 1.1923 and a high of 1.2075 before closing at 1.1980. Looking ahead, ECB rate announcement forecast to remain at 1.0% and President Trichet's Press Conference.

The Japanese Yen (JPY) stayed in a tight range pivoting the Y91.50 level as risk appetite comes and goes. The medium term outlook is being clouded by the weaker then expected US jobs Growth and uncertainty as to the new PM's fiscal plan. April Machine Orders showed a +4% jump vs. +1.2% previously. Overall the USDJPY traded with a low of 91.04 and a high of 91.69 before closing the day around 91.30 in the New York session. UPDATE Q1 Final GDP confirmed at 1.2%.

The Sterling (GBP) shrugged off Tuesday's Fitch comments with the market pushing above 1.4600 as sentiment improved before profit taking helped easing into the US close. April's Trade Balance was slightly worse than expected at -7.3bn vs. -7bn previously. Overall the GBP/USD traded with a low of 1.4394 and a high of 1.4611 before closing the day at 1.4540 in the New York session. Looking ahead, BOE Rate Announcement forecast to remain at 0.5%.

The Australian Dollar (AUD) took full advantage of the improvement in risk to rally up to 0.8350 on strong commodities and good Chinese data. June Consumer Sentiment dropped -5.7% as the European Financial debt crisis and stock market fall took it's toll. The RBNZ hiked rate 0.25% as expected to 2.75%. Overall the AUD/USD traded with a low of 0.8193 and a high of 0.8361 before closing the US session at 0.8280. Looking ahead, May Employment +17.5k vs. 33.7k previously. May Unemployment Rate forecast at 5.4% vs. 5.4% previously. UPDATE ACTUAL EMPLOYMENT +36K UNEMPLOYMENT RATE 5.2%

Oil & Gold (XAU) Gold was hit hard by profit taking as improving sentiment reduced safe haven demand. The market then took profit induced by the US stock bounce. Overall trading with a low of USD$1221 and high of USD$1241 before ending the New York session at USD$1230 an ounce. Oil rallied on the bullish US weekly Inventory numbers. WTI Oil Closed +$2.39 at $74.38 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.1640

1.1827

1.1965

1.2102

1.2327

USD/JPY

89.81

90.54

91.20

92.08

92.97

GBP/USD

1.4260

1.4347

1.4525

1.4771

1.4878

AUD/USD

0.8067

0.8195

0.8280

0.8373

0.8552

XAU/USD

1191.00

1222

1230

1252

1261.00

OIL/USD

70.00

72.50

73.80

75.00

76.00

Euro - 1.1965

Initial support at 1.1827 (March 2006 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2102 (0.50 of 1.2327-1.1877) followed by 1.2327 (June 3 high)

Yen - 91.20

Initial support is located at 90.54 (June 1 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.08 (June 7 high) followed by 92.97 (May 13 high).

Pound - 1.4525

Initial support at 1.4347 (Jun 8 low) followed by 1.4260 (May 25 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar - 0.8280

Initial support at 0.8195 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8373 (0.618 of 0.8552-0.8083) followed by 0.8552 (May 28 low).

Gold - 1230

Initial support at 1222 (June 9 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (May 14 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil - 73.80

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).