FED ANNOUCES EASING EXTENSIONS, USD MIXED

Written by Anthony Darvall

U.S. Dollar Trading (USD) risk aversion ahead of the US interest rate meeting helped the Dollar to day highs before a change in the FED monetary measures helped stocks lift into the close. The FED announced it would continue to buy 2-10 year treasuries and this could lead to the expansion of the QE program if the Economy falters further. In US stocks, DJIA -54 points closing at 10644, S&P -6 points closing at 1121 and NASDAQ -28 points closing at 2277. Looking ahead, June Trade Balance forecast at -42bn vs. -42.7bn previously.

The Euro (EUR) fell aggressively at the start of Europe to break below 1.3100 as a correction set in from the recent rally. The market shot higher after the FOMC to reclaim 1.3200 but remained heavy and started to slipped into the close. EUR/USD traded with a low of 1.3073 and a high of 1.3230 before closing at 1.3180.

The Japanese Yen (JPY) USD/JPY fell towards Y85 after the FOMC news which hurt the USD but the market is finding support in this lower region over the past week and could be putting a short term floor. Finance Minister Noda is increasing his talk to the market and providing support. The BOJ held at 0.1% as expected. Overall the USDJPY traded with a low of 85.15 and a high of 86.25 before closing the day around 85.30 in the New York session. UPDATE Japanese August Machine Orders at 1.6% vs. 5.5% forecast.

The Sterling (GBP) was the worst hit currency after some weak housing data put the GBP on the back foot in Asia and Europe. The RICS house price balance slipped -8% for the first negative reading since July last year and prompted talk of a double dip recession. Overall the GBP/USD traded with a low of 1.5709 and a high of 1.5911 before closing the day at 1.5860 in the New York session. Looking ahead, July Claimant Count forecast at -16.5k vs. -20.8k previously.

The Australian Dollar (AUD) was hurt by the drop in investor confidence throughout the day with stops hit under 0.9100 and the market finding support at 0.9060. The outlook is still bright but the Aussie is beholden to stock market direction and AUD/JPY flows. Overall the AUD/USD traded with a low of 0.9057 and a high of 0.9167 before closing the US session at 0.9120.

Oil & Gold (XAU) continued to trade around the $1200 level falling in Europe before jumping to day highs after the FED announcement. Overall trading with a low of USD$1190 and high of USD $1208 before ending the New York session at USD$1203 an ounce. Crude Oil tracked stock markets lower finding support below $80 a barrel. WTI Oil Closed -$1.23 at $80.25 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.29811.30751.31151.33341.3692
USD/JPY83.5084.8385.2586.6688.12
GBP/USD1.54001.56961.58151.59991.6069
AUD/USD0.88960.90330.90800.92220.9389
XAU/USD1146.001192120412111218.00
OIL/USD78.0079.1079.808081.50

 

Euro - 1.3115

Initial support at 1.3075 (August 10 low) followed by 1.2981 (July 30 low). Initial resistance is now located at 1.3334 (August 6 high) followed by 1.3511 (50% retrace of 1.5144-1.1877)

Yen - 85.25

Initial support is located at 84.83 (Nov 29 2009 low) followed by 83.50 (Nov 29 2009 low). Initial resistance is now at 86.66 (August 3 high) followed by 88.12 (July 28 high).

Pound - 1.5815

Initial support at 1.5696 (August 2 low) followed by 1.5400 (July 26 low). Initial resistance is now at 1.5999 (Aug 6 high) followed by 1.6069 (Feb 3 high).

Australian Dollar - 0.9080

Initial support at 0.9033 (Aug 2 high) followed by the 0.8896 (July 22 high). Initial resistance is now at 0. 9222 (Aug 6 low) followed by 0.9389 (April 12 high).

Gold - 1204

Initial support at 1192 (Aug 6 low) followed by 1157 (July 28 low). Initial resistance is now at 1211 (Aug 6 high) followed by 1218 (July 13 high).

Oil - 79.80

Initial support at 79.10 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).