US Q2 Company Earning in Focus
Written by Anthony Darvall
U.S. Dollar Trading (USD) the market remained cautious but optimistic Monday ahead of the start of US company earning releases. Alcoa was in focus after hours in New York and strong numbers help lift US futures to fresh month highs. Risk appetite may be tempered however as Eurozone concerns still linger and important Chinese data is slated for release later in the week. In US stocks, DJIA +18 points closing at 10216, S&P +1 points closing at 1078 and NASDAQ +2 points closing at 2198. Looking ahead, May trade Balance is forecast at -39bn vs. -40bn previously.
The Euro (EUR) fell below the 1.2600 figure in Asia as the markets tested for support. The more noted level at 1.2550 held and the pair was able to trade in a quiet range for the rest of the day. Risk appetite remains strong but the recent rally may have been a little overdone. EUR/JPY is a key cross with bulls targeting a break of Y113. EUR/USD traded with a low of 1.2550 and a high of 1.2648 before closing at 1.2595. Looking ahead, July German ZEW forecast at 25 vs. 28 previously.
The Japanese Yen (JPY) Broke above Y89 in Asian trading on news the leading DPJ government had suffered a defeat in the weekend elections. Resistance above the figure proved to strong however and as crosses remained sluggish the pair slipped back to the mid Y88 region. AUD/JPY remains well supported on dips and could provide direction for the major if stock markets can continue to rally. Overall the USDJPY traded with a low of 88.38 and a high of 89.18 before closing the day around 88.60 in the New York session.
The Sterling (GBP) broke below 1.5000 in Early Europe as the market went after stops and searched for support. At the 1.4950 level support found and the pair surged back 1.5000 before settling into a tight range for the rest of the day. S&P hurt sentiment in New York stating UK's net general government debt burden may approach a level incompatible with the AAA rating; Medium term economic forecasts for UK are less optimistic than assumptions underlying the budget. Overall the GBP/USD traded with a low of 1.4947 and a high of 1.5030 before closing the day at 1.5030 in the New York session.
The Australian Dollar (AUD) was not immune to the profit taking across the market but held up better then most finding support at 0.8700 before rebounding on the strong Alcoa numbers and continued strength in US stock markets. Overall the AUD/USD traded with a low of 0.8700 and a high of 0.8779 before closing the US session at 0.8755. Looking ahead, NAB Business Confidence previously at 5.
Oil & Gold (XAU) fell back under $1200 as the Dollar strengthened and investor demand for alternative investments dropped in favor of stocks. Overall trading with a low of USD$1195 and high of USD$1213 before ending the New York session at USD$1198 an ounce. Oil Came under pressure as profit taking pushed the pair back to $75. WTI Oil Closed -$1.14 at $74.95 a barrel.
Euro - 1.2610
Initial support at 1.2480 (July 6 low) followed by 1.2194 (July 1 low). Initial resistance is now located at 1.2807 (76.4% retrace of 1.3094-1.1877) followed by 1.3094 (May 10 high)
Yen - 88.80
Initial support is located at 88.33 (July 9 low) followed by 86.97 (July 1 low). Initial resistance is now at 89.42 (June 28 high) followed by 89.98 (June 24 high).
Pound - 1.5040
Initial support at 1.5000 (Psychological level) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5242 (38.2% retrace of 1.6878-1.4231) followed by 1.5391 (April 30 high).
Australian Dollar - 0.8780
Initial support at 0.8622 (July 8 high) followed by the 0.8450 (June 7 high). Initial resistance is now at 0. 8859 (June 21 high) followed by 0.9000 (Big Level).
Gold - 1198
Initial support at 1185 (July 7 low) followed by 1166 (May 21 low). Initial resistance is now at 1214 (July 5 high) followed by 1244 (July 1 high).
Oil - 75.10
Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).