Risk Appetite Slowly Returning

U.S. Dollar Trading (USD) remained on the weak side as stocks and most currencies pushed higher into the weekend overcoming weak US Retail Sales data. May Retail Sales slumped -1.2% vs. +0.2% forecast. The data was countered however by a rise in US Consumer Confidence to a 2 year high at 75.5 vs. 73.6 previously. In US stocks, DJIA +35 points closing at 10211, S&P +4 points closing at 1090 and NASDAQ +24 points closing at 2243. Looking ahead, Fed Member Bullard Speaks.

The Euro (EUR) remained well supported as the market continued to rebound after weeks of heavy selling. Positive risk sentiment and strong cross buying especially on the EUR/GBP underpinned the move higher. May German WPI increased 0.3% as expected. EUR/USD traded with a low of 1.2046 and a high of 1.2152 before closing at 1.2090. Looking ahead, April Industrial Production is forecast at 0.5% vs. 1.3% previously.

The Japanese Yen (JPY) USD/JPY grinded higher for most of the day on solid cross buying. Some volatility after the US retail sales saw day lows but better Consumer Confidence numbers allowed the rally to resume. AUD/JPY continued it recent rally up above. Overall the USDJPY traded with a low of 91.20 and a high of 91.78 before closing the day around 91.71 in the New York session.

The Sterling (GBP) was very volatile hitting 1.4750 going into Europe before reversing hard on EUR/GBP buying and weak economic data. Manufacturing and Industrial Production both posted -0.4%m/m in May vs positive expectations. The pair settled under 1.4600 unable to take advantage of the risk on environment. Overall the GBP/USD traded with a low of 1.4505 and a high of 1.4758 before closing the day at 1.4550 in the New York session.

The Australian Dollar (AUD) broke and closed above 0.8500 in the US session but was range bound in Europe and Asia. AUD/JPY buying on the back of the US Consumer Confidence numbers helped lift the Aussie and sentiment towards the pair has turned quite bullish as the relief rally continues. Overall the AUD/USD traded with a low of 0.8418 and a high of 0.8504 before closing the US session at 0.8503. Looking ahead, Holiday in Australia.

Oil & Gold (XAU) gold continued to trade in range finding support at $1215 but struggled to bounce. Overall trading with a low of USD$1215 and high of USD$1231 before ending the New York session at USD$1226 an ounce. Crude Oil slipped as weak retail sales prompted profit taking on the recent rally. WTI Oil Closed -$1.70 at $73.78 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.1640

1.1881

1.2180

1.2214

1.2327

USD/JPY

89.81

90.54

91.80

92.08

92.97

GBP/USD

1.4260

1.4510

1.4590

1.4771

1.4878

AUD/USD

0.8067

0.8195

0.8560

0.8579

0.8728

XAU/USD

1197.00

1211

1230

1252

1261.00

OIL/USD

70.00

72.50

74.50

75.00

76.00

Euro - 1.2180

Initial support at 1.1881 (June 7 low) followed by 1.1640 (Nov 2005 low). Initial resistance is now located at 1.2214 (June 4 high) followed by 1.2327 (June 3 high)

Yen - 91.80

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 - 1.4590

Initial support at 1.4510 (Jun 10 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4771 (June 2 high) followed by 1.4878 (50% 0f 1.5544-1.4231).

Australian Dollar - 0.8560

Initial support at 0.8195 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8579 (Feb 5 low) followed by 0.8728 (505 retrace of 0.9388 - 0.8068).

Gold - 1230

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil - 74.50

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).