Stock Rally Stalls at Highs

Written by Anthony Darvall

U.S. Dollar Trading (USD) after six days of gains the market was exhausted on the topside and with the disappointing US retail Sales the market was primed to pull back. Also released last night was the June FOMC meeting minutes which were much more dovish then previously as the US economy's recovery began to falter. In US stocks, DJIA +3 points closing at 10366, S&P-1 points closing at 1095 and NASDAQ +7 points closing at 2249. Looking ahead, Weekly Jobless Claims are forecast at 450k vs. 454k previously.

The Euro (EUR) was able to rally to fresh month highs above 1.2750 on the weak US data but when the stocks turned south the single currency was pulled lower via heavy EUR/JPY sales. May Industrial Production is gained 0.9% vs. 0.8% previously. EUR/USD traded with a low of 1.2681 and a high of 1.2780 before closing at 1.2720.

The Japanese Yen (JPY) was pushed above Y89 on a strong Nikkei open and solid cross buying in Asia. Weak US data got dollar selling underway in the US session and the major slumped to 88.10 support. EUR/JPY tested resistance above Y113 but could not hold the lofty levels and fell back to the lower Y112 region. Overall the USDJPY traded with a low of 88.06 and a high of 89.13 before closing the day around 88.30 in the New York session. UPDATE CHINESE GDP 11.1% H1 y/y.

The Sterling (GBP) was one of the best performing currencies breaking above key 1.5250 resistance on strong Jobs data. June Claimant Count fell -21k vs. -20k forecast and follows a solid run of good recent months. The Unemployment Rate responded at 7.8% vs. 7.9% forecast. Overall the GBP/USD traded with a low of 1.5186 and a high of 1.5301 before closing the day at 1.5230 in the New York session. Looking ahead, June Claimant Count is forecast at -20k vs. -30k previously.

The Australian Dollar (AUD) had another good day with fresh month highs in the US above 0.8860 before easing with stocks and AUD/JPY. Chinese data and US banking results released today will provide fresh direction for the risk currency which has returned to favor in this risk on environment. Overall the AUD/USD traded with a low of 0.8784 and a high of 0.8873 before closing the US session at 0.8830.

Oil & Gold (XAU) was volatile with an initial rally sold aggressively towards the the $1200 level before ending roughly unchanged on the day. Overall trading with a low of USD$1202 and high of USD$1218 before ending the New York session at USD$1209 an ounce. Oil was roughly unchanged although well off highs. WTI Oil Closed -$0.11 at $77.04 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2194

1.2480

1.2750

1.2807

1.3094

USD/JPY

86.97

87.66

88.30

89.42

89.98

GBP/USD

1.4857

1.5000

1.5265

1.5391

1.5524

AUD/USD

0.8450

0.8622

0.8830

0.8871

0.9000

XAU/USD

1166.00

1185

1212

1218

1244.00

OIL/USD

74.5

75.00

76.80

78.00

80.00

Euro - 1.2750

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 - 88.30

Initial support is located at 87.66 (July 8 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 - 1.5265

Initial support at 1.5000 (Psychological level) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5391 (April 30 high) followed by 1.5524 (April 15 high).

Australian Dollar - 0.8830

Initial support at 0.8622 (July 8 high) followed by the 0.8450 (June 7 high). Initial resistance is now at 0. 8871 (July 14 high) followed by 0.9000 (Big Level).

Gold - 1212

Initial support at 1185 (July 7 low) followed by 1166 (May 21 low). Initial resistance is now at 1218 (July 13 high) followed by 1244 (July 1 high).

Oil - 76.80

Initial support at 75.00 (Intraday Support) followed by 74.50 (Intraday Support). Initial resistance is now at 78.00 (Intraday Resistance) followed by 80.00 (Intraday Resistance).