Holiday Trading Keeps Market Quiet Monday

U.S. Dollar Trading (USD) was buoyed by month end buying of the USD but in general the market was very quiet with the US markets closed for Memorial day. The markets were quite thin and so small orders were moving the market in a whippy fashion that kept many speculators on the sidelines. The market returns today with focus on the Euro debt Worries and ongoing Gulf Oil Spill concerns. Middle Eastern Tensions flared up overnight and could support Oil going forward. Looking ahead, May PMI Manufacturing forecast at 59.3 vs. 60.4 previously.

The Euro (EUR) pressure remains on the single currency with overflow from Friday's downgrade of Spain and the ECB releasing its Stability report commenting that the Euro Debt Crisis may delay the return to normal rates by a couple of years. May Inflation was at 1.6% as forecast y/y. EUR/USD traded with a low of 1.2265 and a high of 1.2336 before closing at 1.2280. Looking ahead, German Unemployment Forecast at -20k vs. -68k previously. Also released, April Unemployment Rate forecast at 10.1% vs. 10.0% previously.

The Japanese Yen (JPY) month end demand for the Yen sent the USD/JPY down 50 pips in a click during thin markets in the US session and left most cross slightly down on the day. April Housing Data was at 0.6% vs. 5.5% forecast in April. Overall the USDJPY traded with a low of 90.61 and a high of 91.41 before closing the day around 90.85 in the New York session.

The Sterling (GBP) outperformed most currencies as the Holiday market ignored the political scandal over the weekend and sent Cable back above 1.4500 after opening under pressure. EUR/GBP was the big winner falling back below 0.8500. Overall the GBP/USD traded with a low of 1.4435 and a high of 1.4610 before closing the day at 1.4458 in the New York session. Looking ahead, May PMI Manufacturing is forecast at 57.8 vs. 58 previously.

The Australian Dollar (AUD) came under pressure in the US session on Dollar demand and a slight weakening of sentiment put the risk currency under pressure. The fall in AUD/JPY was one of the biggest moves in the market and related to the risk of Tuesday's RBA decision. Overall the AUD/USD traded with a low of 0.8381 and a high of 0.8517 before closing the US session at 0.8450. Looking ahead, RBA rate decision forecast to remain on hold at 4.5%.

Oil & Gold (XAU) was well supported on geopolitical concerns and the ongoing Euro Crisis. Overall trading with a low of USD$1209 and high of USD$1218 before ending the New York session at USD$1215 an ounce. Pushed higher on middle eastern tensions. WTI Oil Closed +$0.80 at $74.80 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2135

1.2144

1.2285

1.2453

1.2587

USD/JPY

89.81

90.61

91.20

91.88

92.97

GBP/USD

1.4231

1.4366

1.4525

1.4611

1.4703

AUD/USD

0.8202

0.8310

0.8460

0.8552

0.8579

XAU/USD

1166.00

1185

1215

1229

1250.00

OIL/USD

70.00

72.50

74.80

75.00

76.00

Euro - 1.2285

Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)

Yen - 91.20

Initial support is located at 90.61 (May 28 low) followed by 89.81 (May 27 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).

Pound - 1.4525

Initial support at 1.4366 (Mary 27 low) followed by 1.4231 (May 20 low). Initial resistance is now at 1.4611 (May 28 High) followed by 1.4703 (May 14 high).

Australian Dollar - 0.8460

Initial support at 0.8310 (0.50 of 0.8067-0.8552) followed by the 0.8202 (May 27 low). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).

Gold - 1215

Initial support at 1185 (May 25 low) followed by 1166 (May 21 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil - 74.80

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