US Bank Chief Dampens Mood

Written by Anthony Darvall

U.S. Dollar Trading (USD) risk was taken off the table as the market reacted to Fed Chief Bernanke's comments the US recovery was 'unusually uncertain'. Stocks fell back and the Yen strengthened as the safe haven of choice. In US stocks, DJIA -109 points closing at 10120, S&P -13 points closing at 1069 and NASDAQ -35 points closing at 2187. Looking ahead, Ben Bernanke Speaks before Congress.

The Euro (EUR) the Euro continued to pull back as the market found itself caught a bit long ahead of the considerable risk event in Friday's release of the Bank stress tests. Adding weight overnight was the weakness in the EUR/JPY back towards the Y110 level. EUR/USD traded with a low of 1.2731 and a high of 1.2915 before closing at 1.2760. Looking ahead, Industrial Orders forecast at 0% vs. 0.9% previously.

The Japanese Yen (JPY) Yen was the strongest currency in the market as stock markets lurched lower and the crosses backed off recent highs. EUR/JPY and GBP/JPY was sold for most of the day and both are at the bottom of recent ranges. The BoJ minutes were cautious noting that the second half could slowdown with the withdrawal of stimulus. Overall the USDJPY traded with a low of 86.77 and a high of 87.46 before closing the day around 86.90 in the New York session.

The Sterling (GBP) tracked the Euro lower but held up relative well with EUR/GBP sliding to 0.8400. During the European open a misclick sent the GBP 100 pips lower in 2 minutes but quickly recovered to test day highs above 1.5320. MPC Minutes were at 7-1 as expected. Overall the GBP/USD traded with a low of 1.5122 and a high of 1.5339 before closing the day at 1.5180 in the New York session. Looking ahead, June Retail Sales are forecast at 0.5% vs. 0.6% m/m.

The Australian Dollar (AUD) failed once again to get above 0.8860 and eased back towards support near 0.8780. AUD/JPY selling weighed after holding at the Y87 level for most of the day. Sentiment towards the Aussie remains strong but future gains will require a catalyst. Overall the AUD/USD traded with a low of 0.8759 and a high of 0.8861 before closing the US session at 0.8780.

Oil & Gold (XAU) Gold was steady above $1190 before easing slightly in the US session. Overall trading with a low of USD$1183 and high of USD$1198 before ending the New York session at USD$1186 an ounce. WTI Oil Closed -$1.02 at $76.56 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2480

1.2709

1.2750

1.3094

1.3416

USD/JPY

85.87

86.27

86.65

88.50

89.16

GBP/USD

1.4857

1.5154

1.5180

1.5472

1.5816

AUD/USD

0.8450

0.8622

0.8750

0.8871

0.9000

XAU/USD

1157.00

1175

1185

1218

1244.00

OIL/USD

74.5

75.00

76.50

77.00

78.00

Euro - 1.2750

Initial support at 1.2709 (July 15 low) followed by 1.2480 (July 6 low). Initial resistance is now located at 1.3094 (May 10 high) followed by 1.3416 (April 27 high)

Yen - 86.65

Initial support is located at 86.27 (July 16 low) followed by 85.87 (Nov 30 2009 low). Initial resistance is now at 88.50 (July 15 high) followed by 89.16 (July 12 high).

Pound - 1.5180

Initial support at 1.5154 (July 20 low) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5472 (38.2% retrace of 1.6878-1.4231) followed by 1.5816 (Feb 17 high).

Australian Dollar - 0.8750

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 - 1185

Initial support at 1175 (July 20 low) followed by 1157 (May 5 low). Initial resistance is now at 1218 (July 13 high) followed by 1244 (July 1 high).

Oil - 76.50

Initial support at 75.00 (Intraday Support) followed by 74.50 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).