Written by Anthony Darvall

U.S. Dollar Trading (USD) was strong on Friday as stocks markets around the world remained heavy and the Euro lead majors lower. The outlook is a little mixed going forward however as the US itself may further expand easing measures to support the economy and potentially weigh on the Dollar. In US stocks, DJIA -57 points closing at 10213, S&P -3 points closing at 1071 and NASDAQ +1 points closing at 2179. Looking ahead, FOMC Member Hoenig Speaks.

The Euro (EUR) fell quite sharply after the ECB's Weber was quoted as saying the central bank should provide unlimited liquidity for the banking system for the rest of the year. Also weighing was heavy EUR/GBP and EUR/JPY crosses. EUR/USD traded with a low of 1.2664 and a high of 1.2832 before closing at 1.2708. Looking ahead, August PMI Services forecast at 56.2 vs. 56.7 previously and PMI Manufacturing is forecast at 55.5 vs. 55.8 previously.

The Japanese Yen (JPY) continued to trade in the recent range with buyers supporting dips towards Y85 whilst topside progress has been severely limited. There is a lot of speculation that the BOJ Governor will meet with PM Kan this week to discuss the recent Yen strength. Overall the USDJPY traded with a low of 85.20 and a high of 85.85 before closing the day around 85.60 in the New York session.

The Sterling (GBP) was beholden to the rest of the market remaining under pressure and being sold on rallies. EUR/GBP selling is providing slight support as is the GBP/USD 1.5500 level. Overall the GBP/USD traded with a low of 1.5464 and a high of 1.5597 before closing the day at 1.5530 in the New York session.

The Australian Dollar (AUD) rallied quite aggressively off intraday lows in Europe when support was found at 0.8850. The outlook is cloudy with the market expected to remain under pressure after the Weekend Election ended without a clear result. Weak commodities are also adding to downside risks. Overall the AUD/USD traded with a low of 0.8843 and a high of 0.8932 before closing the US session at 0.8924.

Oil & Gold (XAU) dipped in Friday below the $1230 on profit taking. Overall trading with a low of USD$1222 and high of USD $1233 before ending the New York session at USD$1228 an ounce. Crude Oil remained under pressure but found support at $73.50 on multiple occasions. WTI Oil Closed -$0.40 at $74.10 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2523

1.2604

1.2695

1.2933

1.3334

USD/JPY

83.50

84.73

85.55

86.38

88.12

GBP/USD

1.5125

1.5499

1.5540

1.5713

1.5999

AUD/USD

0.8634

0.8781

0.8885

0.9080

0.9222

XAU/USD

1190.00

1210

1227

1244

1265.00

OIL/USD

71.00

72.50

74.20

75

77.00

 

Euro - 1.2695

Initial support at 1.2604 (61.8% retrace of 1.2152-1.3334) followed by 1.2523 (July 13 low). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3334 (August 6 high)

Yen - 85.55

Initial support is located at 84.73 (August 11 low) followed by 83.50 (June 1995 low). Initial resistance is now at 86.38 (August 13 high) followed by 88.12 (July 28 high).

Pound - 1.5540

Initial support at 1.5499 (Aug 18 low) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5713 (August 12 high) followed by 1.5999 (Aug 6 high).

Australian Dollar - 0.8885

Initial support at 0.8781 (38.2% retrace of 0.8067-0.9222) followed by the 0.8634 (July 19 low). Initial resistance is now at 0.9080 (August 17 high) followed by 0.9222 (Aug 6 high).

Gold - 1227

Initial support at 1210 (Aug 13 low) followed by 1190 (Aug 10 low). Initial resistance is now at 1244 (July 1 high) followed by 1265 (June 21 high).

Oil - 74.20

Initial support at 72.50 (Intraday Support) followed by 71.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).