Stocks Remain Weak in the US


Written by Anthony Darvall

U.S. Dollar Trading (USD) closed the day strong but was weakest in Asia as the market tried to rally. Stock markets in the US turned south on bearish comments from FOMC Member Hoenig who expressed concern about community banks. In US stocks, DJIA -77 points closing at 10174, S&P -4 points closing at 1067 and NASDAQ -20 points closing at 2159. Looking ahead, July Existing Home Sales are forecast at 4.7mn vs. 5.37mn previously.

The Euro (EUR) fell in the US session to month lows below 1.2700 on a Moody's report that slowing growth in the Eurozone may prompt rating downgrades. EUR/JPY also fell below Y108 to test multi year lows near Y107.30. EUR/USD traded with a low of 1.2622 and a high of 1.2731 before closing at 1.2640. Looking ahead, Q2 German GDP second reading initially at 2.2% Q/Q.

The Japanese Yen (JPY) was strong across the board as the USD/JPY failed to push higher and the crosses slumped in the US session led by the EUR/JPY. The market was unimpressed with the downgraded phone conversation between the BOJ Governor and PM Kan in which the subject of FX intervention was not covered. Overall the USDJPY traded with a low of 85.05 and a high of 85.67 before closing the day around 85.20 in the New York session.

The Sterling (GBP) ended roughly unchanged as the EUR/GBP supported cable on dips towards 1.5500 but the market is failing to bounce far and expectations of a move lower are growing as investor sentiment sours. Overall the GBP/USD traded with a low of 1.5482 and a high of 1.5622 before closing the day at 1.5505 in the New York session.

The Australian Dollar (AUD) was the outperformer of the day recovering after gapping lower at the Asian open on the hung election result and able rally to fresh day highs during the European session. The failure near 0.9000 prompted profit taking and then fresh selling as US stockmarket finished on a weak footing. Overall the AUD/USD traded with a low of 0.8881 and a high of 0.8985 before closing the US session at 0.8910.

Oil & Gold (XAU) was slightly offered for most of the day ending near day lows after failing to hold above $1230 an ounce. Overall trading with a low of USD$1221 and high of USD $1232 before ending the New York session at USD$1224 an ounce. Took another leg lower with the market searched for support. WTI Oil Closed -$0.72 at $73.10 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.25231.26041.26351.29331.3334
USD/JPY83.5084.7385.1586.3888.12
GBP/USD1.51251.53241.55001.57131.5999
AUD/USD0.86340.87810.88950.90800.9222
XAU/USD1190.001210122112441265.00
OIL/USD71.0072.5072.7074.5075.00

 

Euro - 1.2635

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 - 85.15

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 - 1.5500

Initial support at 1.5324 (38.2% retrace of 1.4231-1.5999) 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 - 0.8895

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 - 1221

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 - 72.70

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).