US Stock Losses Extend For Third Day

U.S. Dollar Trading (USD) stocks slumped in the US session as the market continued to react to Obama's Bank reform plans and uncertainty over Bernanke's confirmation added more worries for the market. The Dollar was mixed with safe haven strength being countered by US banking concerns. DJIA -216 points closing at 10172, S&P -24 points closing at 1091 and NASDAQ -60 points closing at 2205.

The Euro (EUR) the Euro rebound continued with EUR/AUD and EUR/GBP bouncing of multimonth lows and lending support to the major. The EUR/USD looked comfortable above 1.4100 and tested resistance close to 1.4200. November Industrial Orders were +1.6% vs 0.5% forecast. Overall the EUR/USD traded with a low of 1.4068 and a high of 1.4140 before closing at 1.4181. Looking ahead, February Consumer Sentiment forecast at 3.1 vs. 3.3 previously.

The Japanese Yen (JPY) gained across the board on safe haven flows with EUR/JPY touching 9 month highs below Y127 and USD/JPY closing below the Key Psychological level Y90. Most crosses were volatile however as bargain hunters came in at lower levels. Overall the USDJPY traded with a low of 89.79 and a high of 90.56 before closing the day around 89.87 in the New York session.

The Sterling (GBP) traded below 1.6100 after December Retail Sales disappointed coming in at 0.3% vs. 1.1% forecast. The pair then consolidated for the rest of the session but the recent rally is starting to look fragile as GBP/JPY and EUR/GBP come under pressure. Overall the GBP/USD traded with a low of 1.6079 and a high of 1.6284 before closing the day at 1.6110 in the New York session.

The Australian Dollar (AUD) traded under 0.9000 for the first time in 3 weeks. Bargain hunting under the level saw the pair bounce throughout the rest of the day but with risk being taken off the table the AUD is in danger of falling further. Overall the AUD/USD traded with a low of 0.8984 and a high of 0.9092 before closing the US session at 0.9013. UPDATE Q4 PPI -0.4% vs. 0.2% forecast.

Oil & Gold (XAU) found support in the lower $1080 region to finish roughly unchanged on the day. Overall trading with a low of USD$1082 and high of USD$1098 before ending the New York session at USD$1092 an ounce. Crude slumped as US stocks fell further throughout the US session. Crude Oil was down -$1.33 ending the New York session at $74.75.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3964

1.4008

1.4150

1.4218

1.4414

USD/JPY

89.29

89.79

90.05

91.87

92.05

GBP/USD

1.5897

1.6038

1.6100

1.6312

1.6372

AUD/USD

0.8902

0.8939

0.9020

0.9146

0.9243

XAU/USD

1074.00

1082

1094.00

1117

1141.00

OIL/USD

70.00

72.50

74.00

75.00

77.00

Euro - 1.4150

Initial support at 1.4008 (Jul 29 low) followed by 1.3964 (Jul 15 low). Initial resistance is now located at 1.4218 (Dec 22 high) followed by 1.4414 (Jan 19 high)

Yen - 90.05

Initial support is located at 89.79 (Jan 22 low) followed by 89.30 (50% retracement of 84.86 - 93.75). Initial resistance is now at 91.87 (Jan 21 high) followed by 92.05 (Jan 14 high).

Pound - 1.6100

Initial support at 1.6038 (Jan 21 low) followed by 1.6137 (Jan 13 low). Initial resistance is now at 1.6312 (Jan 21 high) followed by 1.6372 (Jan 20 high).

Australian Dollar - 0.9020

Initial support at 0.8939 (Jan 21 low) followed by the 0.8902 (Dec 30 low). Initial resistance is now at 0.9146 (Jan 21 high) followed by 0.9243 (Jan 20 high).

Gold - 1094

Initial support at 1082 (Jan 22 low) followed by 1074 (Dec 22 low). Initial resistance is now at 1117 (Jan 20 high) followed by 1141 (Jan 20 high).

Oil - 74.00

Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 77.00 (Intraday Resistance).