Stocks Continue Rally, AUD Shines

Written by Anthony Darvall

U.S. Dollar Tradinag (USD) some good economic data in the June New Home Sales at 0.33m vs. 0.26m previously helped contain some of the USD weakness but the Reserve currency struggled in the positive risk environment. In US stocks, DJIA +100 points closing at 10525, S&P +12 points closing at 1115 and NASDAQ +26 points closing at 2296. Looking ahead, July US Consumer Confidence is forecast at 51 vs. 52.9 previously. Also Released, May CS House Prices forecast up 0.3% vs. 0.8% m/m.

The Euro (EUR) traders were nervous ahead of the European open but investors there embraced the bank stress tests and pushed the Euro higher back above 1.3000 before settling just below the figure. Risk appetite and EUR/JPY flows will provide the next direction although many banks are reversing parity calls and instead focusing on the topside over the next 6 months. EUR/USD traded with a low of 1.2888 and a high of 1.3007 before closing at 1.2990. Looking ahead, German GFK Index Forecast at 3.5% in August.

The Japanese Yen (JPY) the major struggled to hold gains above Y87.50 as the Dollar weakened broadly but found support under Y87. The market outlook is mixed with buoyant crosses being offset by weak USD/JPY technicals and expectations of an Y85 test. Overall the USDJPY traded with a low of 86.81 and a high of 87.74 before closing the day around 87.05 in the New York session.

The Sterling (GBP) resistance was found above 1.5500 with the market stalling above the key figure. Further gains are likely but the Pound has failed to make straight-line gains in recent weeks so expect volatility. EUR/GBP has resumed its medium term downtrend with 0.8300 the first target. Overall the GBP/USD traded with a low of 1.5416 and a high of 1.5523 before closing the day at 1.5490 in the New York session. Looking ahead, July CBI Sales forecast at 0 vs. -5 previously.

The Australian Dollar (AUD) broke above the key 0.9000 level riding the recent rally in US stocks. The market is once again turning bullish on the AUD and further targets include 0.9080 and 0.9150. AUD/JPY is stalling at the Y78 level but Y80 is the bull's target. Overall the AUD/USD traded with a low of 0.8940 and a high of 0.9038 before closing the US session at 0.9010.

Oil & Gold (XAU) subsiding Eurozone fears have led to a further pullback in Gold with the market settling into an 1175-1200 range waiting for a further catalyst. Overall trading with a low of USD$1200 and high of USD $1185 before ending the New York session at USD$1190 an ounce. Pulled back after failing ahead of $80 a barrel, finding support under $78 a barrel. WTI Oil Closed -$0.30 at $78.80 a barrel.

TECHNICAL COMMENTARY

Currency
Sup 2
Sup 1
Spot
Res 1
Res 2

EUR/USD
1.2480
1.2709
1.2990
1.3094
1.3416

USD/JPY
85.87
86.27
86.95
88.50
89.16

GBP/USD
1.4857
1.5125
1.5490
1.5524
1.5816

AUD/USD
0.8622
0.8738
0.9015
0.9077
0.9389

XAU/USD
1157.00
1175
1185
1218
1244.00

OIL/USD
75.00
78.00
79.10
80.00
82.50

Euro - 1.2990

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 - 86.95

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 - 1.5490

Initial support at 1.5125 (July 20 low) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5524 (April 15 high) followed by 1.5816 (Feb 17 high).

Australian Dollar - 0.9015

Initial support at 0.8738 (July 22 high) followed by the 0.8622 (June 8 high). Initial resistance is now at 0. 9077 (76.4% retrace of 0.9389-0.8067) followed by 0.9389 (April 12 high).

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 - 79.05

Initial support at 78.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).