Market Mood Improves into the Weekend

U.S. Dollar Trading (USD) finished weaker across the board as stock markets recovered some of the week's losses into the weekend. Weak US data did not help but was overlooked as buyers took control of the market. Q1 GDP was revised to 2.7% vs. 3.0% previously. In US stocks, DJIA -8 points closing at 10143, S&P +3 points closing at 1076 and NASDAQ +6 points closing at 2223. Looking ahead, May Core PCE is forecast at 0.1% vs. 0.1% previously m/m.

The Euro (EUR) was stronger on the day as Oil surged and general risk appetite prompted a new leg higher in the single currency. Traders are still concerned about the European debt crisis but for the time being the catalyst for further aggressive Euro selling is absent. EUR/USD traded with a low of 1.2252 and a high of 1.2396 before closing at 1.2380. Looking ahead, June German CPI is forecast at 0.1% vs. 0.1% previously m/m.

The Japanese Yen (JPY) most of the crosses finished higher but the USD/JPY remained under pressure below the key Y90 level. EUR/JPY found support under Y110 to bounce once again to the Y111 level. Future direction for the Yen will continue to be determined by the day to day movement of stock markets. Overall the USDJPY traded with a low of 89.20 and a high of 89.78 before closing the day around 89.30 in the New York session. UPDATE May Japanese Retail Sales drops to 2.8% y/y vs. 4/9% previously.

The Sterling (GBP) continued to track higher with the resurgent pound breaking and closing above the key 1.5000 level. The Austerity budget released last week is providing support along is the possibility of rate hikes sooner than previously expected. Overall the GBP/USD traded with a low of 1.4855 and a high of 1.5078 before closing the day at 1.5040 in the New York session.

The Australian Dollar (AUD) reversed direction as support was found at 0.8600 and stocks rallied in the US session after falling at the start of Europe. AUD/JPY struggled to take full advantage of the improved risk environment as the USD/JPY slips lower. Overall the AUD/USD traded with a low of 0.8595 and a high of 0.8760 before closing the US session at 0.8740.

Oil & Gold (XAU) Gold rallied as Oil surged higher and the Dollar remained weak. Overall trading with a low of USD$1241 and high of USD$1258 before ending the New York session at USD$1254 an ounce. Oil rallied on hurricane concerns in the gulf. WTI Oil Closed +$2.35 at $78.86 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2045

1.2209

1.2380

1.2487

1.2672

USD/JPY

87.95

88.97

89.40

90.59

91.48

GBP/USD

1.4646

1.4803

1.5060

1.5078

1.5219

AUD/USD

0.8506

0.8582

0.8760

0.8865

0.9027

XAU/USD

1215.00

1224

1255

1265

1300.00

OIL/USD

75.00

78.00

79.20

80.00

81.50

Euro - 1.2380

Initial support at 1.2209 (June 23 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2487 (June 21 high) followed by 1.2672 (May 21 high)

Yen - 89.40

Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at  90.59 (June 23 high) followed by 91.48 (June 21 high).

Pound - 1.5060

Initial support at 1.4803 (Jun 23 low) followed by 1.4646 (Jun 17 low). Initial resistance is now at 1.5078 (Jun 25 high) followed by 1.5219 (76.4% 0f 1.5524-1.4231).

Australian Dollar - 0.8760

Initial support at 0.8582 (June 16 low) followed by the 0.8506 (June 15 low). Initial resistance is now at 0. 8865 (May 17 high) followed by 0.9027 (May 17 high).

Gold - 1255

Initial support at 1224 (June 23 low) followed by 1215 (June 10 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (Round Number).

Oil - 79.20

Initial support at 78.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 81.50 (Intraday Resistance).