China Says EU Investment review Story 'groundless'

U.S. Dollar Trading (USD) was on the back foot as risk aversion gave way to risk appetite when global stock markets rallied for 24 hours. Q1 GDP was at 3.0% slightly worse then 3.4% forecast but still strong. Weekly Jobless claims improved to 460k vs. 471k previously. In US stocks, DJIA +258 points closing at 10258, S&P +35 points closing at 1110 and NASDAQ +81 points closing at 2277. Looking ahead, April Core PCE is forecast at 0.1% vs. 0.1% previously m/m and Chicago PMI is forecast at 62 vs. 63.8 previously.

The Euro (EUR) rebounded off support at year lows on an official Chinese rebuke of the review of the EU investments story widely accredited for the sell off on Wednesday. China Premier Wen said they were willing to deepen China-EU cooperation. EUR/USD traded with a low of 1.2182 and a high of 1.2396 before closing at 1.2350. Looking ahead, Swiss April Trade Balance previously at 2007mn.

The Japanese Yen (JPY) was the weakest currency in the market as the heavily bought up safe haven currency was hit from profit taking and surging commodity currency crosses. AUD/JPY jumped 5% to test the Key Y77 level which was the previous major support and USD/JPY rallied to Y91. Future direction will rely upon the sustainability of the stock market rally and EU sentiment recovery. Overall the USDJPY traded with a low of 89.91 and a high of 91.10 before closing the day around 90.90 in the New York session. UPDATE April Unemployment Rate 5.1% vs. 5.0% previously and April Retail Sales at 4.9% vs. 3.7% forecast.

The Sterling (GBP) took advantage of the solid improvement in risk appetite to reclaim 1.4500 on cable and surge above Y132 on GBP/JPY. May CBI Realized Trades fell to -18 vs. 13 previously. May Gfk Index forecast at -18 vs. -16 previously. Overall the GBP/USD traded with a low of 1.4379 and a high of 1.4610 before closing the day at 1.4570 in the New York session.

The Australian Dollar (AUD) was the best performing currency as the heavily beaten down Aussie enjoyed a major buying spree and gained over 4% against the USD. Q1 CAPEX was weaker than expected at -0.1% vs. 1.4% forecast but this had little effect. Key resistance is found at 0.8580 the previous Year low before May 19. Overall the AUD/USD traded with a low of 0.8224 and a high of 0.8532 before closing the US session at 0.8510.

Oil & Gold (XAU) Held above $1200 on USD weakness and general commodity gains but was capped by the decrease in alternative currency. Overall trading with a low of USD$1205 and high of USD$1218 before ending the New York session at USD$1208 an ounce. Crude Oil surged up +4% in a major move higher. WTI Oil Closed +$3.04 at $74.55 a barrel.

TECHNICAL COMMENTARY

       

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2135

1.2144

1.2325

1.2587

1.2747

USD/JPY

87.95

88.97

91.25

91.88

92.97

GBP/USD

1.4111

1.4231

1.4570

1.4703

1.4918

AUD/USD

0.7828

0.8067

0.8520

0.8529

0.8725

XAU/USD

1146.00

1166

1209

1229

1250.00

OIL/USD

70.00

72.50

74.80

75.00

76.00

Euro - 1.2325

Initial support at 1.2144 (May 19 low) followed by 1.2135 (0.50 of 0.8232-1.6039). Initial resistance is now located at 1.2587 (May 24 high) followed by 1.2747 (May 12 high)

Yen - 91.25

Initial support is located at 88.97 (May 20 low) followed by 87.95 (May 6 low). Initial resistance is now at 91.88 (May 20 low) followed by 92.97 (May 18 high).

Pound - 1.4570

Initial support at 1.4231 (Mary 20 low) followed by 1.4111 (March 18 2009 low). Initial resistance is now at 1.4703 (May 14 High) followed by 1.4918 (May 13 low).

Australian Dollar - 0.8520

Initial support at 0.8529 (May 20 high) followed by the 0.7828 ( 2009 low). Initial resistance is now at 0. 8499 (May 18 low) followed by 0.8725 (May 19 high).

Gold - 1209

Initial support at 1166 (May 21 low) followed by 1146 (April 27 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil - 74.80

Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 75.00 (March high) followed by 76.00 (Intraday Resistance).