US GDP Misses Estimates

Written by Anthony Darvall

U.S. Dollar Trading (USD) investor appetite for riskier assets pushed the USD lower against the commodity currencies on Friday as Oil and Gold rallied. Data was mixed with Q2 GDP at 2.4% vs. 2.5% forecast being offset by strong Chicago PMI at 62.3 vs. 59.1 previously. In US stocks, DJIA -1 points closing at 10465, S&P +1 points closing at 1101 and NASDAQ +3 points closing at 2254. Looking ahead, July ISM Manufacturing is forecast at 54 vs. 56.2 previously.

The Euro (EUR) was unable to gain against the greenback as resistance near 1.3100 capped buyers but the market finished well off lows after once again testing support below 1.3000. July CPI was 1.7% vs. 1.4% y/y previously and German Retail Sales slumped -0.9% in June. EUR/USD traded with a low of 1.2981 and a high of 1.3093 before closing at 1.3055. Looking ahead, July PMI Manufacturing forecast at 56.5.

The Japanese Yen (JPY) broke briefly below Y86 after the US GDP miss before the reversal of the stock market's direction help crosses and the major lift. GBP/JPY was especially buoyant back above Y136. Dollar weakness still targets Y85 but traders expect jawboning from Japanese Government to increase near those levels. Overall the USDJPY traded with a low of 85.95 and a high of 86.93 before closing the day around 86.40 in the New York session.

The Sterling (GBP) the rally continued with EUR/GBP selling and GBP/JPY buying helping the Pound outperform. Resistance at 1.57 was broken and the market remained strong into the weekend. Overall the GBP/USD traded with a low of 1.5553 and a high of 1.5722 before closing the day at 1.5702 in the New York session. Looking ahead, July Manufacturing PMI is forecast at 57 vs. 57.5 previously.

The Australian Dollar (AUD) was extremely strong after initially selling off below 0.9000 on AUD/JPY weakness and risk aversion after the US GDP miss before the sharp rally in US stocks helped lift the commodity currency back to the 0.9050's. The market now turns its attention to the RBA decision tomorrow. Overall the AUD/USD traded with a low of 0.8967 and a high of 0.9066 before closing the US session at 0.9057.

Oil & Gold (XAU) bounced back to $1180 as the USD came under pressure and Oil rallied. Overall trading with a low of USD$1166 and high of USD $1184 before ending the New York session at USD$1180 an ounce. Crude Extended gains back above $79 a barrel. WTI Oil Closed +$0.80 at $79.10 a barrel.

TECHNICAL COMMENTARY

Currency
Sup 2
Sup 1
Spot
Res 1
Res 2

EUR/USD
1.2480
1.2709
1.3060
1.3107
1.3416

USD/JPY
84.83
85.87
86.50
88.12
89.16

GBP/USD
1.5125
1.5412
1.5700
1.5816
1.6069

AUD/USD
0.8738
0.8896
0.9070
0.9077
0.9389

XAU/USD
1146.00
1157
1180
1204
1218.00

OIL/USD
77.00
78.00
79.10
79.50
80.00

Euro - 1.3060

Initial support at 1.2709 (July 15 low) followed by 1.2480 (July 6 low). Initial resistance is now located at 1.3107 (July 29 high) followed by 1.3416 (April 27 high)

Yen - 86.50

Initial support is located at 85.87 (Nov 30 low) followed by 84.83 (Nov 29 2009 low). Initial resistance is now at 88.12 (July 28 high) followed by 89.16 (July 12 high).

Pound - 1.5700

Initial support at 1.5412 (July 26 low) followed by 1.5125 (July 20 low). Initial resistance is now at 1.5816 (Feb 17 high) followed by 1.6069 (Feb 3 high).

Australian Dollar - 0.9070

Initial support at 0.8896 (July 23 high) followed by the 0.8738 (July 22 high). Initial resistance is now at 0. 9077 (76.4% retrace of 0.9389-0.8067) followed by 0.9389 (April 12 high).

Gold - 1180

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1204 (July 23 high) followed by 1218 (July 13 high).

Oil - 79.10

Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).