Stocks Rebound 'Risk On'
U.S. Dollar Trading (USD) was on the back foot after the US stock market staged an impressive rally after Asian and European stocks were quite weak. The exception was the Yen however as Japanese PM Hatoyama resigned and the search for a new leader began. April Pending Home Sales at 6% vs. 5% forecast. In US stocks, DJIA +225 points closing at 10249, S&P +27 points closing at 1098 and NASDAQ +58 points closing at 2281. Looking ahead, May ADP National Employment is forecast at 60k vs. 32k previously. Also released, Weekly Jobless Claims are forecast at 450k vs. 460k previously.
The Euro (EUR) struggled to take advantage of the improvement in the investor mood as reports surfaced of Iran selling 45bn Euros and re-balancing it's reserves into USD and Gold. This was slightly offset by earlier reports that the BRIC countries would continue to buy Euros. April PPI at 0.9% vs. 0.6% previously. EUR/USD traded with a low of 1.2174 and a high of 1.2275 before closing at 1.2240. Looking ahead, April Retail Sales are forecast at -0.2% vs. -0.1% previously.
The Japanese Yen (JPY) was the weakest currency in the market after the PM resigned on pressure from his handling of the recent US Army base negotiations. Resistance at 91.60 was broken and the pair pushed higher to above Y92 in the US session. Crosses did well in the 'risk on' environment with CAD/JPY leading. Overall the USDJPY traded with a low of 91.00 and a high of 92.38 before closing the day around 92.10 in the New York session.
The Sterling (GBP) pushed above 1.4700 in Asia but the recent gains were too excessive to maintain and the pair slipped back lower unable to participate in the US rally. EUR/GBP broke to fresh year lows below 0.8300 before profit taking hit the major and all the crosses. Overall the GBP/USD traded with a low of 1.4550 and a high of 1.4773 before closing the day at 1.4665 in the New York session. Looking ahead, May PMI forecast at 55.5 vs. 55.3 previously.
The Australian Dollar (AUD) was under pressure breaking below 0.8300 in the Asian session even with solid GDP numbers at 0.5% Q.Q and 2.7% Y/Y. The mood changed however with the US stock market rallying aggressively and heavy AUD/JPY buying pushing the Aussie back above 0.8400. Topside 0.8580 remains the key resistance for any relief rally. Overall the AUD/USD traded with a low of 0.8274 and a high of 0.8435 before closing the US session at 0.8320. Looking ahead, April Trade Balance is forecast at -500m vs. 2082m previously.
Oil & Gold (XAU) Gold was steady on the Iran buying news but fresh gains will require further stimulus. Overall trading with a low of USD$1213 and high of USD$1227 before ending the New York session at USD$1223 an ounce. Oil Rallied on improved risk appetite and lingering middle eastern concerns. WTI Oil Closed $1.39 at $72.50 a barrel.
Euro - 1.2270
Initial support at 1.2110 (June 1 low) followed by 1.2000 (Round Number). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2587 (May 24 high)
Yen - 92.10
Initial support is located at 90.61 (May 28 low) followed by 89.81 (May 27 low). Initial resistance is now at 92.97 (May 18 low) followed by 93.64 (May 13 high).
Pound - 1.4665
Initial support at 1.4366 (Mary 27 low) followed by 1.4231 (May 20 low). Initial resistance is now at 1.4878 (50% 0f 1.5544-1.4231) followed by 1.4918 (May 13 high).
Australian Dollar - 0.8420
Initial support at 0.8202 (May 27 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8552 (May 28 low) followed by 0.8579 (Feb 5 low).
Gold - 1225
Initial support at 1202 (May 28 low) followed by 1185 (May 25 low). Initial resistance is now at 1229 (Key level) followed by 1250 (1123.90 plus 1.618 of 1085.3-1170.1).
Oil - 73.60
Initial support at 72.50 (Intraday Support) followed by 70.00 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).