ECB, BOE Rate Decisions Ahead

Written by Anthony Darvall

U.S. Dollar Trading (USD) enjoyed a relief rally as US data surprised and traders took profit from recent USD selling. July ISM services jumped to 54.3 vs. 53.8 previously. Also solid, July ADP Private payrolls at 42k vs. 19k previously. In US stocks, DJIA +44 points closing at 10680, S&P +6 points closing at 1127 and NASDAQ +20 points closing at 2303. Looking ahead, Weekly Jobless Claims are forecast at 455k vs. 457k previously.

The Euro (EUR) eased back after solid strength over the previous two trading days and the market fell back on the stronger US data. July EU PMI Services were revised to 55.8 vs. 56 previously. The pullback did not threaten the uptrend with support seen at 1.3100 and 1.3000. EUR/USD traded with a low of 1.3130 and a high of 1.3242 before closing at 1.3170. Looking ahead, August ECB Rate Announcement is forecast to remain at 1% but attention will be on the following press conference.

The Japanese Yen (JPY) traded at year lows below Y85.50 but was bought back up on the strong US data to finish above the Y86 level. The market is still bearish on the outlook with Y85 the bears first target. AUD/JPY was especially strong as the risk trade remained the cross of choice. Overall the USDJPY traded with a low of 85.31 and a high of 86.43 before closing the day around 86.20 in the New York session.

The Sterling (GBP) fell back below 1.5900 as the market took profit in New York and ahead of the Bank of England Policy meeting today. July Halifax Prices increased 0.6% vs. -0.3%. EUR/GBP stalled its decent with the pair bouncing back to 0.8300. Overall the GBP/USD traded with a low of 1.5854 and a high of 1.5967 before closing the day at 1.5887 in the New York session.

The Australian Dollar (AUD) was able to set fresh month highs in spite of the USD strength as June Trade Balance figures set a record at 3.5bn vs. 1.6bn previously. AUD/JPY led the market higher in the US session but AUD/USD topped out at 0.9180 resistances. Overall the AUD/USD traded with a low of 0.9093 and a high of 0.9185 before closing the US session at 0.9165. UPDATE New Zealand Unemployment increased to 6.8% vs. 6.0%.

Oil & Gold (XAU) tested resistance above $1200 but failed to break above the psychologically level. Overall trading with a low of USD$1188 and high of USD $1203 before ending the New York session at USD$1195 an ounce. Struggled at $83 before pulling back to support at $81.50. WTI Oil Closed -$0.08 at $82.30 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.27091.29521.31601.34161.3692
USD/JPY83.5084.8386.2086.6688.12
GBP/USD1.54001.56961.58951.60691.6276
AUD/USD0.88960.90330.91550.92730.9389
XAU/USD1146.001157119512041218.00
OIL/USD78.0080.0082.2082.5085.00

Euro - 1.3160

Initial support at 1.2952 (July 27 low) followed by 1.2709 (July 15 low). Initial resistance is now located at 1.3416 (April 27 high) followed by 1.3692 (April 12 high)

Yen - 86.20

Initial support is located at 84.83 (Nov 29 2009 low) followed by 83.50 (Nov 29 2009 low). Initial resistance is now at 86.66 (August 3 high) followed by 82.12 (July 28 high).

Pound - 1.5895

Initial support at 1.5692 (August 2 low) followed by 1.5400 (July 26 low). Initial resistance is now at 1.6069 (Feb 3 high) followed by 1.6276 (Jan 28 high).

Australian Dollar - 0.9155

Initial support at 0.9033 (Aug 2 high) followed by the 0.8896 (July 22 high). Initial resistance is now at 0. 9273 (May 4 low) followed by 0.9389 (April 12 high).

Gold - 1195

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 - 82.20

Initial support at 80.0 (Intraday Support) followed by 79.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 85.00 (Intraday Resistance).