Asia Sparks Global Rally
U.S. Dollar Trading (USD) continued to be under pressure as the stock market rallied and US data disappointed. June ISM Services dropped to 53.8 vs. 55.4 previously and confirms a long string of recent data that the US economy is growing slower than previously. In US stocks, DJIA +57 points closing at 9743, S&P +5 points closing at 1027 and NASDAQ +2 points closing at 2093.
The Euro (EUR) continued to press higher breaking above 1.2600 as European stocks rallied more then 2%. The European Debt crisis is subsiding for now as a Spanish Bond offering yesterday went well. Market focus is now turning to the European Bank Stress tests slated for release on July 23. EUR/USD traded with a low of 1.2480 and a high of 1.2664 before closing at 1.2610. Looking ahead, Q1 GDP is expected to be confirmed at 0.2% q/q.
The Japanese Yen (JPY) weakened against all except the Dollar as risk appetite and carry trades such as the AUD/JPY surged higher. Resistance at Y88 held once again and the market is bracing itself for further losses as US data turns south. The EUR/JPY outlook remains cloudy with Y110 the major pivot in recent sessions. Overall the USDJPY traded with a low of 87.33 and a high of 88.00 before closing the day around 87.50 in the New York session.
The Sterling (GBP) underperformed the rest of the market with resistance at 1.5200 proving too much even with the major equity rallies. EUR/GBP broke above 0.8330 with the market pressing higher on Euro demand. GBP/JPY is also weighing with lack of follow through making the bulls restless. Overall the GBP/USD traded with a low of 1.5079 and a high of 1.5230 before closing the day at 1.5140 in the New York session.
The Australian Dollar (AUD) rallied aggressively after a brief sell off at the start of Asia to be the biggest gainer on the day. May Trade Balance surged to 1.65bn vs. 0.5bn forecast and the RBA was upbeat in its assessment in the Australian/Asian Economy going forward. Overall the AUD/USD traded with a low of 0.83 and a high of 0.8315 before closing the US session at 0.8562.
Oil & Gold (XAU) Gold fell through $1200 an ounce as the Euro resurgence reduced demand for gold as an alternative currency. Overall trading with a low of USD$1189 and high of USD$1214 before ending the New York session at USD$1195 an ounce. Bounced with stocks but gains were muted by weak US data. WTI Oil Closed +$0.80 at $71.90 a barrel.
Euro - 1.2610
Initial support at 1.2194 (July 1 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2672 (May 21 high) followed by 1.2803 (May 11 high)
Yen - 87.50
Initial support is located at 86.97 (July 1 low) followed by 85.87 (Nov 30, 2009 low). Initial resistance is now at 88.56 (July 1 high) followed by 89.42 (June 28 high).
Pound - 1.5140
Initial support at 1.5000 (Psychological level) followed by 1.4857 (Jun 25 low). Initial resistance is now at 1.5242 (38.2% retrace of 1.6878-1.4231) followed by 1.5391 (April 30 high).
Australian Dollar - 0.8490
Initial support at 0.8263 (June 9 low) followed by the 0.8067 (May 25 low). Initial resistance is now at 0. 8566 (June 30 high) followed by 0.8722 (June 29 high).
Gold - 1193
Initial support at 1189 (July 6 low) followed by 1185 (May 25 low). Initial resistance is now at 1244 (July 1 high) followed by 1265 (June 25 high).
Oil - 72.20
Initial support at 70.00 (Intraday Support) followed by 69.50 (Intraday Support). Initial resistance is now at 72.50 (Intraday Resistance) followed by 75.00 (Intraday Resistance).