Weak US Jobs Hurt Dollar

Written by Anthony Darvall

U.S. Dollar Trading (USD) came under pressure after the July Non Farms Payrolls fell -131k and June's figures were revised lower by another 100k. The USD/JPY tested the key Y85 level and EUR/USD broke above 1.3300 although some riskier assets like Oil came under pressure. The July Unemployment Rate increased to 8.0% vs. 7.9% previously. In US stocks, DJIA -21 points closing at 10653, S&P -4 points closing at 1121 and NASDAQ -4 points closing at 2289.

The Euro (EUR) with little technical resistance seen the on the topside the market surged after the US data to test and break above 1.3300. Further gains are seen as the market turns aggressively bearish on the USD and the Eurozone concerns fade into the background. June German Industrial Production fell -0.6% vs. 0.7% forecast. EUR/USD traded with a low of 1.3158 and a high of 1.3333 before closing at 1.3290. Looking ahead, August Sentix Index forecast at 1.6 vs. -1.3 previously. Also released, June German Trade Balance forecast at 12.5bn vs. 10.6bn previously.

The Japanese Yen (JPY) reacted aggressively to the US data as well falling to the key Y85 level but failing to break before recovering timidly for the rest of the day. The market is now waiting for comments from the Japanese Government on Monday as recent rhetoric has been getting louder. Overall the USDJPY traded with a low of 85.03 and a high of 86.22 before closing the day around 85.38 in the New York session.

The Sterling (GBP) surged with the Euro but failed to break the 1.6000 level on multiple attempts with talks in the market of heavy option related selling. June Industrial Output unexpectedly dropped -0.5% vs. 0.2% forecast m/m. Overall the GBP/USD traded with a low of 1.5841 and a high of 1.6000 before closing the day at 1.5960 in the New York session. Looking ahead, July BRC Retail Sales previously at 1.2%.

The Australian Dollar (AUD) broke briefly above 0.9200 after USD weakness post NFP but fell back sharply on the drop in US stocks. AUD/JPY reacted more aggressively to the downside and is a better representation of risk appetite. Overall the AUD/USD traded with a low of 0.9136 and a high of 0.9221 before closing the US session at 0.9185.

Oil & Gold (XAU) broke above $1200 an ounce on speculation after weak US data that the FED may initiate fresh monetary easing measures. Overall trading with a low of USD$1193 and high of USD $1211 before ending the New York session at USD$1205 an ounce. Crude Oil fell back after risk was taken off the table in the New York session. WTI Oil Closed -$1.30 at $80.70 a barrel.

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.27371.29811.32801.34161.3692
USD/JPY83.5084.7385.4086.6688.12
GBP/USD1.54001.56961.59701.60691.6276
AUD/USD0.88960.90330.91700.92730.9389
XAU/USD1146.001157120412111218.00
OIL/USD78.0080.0081.0082.5085.00

Euro - 1.3280

Initial support at 1.2981 (July 30 low) followed by 1.2737 (July 22 low). Initial resistance is now located at 1.3416 (April 27 high) followed by 1.3692 (April 12 high)

Yen - 85.40

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 - 1.5970

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 - 0.9170

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 - 1204

Initial support at 1157 (July 5 low) followed by 1147 (Apr 27 low). Initial resistance is now at 1211 (Aug 6 high) followed by 1218 (July 13 high).

Oil - 81.00

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).