Rally Continues, Risk On
U.S. Dollar Trading (USD) with more positive news in the IMF upgrading World GDP to 4.6% vs. 4.2% the market extended its rally for a third day. The USD was weaker against most currencies as the safe haven was sold in preference for riskier assets. Weekly Jobless Claims dropped to 454k vs. 472k previously. In US stocks, DJIA +120 points closing at 10138, S&P +9 points closing at 1070 and NASDAQ +15 points closing at 2175. Looking ahead, May Wholesale Trade forecast at 0.5% vs. 0.7%.
The Euro (EUR) grinded higher but was relatively contained as the rally lost momentum after significant gains over the past week. The ECB held rates at 1.0% and President Trichet spoke of some investors being too pessimistic on the outlook for Europe. German Industrial Production was strong +2.6% vs. +1.2% previously. EUR/USD traded with a low of 1.2623 and a high of 1.2714 before closing at 1.2690. Looking ahead, June CPI 0.1 vs. 0.1% previously.
The Japanese Yen (JPY) broke and held above the Y88 resistance level on solid risk appetite and strong cross buying. AUD/JPY in particular helped lift the major higher after the strong Aussie Jobs data in the Asian session. May Machine Orders dropped -9.1% vs. -3.1% forecast. Overall the USDJPY traded with a low of 87.78 and a high of 88.66 before closing the day around 88.50 in the New York session.
The Sterling (GBP) remained subdued in the risk on environment unable to push higher as Europe sold cable on weak housing data. June Halifax house prices fell -0.6% m/m. The BoE Held at 0.5% as expected and also kept the Asset purchase program at 200bn. Overall the GBP/USD traded with a low of 1.5100 and a high of 1.5244 before closing the day at 1.5160 in the New York session. Looking ahead, May Trade Balance is forecast at -7bn vs. -7.2bn previously.
The Australian Dollar (AUD) led the markets higher boosted in Asia on exceptionally strong job numbers in June. June Employment change +45.9k vs. +17.5k forecast. June Unemployment Rate 5.1% vs. 5.2% previously. Resistance is now seen at 0.8860 but the market is heavily overbought at this time scale. Overall the AUD/USD traded with a low of 0.8631 and a high of 0.8793 before closing the US session at 0.8760.
Oil & Gold (XAU) was mixed, range trading with weakness in the Dollar being offset by less demand for alternative investments. Overall trading with a low of USD$1187 and high of USD$1208 before ending the New York session at USD$1198 an ounce. Oil Surged back to life on bullish inventory numbers, -5m barrels last week. WTI Oil Closed +$1.37 at $75.40 a barrel.
Euro - 1.2675
Initial support at 1.2480 (July 6 low) followed by 1.2194 (July 1 low). Initial resistance is now located at 1.2807 (76.4% retrace of 1.3094-1.1877) followed by 1.3094 (May 10 high)
Yen - 88.50
Initial support is located at 86.97 (July 1 low) followed by 85.87 (Nov 30, 2009 low). Initial resistance is now at 88.65 (July 8 high) followed by 89.42 (June 28 high).
Pound - 1.5130
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 - 0.8750
Initial support at 0.8622 (July 8 high) followed by the 0.8450 (June 7 high). Initial resistance is now at 0. 8859 (June 21 high) followed by 0.9000 (Big Level).
Gold - 1195
Initial support at 1185 (July 7 low) followed by 1166 (May 21 low). Initial resistance is now at 1214 (July 5 high) followed by 1244 (July 1 high).
Oil - 75.30
Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).