CURRENCY TRADING SUMMARY - 22nd October (00:30GMT)

U.S. Dollar Trading (USD) suffered broadly as the Euro broke above 1.5000 and Oil broke above $80 for the first time this year. The dollar did well into the close off as the US stock market was sold off. In US Stocks, DJIA -92 points closing at 9949, S&P -9 points closing at 1081 and NASDAQ -12 points closing at 2150. Looking ahead, Weekly Jobless Claims are forecast at 515k vs. 514k previously.

The Euro (EUR) took out the 1.5000 level as traders bought the single currency when Oil broke above $80 a barrel. EUR/JPY was also very strong breaking above 136 Yen. EUR/GBP was weaker though as the pound continued to recover with pair testing 0.9000. Overall the EUR/USD traded with a low of 1.4888 and a high of 1.5046 before closing at 1.5010. Looking ahead, August Current Account previously at 8.8bn.

The Japanese Yen (JPY) was weak as strong cross buying on the AUD/JPY, GBP/JPY and EUR/JPY propped the USD/JPY above 91 Yen. Most pairs did pull back into the US close as the Dow Jones fell 100 points quickly. Overall the USDJPY traded with a low of 94.49 and a high of 91.28 before closing the day around 91.05 in the New York session. Looking ahead, September Japanese Trade Balance forecast at 629 bln vs. 185 bln previously.

The Sterling (GBP) was extremely strong as the MPC minutes showed a 9-0 vote to keep QE at 175 Bn and Oil surged in the US. GBP/JPY buying and EUR/GBP selling the main driver. Overall the GBP/USD traded with a low of 1.6347 and a high of 1.6637 before closing the day at 1.6610 in the New York session. Looking ahead, September Retail Sales are forecast at 0.5% vs. 0.0%.

The Australian Dollar (AUD) tracked Oil and the Euro higher trading back above 0.9300 before falling off the figure as Stocks fell. AUD/JPY hit fresh highs buoyed by ongoing hawkish comments about the November interest rate meeting. Overall the AUD/USD traded with a low of 0.9193 and a high of 0.9329 before closing the US session at 0.9270.

Oil & Gold (XAU) made slight gains but underperformed the rest of the market. Overall trading with a low of USD$1047 and high of USD$1065 before ending the New York session at USD$1058 an ounce. Oil rallied over $3 a barrel from lows in the US session. Crude Oil was up $2.25 ending the New York session at $81.37.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4762

1.4829

1.5015

1.5046

1.5083

USD/JPY

88.84

89.28

90.90

91.63

92.53

GBP/USD

1.6241

1.6329

1.6610

1.6658

1.6742

AUD/USD

0.8985

0.9113

0.9290

0.9347

0.9476

XAU/USD

1036.00

1043

1060.00

1067.00

1070.00

OIL/USD

79.50

80.00

81.00

82.00

82.50


Euro - 1.5015
Initial support at 1.4829 (Oct 19 low) followed by 1.4762 (Oct 13 low). Initial resistance is now located at 1.5046 (Oct 21 high) followed by 1.5083 (August 11 2008 high)

Yen - 90.90
Initial support is located at 89.28 (Oct 15 low) followed by 88.84 (Oct 14 low). Initial resistance is now at 91.63 (Sept 24 high) followed by 92.53 (Sept 21 high).

Pound - 1.6610
Initial support at 1.6329 (Oct 19 low) followed by 1.6241 (Sept 19 low). Initial resistance is now at 1.6658 (Sept 15 high) followed by 1.6742 (Sept 11 high).

Australian Dollar - 0.9290
Initial support at 0.9113 (Oct 19 low) followed by the 0.8985 (Oct 12 low). Initial resistance is now at 0.9347 (Aug 4 08 high) followed by 0.9476 (Jul 31 08 high).

Gold - 1060
Initial support at 1043 (Oct 16 low) followed by 1036 (Oct 7 low). Initial resistance is now at 1067 (Oct 20 high) followed by 1070 (Oct 14 high).

Oil - 81.00
Initial support at 80 (key level) followed by 79.50 (Previous Resistance). Initial resistance is now at 82 (Oct 21 high) followed by 82.50 (Fib Projection).