G7 fails to call for a stronger USD. AUD still on target

CURRENCY TRADING SUMMARY – 6th October (00:30GMT)

U.S. Dollar Trading (USD) lost further ground despite ISM services rising from 48.4 to 50.9 for the first time since September 2008. Such figures help share markets shrugging off the disappointment of last Fridays NFP data in which -263K jobs were lost vs. -180k forecasts. The DJIA rose 112.08 pts (1.18%) whilst the NASDAQ also gained 15.19 pts (1.16%). 

The Euro (EUR) gapped higher first thing Monday morning as the G7 communiqué failed to address a strong USD policy, despite mentioning concerns surrounding FX volatility. On the data front August retail sales fell by -0.2%, yet the EUR continued to trade higher as Sentix index recorded a 15 month high at -12.6. EUR also found demand on comments by ECB’s Nowotny that he sees no need to take action on current exchange levels. The EUR traded with a low of 1.4578 and a high of 1.4672 before closing the day at 1.4650.    

The Japanese Yen (JPY) saw Fin-Min Fujii re-iterate Japanese Yen intervention if necessary. The Yen remained mixed as the market continues to scratch its head over recent rhetoric and its ambiguity. The USDJPY traded with a low of 89.41 and a high of 89.98 before closing the day at 89.55

The Sterling (GBP) was largely mixed finding support on UK PMI Services figures rising to 2 year highs of 55.3 from last months 54.1. Nonetheless the GBP continues to be hampered on fears that the UK government will be faced with a financing gap of 215 billion pound in 2009 which equates 15% of UK GDP. Over all the GBP traded with a low of 1.5899 and a high of 1.6024 before closing at 1.5938.

The Australian Dollar (AUD) continued to push higher despite markets in Sydney being closed for Labour Day holiday. In anticipation of hawkish RBA comments at Wednesdays meeting with two analysts seeing a chance of a hike, the Aussie dollar also found demand following September Job ads rising to 4.4%. AUD traded with a low of 0.8645 and a high of 0.8796 before closing the day at 0.8773. Update: August Trade Balance worse than expected at -1524 million versus -850 million forecasted. RBA Rate Announcement at 0330 GMT.

Oil & Gold (XAU) were both buoyed by investor demand following a boost in the US services sector. Crude Oil rose by 46 cents (+0.7%) to US 70.41 a barrel. Whilst XAU surged by US$13.50 an ounce (1.3%) to close at 1017.80. 

TECHNICAL COMMENTARY                                                            

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4467

1.4527

1.4664

1.4725

1.4844

USD/JPY

87.99

88.24

89.40

90.51

91.63

GBP/USD

1.5691

1.5771

1.5950

1.6207

1.6468

AUD/USD

0.8587

0.8676

0.8775

0.8943

0.9130

XAU/USD

982.00

985

1016.40

1020.00

1024.00

OIL/USD

68.00

69.40

70.20

70.75

72.05

Euro – 1.4664

Initial support at 1.4527 (Sept 29 low) followed by 1.4467 (Sept 9 low). Initial resistance is now located at 1.4725 (Sept 25 high) followed by 1.4844 (September 23 high)

Yen – 89.40

Initial support is located at 88.24 (Sept 28 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 90.51 (76.4% retrace 87.13-101.44) followed by 91.63 (Sept 24 high).

Pound – 1.5950

Initial support at 1.5771 (Sept 28 low) followed by 1.5691 (38.2% retrace 1.3503 - 1.7043). Initial resistance is now at 1.6207 (23.6% retrace 1.3503-1.7043) followed by 1.6468 (Sept 23 high).

Australian Dollar – 0.8775

Initial support at 0.8676 (Sept 29 low) followed by the 0.8587 (Sept 28 low). Initial resistance is now at 0.8943 (76.4% retrace 0.9850-0.6009) followed by 0.9130 (Aug 07 '08 high).

Gold – 1016.40

Initial support at 985 (Sept 29 low) followed by 982 (Sept 10 low). Initial resistance is now at 1020 (Sept 22 high) followed by 1024 (September 17 high).

Oil – 70.20

Initial support at 69.40 (Fib Support) followed by 68.00 (Fib Support). Initial resistance is now at 70.75 (Sept 30 high) followed by 72.05 (Sept 22 High).