CURRENCY TRADING SUMMARY - 4th September (00:30GMT)

U.S. Dollar Trading (USD) continued to be sold in the Asian session as news of no new curbs on banking helped shanghai rise +4.8%. Weekly Jobless Claims forecast at 560k came in at 570k. Also released, August ISM-manufacturing forecast at 48 came in at 48.4 vs. 46.4 previously. Crude Oil was down -$0.09 to close at $67.96. In US share markets, S&P ended +8 points (0.85%) at 1003, NASDAQ ended +16 points (0.82%) at 1983 and DOW JONES ended +63 points (0.69%) at 9344. Looking ahead, August Non Farm Payrolls forecast at -225k vs. -247k previously and Unemployment Rate forecast at 9.5% vs. 9.4% previously.

The Euro (EUR) traded above 1.4300 to touch 1.4350 before easing after lackluster ECB President Trichet comments post rate meeting. The ECB held at 1.0% but Trichet noted that the recovery will be bumpy and uneven. July retail sales also weighed falling -0.2% vs. 0.1% forecast. Overall the EUR/USD traded with a low of 1.4190 and a high of 1.4295 before closing at 1.4270. Looking ahead, ECB President speaks again.

The Japanese Yen (JPY) tested 92 in early Asian before the bounce in Chinese stocks led to reversal of direction. USD/JPY was found a little short ahead of the US data today and the pair jumped back above 92.50. GBP/JPY had the biggest bounce from below 150 Yen to above 151.50. Overall the USDJPY traded with a low of 91.95 and a high of 92.79 before closing the day around 92.60 in the New York session. UPDATE Q2 Capex -21.7% vs. -22.9% forecast Q/Y.

The Sterling (GBP) led the market recovery on the back of positive stocks and continued the bounce on UK economic data. August Services PMI came in at 54.1 vs. 53.2 previously. Cable broke higher in Europe to test 1.64 before fading with Euro weakness. Overall the GBP/USD traded with a low of 1.6237 and a high of 1.6414 before closing the day at 1.6340 in the New York session.

The Australian Dollar (AUD) continued to trend higher breaking above 0.8400 after shrugging off the weakness from earlier in the week and some soft trade data yesterday. July Trade Balance forecast at -850mn blew out to -1.56bn vs. -0.54bn previously. Helping the Aussie rally was the continued rally in Gold and strong AUD/JPY support below 77 Yen. Overall the AUD/USD traded with a low of 0.8316 and a high of 0.8428 before closing the US session at 0.8390.

Gold (XAU) press coverage of the Gold break out help the pair continue to rally trading close to the $1000 level before fading late in the day. Overall trading with a low of USD$974 and high of USD$997 before ending the New York session at USD$990 an ounce.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4046

1.4178

1.4255

1.4406

1.4447

USD/JPY

90.54

91.74

92.75

94.07

95.06

GBP/USD

1.6034

1.6114

1.6330

1.6413

1.6546

AUD/USD

0.8156

0.8239

0.8400

0.8478

0.8519

XAU/USD

939.00

944.00

993.00

997.00

1000.00


Euro - 1.4255
Initial support at 1.4178 (Sept 1 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4407 (Aug 27 high) followed by 1.4447 (Aug 5 high)

Yen - 92.75
Initial support is located at 91.74 (July 13 low) followed by 90.54 (February 13 low). Initial resistance is now at 94.07 (August 28 high) followed by 95.06 (Aug 14 high).

Pound - 1.6330
Initial support at 1.6114 (Sept 1 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6381 (Aug 28 high) followed by 1.6546 (Aug 24 high).

Australian Dollar - 0.8400
Initial support at 0.8239 (AUG 27 low) followed by the 0.8156 (AUG 17 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold - 993
Initial support at 944 (Aug 31 low) followed by 939 (Aug 24 low). Initial resistance is now at 997 (Sept 3 high) followed by 1000 (Psychological Round Number).