CURRENCY TRADING SUMMARY - 3rd September (00:30GMT)

U.S. Dollar Trading (USD) was surprisingly soft as the market continued to trade with 'risk off'. The USD gave back some of the gains from Tuesday night. Gold led the charge higher over $20 an ounce and the Aussie started the ball rolling in the Asian session with strong GDP numbers. ADP Unemployment in August fell -298k vs. -250k Forecast and added weight to the stock market. FOMC minutes were relatively dovish as the FED warned about the market getting ahead of themselves and that slow growth was forecast for the short term. Crude Oil was unchanged to close at $68.05. In US share markets, S&P ended -3 points (-0.33%) at 994, NASDAQ ended -2 points (-0.01%) at 1967 and DOW JONES ended -29 points (-0.32%) at 9280. Looking ahead, ISM non manufacturing forecast at 48 vs. 46.4 previously. Also released, Weekly Jobless Claims forecast at 560k vs. 570k previously.

The Euro (EUR) enjoyed gains on broad USD weakness as the 1.4200 held firm and traders continued to square up positions before today's ECB meeting and tomorrows US non Farm Payrolls risk event. EUR/JPY plumbed new lows but found solid support and settled into a tight range. Q2 GDP remained unrevised at -0.1%. Overall the EUR/USD traded with a low of 1.4190 and a high of 1.4295 before closing at 1.4270. Looking ahead, July Retail Sales forecast at 0.1% vs. -0.2% previously. Also ahead, ECB Rate announcement forecast to remain at 1.0% but the focus will be on Trichet's post meeting comments.

The Japanese Yen (JPY) Nikkei losses and risk aversion combined to push the USD/JPY through supports at 92.50 to plumb new multi-month lows. Key level on the downside is 91.60. GBP/JPY went though 150 Yen but found support below. EUR/JPY kept to a tight range below 132. Overall the USDJPY traded with a low of 92.09 and a high of 93.06 before closing the day around 92.25 in the New York session.

The Sterling (GBP) some large buy orders in Europe helped reverse direction and the pair surged back above 1.62 to briefly touch 1.63. News of a massive Oil find from BP helped keep the mood positive although GBP/JPY selling capped the rally. Overall the GBP/USD traded with a low of 1.6115 and a high of 1.6300 before closing the day at 1.6270 in the New York session. Looking ahead, August PMI Services forecast at 53.9 vs. 53.2.

The Australian Dollar (AUD) performed extremely well on the back of strong GDP figures for the second quarter. Q2 GDP forecast at 0.2% came in at 0.6%. The number increases the chance of aggressive rate rises sooner rather than later. AUD/JPY recovered from fresh multi-month lows although is struggling to eek out gains in the current risk environment. Overall the AUD/USD traded with a low of 0.8240 and a high of 0.8373 before closing the US session at 0.8345. Looking ahead, July Trade Balance forecast at -850mn vs. -441mn previously.

Gold (XAU) broke higher as large fund buying pushed the pair past $960 an ounce to quickly run up and touch $980. Overall trading with a low of USD$951 and high of USD$980 before ending the New York session at USD$952 an ounce.

TECHNICAL COMMENTARY


Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4046

1.4178

1.4275

1.4406

1.4447

USD/JPY

90.54

91.74

92.15

94.07

95.06

GBP/USD

1.6034

1.6114

1.6275

1.6381

1.6546

AUD/USD

0.8156

0.8239

0.8350

0.8478

0.8519

XAU/USD

939.00

944.00

978.00

980.00

990.00


Euro - 1.4275
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 - 92.15
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 - 1.6275
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 - 0.8345
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 - 978
Initial support at 944 (Aug 31 low) followed by 939 (Aug 24 low). Initial resistance is now at 980 (Sept 2 high) followed by 990 (Jun 3 high).