CURRENCY TRADING SUMMARY - 16th July (00:30GMT)
U.S. Dollar Trading (USD) came under extreme pressure as US stocks soared the most in 3 months up 3.0%, extending Monday and Tuesday's gains. Risk appetite flew higher and VIX index a widely watched risk gauge plummeted. US June CPI was higher than expected at 0.7% vs. 0.6% m/m. Industrial Output in June fell -0.4% vs. -0.6% forecast. The FOMC minutes were bleak as usual with trend growth not seen returning for 5-6 years. Crude Oil closed up $2.02 at $61.54. In US share markets, S&P ended +26.84 points (+2.96%) at 932.68, NASDAQ ended +63.17 points (+3.51%) at 1862.90 and DOW JONES ended +256.72 points (+3.07%) at 8616.21. Looking ahead, Weekly Jobless claims are forecast at 565K vs. 565K previously.
The Euro (EUR) was very strong after resistance at 1.4000 was cleared away and the pair rose above 1.4100. EUR/JPY surged on Yen weakness as global stock markets continued to rally. EU CPI was -0.1% y/y as forecast. The EUR/USD is still well withing the 1.3850-1.4200 range but is looking well supported. Overall the EUR/USD traded with a low of 1.3969 and a high of 1.4137 before closing at 1.4015.
The Japanese Yen (JPY) extended the weakness seen throughout the week with USD/JPY pushing the rest of the crosses higher. The BOJ met and held at 0.1% but did extend their Corporate Bond Buying program. Stock markets are still providing the majority of the Yen's direction. Overall the USDJPY traded with a low of 92.3.24 and a high of 94.48 before closing the day around 94.20 in the New York session.
The Sterling (GBP) gained with the improving risk sentiment breaking above 1.6400 and GBP/JPY gained over 2 Yen during the day. May Unemployment at at 7.6% vs. 7.4% forecast and Claimant change 23.8K vs. 41.4K previously. BoE Bean commented that the QE program is ongoing. Overall the GBP/USD traded with a low of 1.6299 and a high of 1.6471 before closing the day at 1.6440 in the New York session.
The Australian Dollar (AUD) continued to soar with the markets favorite risk currency able to reclaim as US stocks climbed higher. AUD/JPY broke back above 75 Yen and the large rally in Oil and Gold underpinned the move. With little retracement in the previous 3 days the market is now heavily overbought but some would argue justifiable so given the rapid change in sentiment. Overall the AUD/USD traded with a low of 0.7923 and a high of 0.8059 before closing the US session at 0.8030.
Gold (XAU) was a large mover as US June CPI and PPI stoked more inflation fear and long term USD weakness talk. Overall trading with a low of USD$924 and high of USD$943 before ending the New York session at USD$938 an ounce.
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.4075
Initial support at 1.3833 (Jul 8 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4201 (July 1 high) followed by 1.4267 (Jun 5 high)
Yen - 94.40
Initial support is located at 91.74 (Jul 13 low) followed by 90.52 (76.4 retrace 87.13-101.44). Initial resistance is now at 94.89 (Jul 8 high) followed by 95.46 (Jul 7 high).
Pound - 1.6405
Initial support at 1.5985 (July 8) followed by 1.5803 (Jun 8 low). Initial resistance is now at 1.6546 (Jul 1 high) followed by 1.6745 (June 30 high).
Australian Dollar - 0.8015
Initial support at 0.7703 (July 13 low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.8038 (July 7 high) followed by 0.8155 (Jun 30 high).
Gold - 938
Initial support at 918 (Jul 8 low) followed by 895 (May 6 low). Initial resistance is now at 934 (Jul 3 high) followed by 948 (Jun 26 high).