RBA first to pull the trigger, as XAU trades at record high of 1,043

CURRENCY TRADING SUMMARY – 7th October (00:30GMT)

U.S. Dollar Trading (USD) slipped to record lows versus Gold following speculation that Arab states were in secret meetings to trade Oil in non-Dollar denominated contracts, ending the use of USD pricing for the highly sought commodity. Reports in the Independent UK implied that a move to a basket of currencies were favoured, including the Euro, Yuan, Yen and Gold, were later denied by Russian, Kuwait and Saudi officials. Which did little to prevent the Dollar from slipping further against the commodity currencies. In US share markets, the DJIA gained 131.50 pts (+1.37%) whilst the NASDAQ also gained 19.43 points (+1.46%).      

The Euro (EUR) took advantage of the USD weakness, adding to its post G7 weekend moves. Tuesdays move was largely on the back of the Independent newspaper report that Oil producing nations were in talks to cease pricing oil in USD with a shift to a basket of currencies including the Euro. The EUR also was boosted by further gains against the GBP following disappointing UK production figures, despite ECB officials downplaying chance of an early rate hike. The Euro traded with a low of 1.4644 and a high of 1.4744 before closing the session at 1.4715. Euro zone GDP figures for the second quarter are expected to be confirmed at -0.1%, whilst German Industrial orders are forecasted to be released at 1.3% (Previous: 3.5%)  

The Japanese Yen (JPY) man of the hour, Japanese Finance Minister Fujii was outspoken once more indicating that USD weakness had been discussed at the G7 meeting. The USDJPY traded with a low of 88.60 and a high of 89.65 before closing the day at 88.76.

The Sterling (GBP) was one of the only currencies to have lost ground against the USD on Tuesday following poor readings in UK manufacturing and Industrial Production falling 1.9% and 2.5% respectively. Over all the GBP traded with a low of 1.5874 and a high of 1.6047 before closing the day at 1.5938

The Australian Dollar (AUD) was one of the stars on Tuesday following the RBA being the first G20 Central Bank to hikes rates, moving by 25 bpt, in which the official cash rate now sits at 3.25%. Furthermore, the RBA upgraded its growth forecasts to 3% GDP in 2010 adding fuel to another possible rate hike by the end of the year. The AUD traded at fresh 14 month highs throughout the day reaching 0.8920 having traded at a low of 0.8753 before closing at 0.8905.  

Oil & Gold (XAU) were both in the spotlight with Oil being the key driver for much of the USD weakness following the Independent report of Arab states in talks to flee USD denominated contracts. However Oil rallied as the US Energy Information raised forecasts of consumption by 170k barrels for the 4th quarter of 2009. Crude rose by US 47 cents to US 70.88 a barrel. XAU soared to all time highs of 1,043.45 on the back of the UK independent report that USD would be dropped as the peg currency for Oil, in which the safe haven commodity was most attractive.    

TECHNICAL COMMENTARY                                                            

 

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4481

1.4581

1.4710

1.4844

1.4908

USD/JPY

88.24

88.61

88.95

89.88

90.41

GBP/USD

1.5771

1.5805

1.5905

1.6126

1.6207

AUD/USD

0.8570

0.8647

0.8895

0.8943

0.9130

XAU/USD

1000.95

1015.70

1038.30

1050.00

1100.00

OIL/USD

69.16

70.18

71.35

72.09

72.98

 

 

Euro – 1.4710

Initial support at 1.4581 (Oct 5 low) followed by 1.4467 (Oct 2low). Initial resistance is now located at 1.4844 (Sept 23 high) followed by 1.4908 (August 22 ’08 high)

Yen – 88.95

Initial support is located at 88.61 (Oct 2 low) followed by 88.24 (Sep 28 low). Initial resistance is now at 89.88 (Oct 5 high) followed by 90.41 (Sept 03 high).

Pound – 1.5905

Initial support at 1.5805 (Oct 2 low) followed by 1.5771 (Sep 28 low). Initial resistance is now at 1.6126 (Sep 30 high) followed by 1.6207 (23.6% retracement 1.3503 – 1.7043).

Australian Dollar – 0.8895

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 – 1038.30

Initial support at 1015.70 (Oct 6 low) followed by 1000.95 (Oct 5 low). Initial resistance is now at 1050 (Psych. Level) followed by 1100 (Psych Level).

Oil – 71.35

Initial support at 70.18 followed by 69.16.  Initial resistance is now at 72.09 followed by 72.98 High).