XAU and AUD continue on its march. Eyes on ECB and BoE

CURRENCY TRADING SUMMARY – 8th October (00:30GMT)

U.S. Dollar Trading (USD) had a less eventful day pairing back a modest rebound. The IMF did plenty to stem any further USD losses after stating that they saw no need for a shift out of the dollar reserves, which was further re-iterated by French Finance Minister Lagarde; that replacing the USD as the global reserve currency was purely speculation. In US share markets the DJIA closed down a mere 5.67 points (-0.06%) whilst the NASDAQ was slightly higher by 2.10 points (0.16%). Looking ahead, key data includes US Jobless claims which are forecasted to come in at 543k as opposed to the previous 551k seen previously.  

The Euro (EUR) slipped lower following flat equity markets which failed to contribute to EURJPY demand. EU Q2 GDP was revised lower to -0.2% from -0.1, whilst German Industrial orders were up at 1.4%, doing little to boost confidence. The Euro was further weighed by ECB Liikanen comments that the Eurozone recovery would be sluggish. The Euro traded with a low of 1.4649 and a high of 1.4736 before closing at 1.4685. Much of this weeks focus surrounds today’s ECB announcement in which it is widely expected interest rates would remain on hold, in which post commentary will be listened to attentively for any indication on exit strategies, an rhetoric surrounding EU economy improving with growth outlook uncertain.   

The Japanese Yen (JPY) was key in the USD pairing back some of its weekly losses as profit taking took course following the Japanese Yen trading at a 9 month high. Minister of Finance Fujii mentioned that current levels were consistent with market fundamentals, although prepared to intervene if moves become abnormal, in which markets interpreted as the Japanese Government being comfortable with current levels, a key factor in the Yen strength prior to profit taking. Overall the USDJPY traded with a low of 87.98 and a high of 89.39 before closing the day at 88.57.  UPDATE: Current Account for the month of August seen at 10.4% (Forecast: 8.9%)

The Sterling (GBP) disappointed once more despite UK nationwide consumer confidence rising to its highest level since April 2008, reading at 71 (previous 65). Nonetheless the GBP remains pressured following sharp drops in UK Manufacturing and Industrial Production (-1.9% and -2.5% respectively) adding to concerns that economic outlook remains uncertain. Overall the GBP traded with a low of 1.5856 and a high of 1.5971 before closing the day at 1.5959. The BoE is scheduled to meet on Thursday with the markets widely expecting rates to remain on hold, although pockets of the market forecast the BoE may cut its remuneration paid on commercial deposits, whilst being on alert for any indication of expansion to quantitative easing.    

The Australian Dollar (AUD) set a new 14 month high on Wednesday as the RBA’s Tuesday rate hike still resonates, before profit taking and disappointing housing finance sent the Aussie dollar lower in the US session. Overall the AUD traded with a low of 0.8864 and a high of 0.8651e closing the day at 0.8910. Looking Ahead, Unemployment Rate for the month of September is expected to be released at 5.9 % with a loss of 10k jobs  

Oil & Gold (XAU) XAU traded once again at a new record high for the second successive day touching 1049.70 an ounce, maintaining it attraction as an inflation hedge. XAU closed up US$3.40 at US$1044.40. Oil fell on Wednesday following a rise in US inventories by 2.9 million barrels versus the forecasted 1 million. Crude fell by US$1.31 a barrel to US$69.57.   

TECHNICAL COMMENTARY                                                            

 

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4481

1.4581

1.4720

1.4844

1.4908

USD/JPY

87.13

87.98

88.55

89.98

90.41

GBP/USD

1.5771

1.5805

1.5965

1.6126

1.6207

AUD/USD

0.8647

0.8760

0.8935

0.9130

0.9347

XAU/USD

1000.95

1015.70

1045.20

1050.00

1100.00

OIL/USD

67.28

68.55

69.95

71.43

73.04

 

 

Euro – 1.4720

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 – 88.55

Initial support is located at 87.981 (Jan 23 low) followed by 87.13 (Jan 21 low). Initial resistance is now at 89.88 (Oct 5 high) followed by 90.41 (Sept 03 high).

Pound – 1.5965

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 – 0.8835

Initial support at 0.8760 (Oct 5 low) followed by the 0.8647 (Oct low). Initial resistance is now at 0.9130 (Aug 07 ’08 high) followed by 0.9347 (Aug 04 '08 high).

Gold – 1045.20

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 – 69.95

Initial support at 68.55 followed by 67.28.  Initial resistance is now at 71.43 followed by 73.04.