U.S. Dollar Trading (USD) market volatility returned overnight with the negative reaction to the Greek referendum vote continued and manufacturing PMI's around the world sending warning signs about the global recovery. October US ISM fell to 50.8 vs. 51.6 previously. In US stocks, DJIA -297 points closing at 11658, S&P -35 points closing at 1218 and NASDAQ -77 points closing at 2606. Looking ahead, FOMC FED Rate Forecast at unchanged at 0.25%. The FOMC Press conference could move markets with QE3 a  possibility.

The Euro (EUR) the Greece PM surprise decision to take the EU bailout to a referendum is creating uncertainty in the market with the EUR/USD and Euro stocks sold off heavily on the news. The referendum would probably take place in January and the markets would be uncertain until then. The Greek PM himself is up for a confidence vote and this could lead to fresh elections he fails.

The Japanese Yen (JPY) settled down after intervention on Monday with the heavy selling on crosses hurting the USD/JPY upside. The market is spooked easily and USD/JPY jumped Y79 briefly on intervention rumors during Asia before paring back to Y78. EUR/JPY dropped below Y107 but found support under the figure.

The Sterling (GBP) risk aversion mounted and the GBP/USD crashed below 1.6000 unable to react to better than expected Q3 GDP at 0.5% Q/Q. The October Manufacturing plummeted to 47.4 through and this led to heavy selling on cable back to 1.5900. Looking ahead, October Construction PMI forecast to remain at 50.1.

The Australian Dollar (AUD) the Aussie lost ground across the board yesterday as the RBA cut rates to 4.5% as forecast to help the economy respond to slowing global growth and falling inflation. The AUD/USD fell from 1.0550 to test 1.0300 in the US session and is a major reversal of fortune for the commodity currency.

Oil & Gold (XAU) Gold dipped below $1700 on USD demand going into the US session but this was reversed sharply as safe haven demand for the precious metal jumped on debt concerns out of Europe. Oil dipped below $90 a barrel before recovering and closing above $91 holding up well in risk off trade.

Pairs to watch

EUR/USD FOMC and QE3 to steal headlines?

USD/JPY Intervention over? Downside to resume?



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3406

1.3567

1.3670

1.3871

1.4171

USD/JPY

75.35

76.95

78.25

78.99

80.24

GBP/USD

1.5754

1.5825

1.5950

1.6097

1.6167

AUD/USD

1.0148

1.0232

1.0305

1.0567

1.0765

XAU/USD

1635.00

1695

1716

1754

1786

OIL/USD

89.00



90.00

90.80

92.00

95.00

Euro - 1.3670

Initial support at 1.3567 (61.8% retrace of 1.3146-1.4247) followed by 1.3346 (Oct 10 low). Initial resistance is now located at 1.3871 (Nov 1 high) followed by 1.4171 (Oct 31 high)



Yen - 78.25

Initial support is located at 76.95 (61.8% retrace of 75.35-79.53) followed by 75.35 (Oct 31 low). Initial resistance is now at 78.99 (Nov 1 high) followed by 80.24 (Aug 4 high).

Pound - 1.5950

Initial support at 1.5825 (38.2% retrace of 1.5272-1.6167) followed by 1.5754 (Oct 21 low). Initial resistance is now at 1.6097 (Nov 1 high) followed by 1.6167 (Oct 31 high).



Australian Dollar - 1.0305

Initial support at 1.0232 (38.2% retrace of 0.9388-1.0753) followed by the 1.0148 (Oct 20 low). Initial resistance is now at 1.0567 (Nov 1 high) followed by 1.0765 (Sep 1 high).

Gold - 1716

Initial support at 1695 (Oct 26 low) followed by 1635 (Oct 24 low). Initial resistance is now at 1754 (Sept 23) followed by 1786 (Sept 22 high).



Oil - 90.80

Initial support at 90.00 (Intraday Support) followed by 89.00 (Intraday Support). Initial resistance is now at  92.00 (Intraday resistance) followed by 95.00 (Intraday Resistance).





Written by Anthony Darvall