U.S. Dollar Trading (USD) good economic news was overlooked with the market gripped in selling mode. September Manufacturing PMI at 51.6 vs. 50.6 previously. Stocks finished down over 2% with rallies proving short lived. In US stocks, DJIA -258 points closing at 10655, S&P -32 points closing at 1099 and NASDAQ -79 points closing at 2335. Looking ahead, August Factory Orders forecast at 0% vs. 2.4% previously.
The Euro (EUR) the Euro was the worst performer leading the market lower with Greece set to miss both 2011 and 2012 deficit targets and pressure on European banks mounting the outcome is becoming more unclear. The ECB meeting is forming as a key risk event with some analysts speculating a 50bps rate cut may emerge to counter the recent slowdown and turmoil. Looking ahead, August PMI forecast at -0.2% vs. 0.5% previously.
The Japanese Yen (JPY) the market bought the Yen aggressively with USD/JPY falling as well with weakness in crosses overwhelmed. EUR/JPY ended at Y101 within striking distance of the key Y100 which is expected to provoke talk form Japanese Officials. AUD/JPY as the risk trade was under heavy selling pressure as well breaking below Y73.
The Sterling (GBP) was heavy as USD strength spread throughout the markets. The losses were contained however with a move below 1.5500 found support 1.5450. EUR/GBP continues to plummet falling to 0.8550 and is providing a minor support. GBP/JPY found support at Y118. Septembers Manufacturing PMI supported at 51.1 vs. 49.4 previously in a surprising reading back above expansionary territory.
The Australian Dollar (AUD) the Aussie was under pressure from multiple angles with concerns about Chinese property and crashing commodities making the risk currency one of the worst performers overnight. Support is seen at 0.9480 but the downtrend is well entrenched. Update August Trade Balance 3.1bn vs. 1.9bn forecast. Looking ahead, RBA forecast to hold at 4.75%.
Oil & Gold (XAU) Gold surged above $1660 as the sovereign risk aversion led investors back to the precious metal. Crude Oil continued to be sold heavily falling back to $76 and testing year lows before stabilizing.
Pairs to watch
EUR/USD 1.3000 to be tested?
XUA/USD would a Greek default support the alternative Currency?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.3195
Initial support at 1.3089 (Jan 13 low) followed by 1.3000 (Big Figure support). Initial resistance is now located at 1.3389 (Oct 3 high) followed by 1.3601 (Sept 30 high)
Yen - 76.70
Initial support is located at 76.11 (Sep 22 low) followed by 75.00 (Psych Support). Initial resistance is now at 77.28 (Sep 15 high) followed by 77.86 (Sep 9 high).
Pound - 1.5435
Initial support at 1.5400 (big figure support) followed by 1.5328 (Sept 22 low). Initial resistance is now at 1.5597 (Oct 3 high) followed by 1.5666 (Sept 30 high).
Australian Dollar - 0.9485
Initial support at 0.9463 (Sep 24,2010 low) followed by the 0.9419 (channel lower drawn off Aug 1 high). Initial resistance is now at 0.9701 (Oct 3 high) followed by 0.9810 (Sep 30 high).
Gold - 1660
Initial support at 1607 (Sep30 low) followed by 1583 (Sept 29 low). Initial resistance is now at 1676 (Sep 27 high) followed by 1704 (Aug 25 low).
Oil - 76.75
Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 78.00 (Intraday resistance) followed by 80.00 (Intraday Resistance).
Written by Anthony Darvall