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U.S. Dollar Trading (USD) better than expected US NonFarm Payrolls at 200k vs. 150k did little to reverse the negative market sentiment coming out of Europe and stocks closed negative. The Unemployment Rate dropped to 8.5% vs. 8.7% forecast as more people stopped looking for work. In US stocks, DJIA -55 points closing at 12359, S&P -3 points closing at 1277 and NASDAQ +4 points closing at 2674. Looking ahead, November Consumer Credit forecast at 7bn vs. 7.65bn.
The Euro (EUR) selling accelerated on Friday with the major testing 1.2700 before stabilizing but slipping to fresh all-time lows against the AUD. EUR/JPY selling also added to the downside pressure with the pair slipping below Y98 and still searching for support. More negative news emerged in weekend press reports that Greece was not reforming quickly enough and may have to leave the Eurozone if bailout funds are not received. Looking ahead, November German Trade Balance forecast at 12 vs. 12.6bn previously.
The Japanese Yen (JPY) USD/JPY spiked higher initial on the strong US Jobs data but then reversed with the heavy cross selling especially the EUR/JPY which is hitting 11 year lows. The BOJ/MOF may start to be more vocal on the Euro cross and could be the basis for further intervention.
The Sterling (GBP) UK House Prices fell -0.9% in December according to Halifax and shows that the UK housing market is continued to decline. The GBP/USD tracked the Euro lower to 1.5400 and is struggling to hold gains lately. EUR/GBP is still a source of support with the grind lower continuing and 0.8250 broken in Early Asian Trade Monday.
Australian Dollar (AUD) was very contained compared to most majors with the good US jobs numbers supporting the risk currency but the USD strength containing any upside. The market opened up weaker in Asia on Monday however after weekend reports that China would be downgrading its growth targets to 7% GDP in 2012. The China story is very important for the Australian economy and any slowdown would hurt the AUD.
Oil & Gold (XAU) was whippy after the NFP trading higher hitting $1630 before reversing to $1610. OIL/USD tried to rally but failed above 102.50 before reversing to $101.
Pairs to watch
EUR/USD Where now? 1.25?
USD/JPY is strong US data enough to change direction?
Euro – 1.2690
Initial support at 1.2644 (Sept 10 2010 low) followed by 1.2588 (Aug 24 2010 low). Initial resistance is now located at 1.2947 (Jan 5 high) followed by 1.3080 (Dec 28 high)
Yen – 76.95
Initial support is located at 76.58 (Nov 18 low) followed by 76.00 (Big Figure). Initial resistance is now at 77.74 (Dec 30 high) followed by 78.98 (Nov 1 high).
Pound – 1.5410
Initial support at 1.5402 (Dec 30 low) followed by 1.5272 (Oct 6 low). Initial resistance is now at 1.5526 (Jan 6 high) followed by 1.5629 (Jan 5 high).
Australian Dollar – 1.0155
Initial support at 1.0127 (Dec 30 low) followed by the 1.0044 (Dec 29 low). Initial resistance is now at 1.0387 (Jan 3 low) followed by 1.0567 (Mar 3 high).
Gold – 1610
Initial support at 1592 (Jan 4 low) followed by 1561 (Jan 2 low). Initial resistance is now at 1641 (Dec 21 low) followed by 1662 (50% retrace of 1802.93-1522.65).
Oil – 101.10
Initial support at 100.00 (Intraday Support) followed by 99.00 (Intraday Support). Initial resistance is now at 102.50 (Intraday resistance) followed by 105.00 (Intraday Resistance).
Written by Anthony Darvall