U.S. Dollar Trading (US) global stocks fell sharply yesterday with weak US data and concerns about European banks. Aug Philly fed shocked at -30 vs. 3.2 and sent shockwaves throughout the market as the very weak number signals a potential recession. The dollar gained against risk currencies but was under pressure against the soaring safe haven Gold. In US stocks on Friday, DJIA -419 points closing at 10990, S&P -53 points closing at 1140 and NASDAQ -131 points closing at 2380.

The Euro (EUR) the Euro slumped on fears that large banks in the Eurozone were having funding issues. EUR/CHF and EUR/JPY led the major lower which found support at 1.4300 eventually. The ECB is continuing to support bonds in the debt market which is at least containing the debt issue but if a large bank was to fail the contagion may spark a fresh banking crisis in Europe.

The Japanese Yen (JPY) is being kept very contained against the USD with the BOJ verbal intervention support at Y76.50 and safe haven demand capping rallies towards Y77. Crosses were heavier though with AUD/JPY dropping below Y80 and EUR/JPY slipping back below the key Y110. Plenty of range traders are cashing in the on the 10 day 50 pip range on the USD/JPY with well-defined entry and exit points.

The Sterling (GBP) the Pound held up well with the so much risk aversion in the market being supported by EUR/GBP selling. July Retails sales were softer than forecast at 0.2% vs. 0.3% m/m.  The market closed at the 1.6500 handle but could be under pressure if the stock sell off intensifies. Looking ahead, July Public net borrowing forecast at 0.4bn vs. 12.0bn.

The Australian Dollar (AUD) the Aussie fared badly in the US stock crash with sellers pushing the commodity currency back under 1.0400 after testing 1.0600 the day before. AUD/JPY is under pressure and if problems continue the AUD/USD could fall back to parity at 1.0000.

Oil & Gold (XAU) the banking concerns helped Gold surge back to all-time highs above $1800 and then onto $1828 an ounce. Crude Oil crashed with stocks back to $80 a barrel.

Pairs to watch

Oil/USD fell $6 a barrel and will continue to be volatile

EUR/USD holding up so far but will banking issues overwhelm support?



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4150

1.4226

1.4290

1.4452

1.4536

USD/JPY

75.00

76.25

76.55

77.31

78.86

GBP/USD

1.6256

1.6323

1.6465

1.6592

1.6661

AUD/USD

1.0246

1.0331

1.0345

1.0559

1.0786

XAU/USD

1784.00

1800

1845

1850

1900

OIL/USD

77.00



80.00

80.80

82.50

85.00



Euro - 1.4290

Initial support at 1.4226 (Aug 15 low) followed by 1.4150 (Aug 12 low). Initial resistance is now located at 1.4452 (Aug 18 high) followed by 1.4536 (Jul 27 high)



Yen - 76.55

Initial support is located at 76.25 (Mar 15 low) followed by 75.00 (Psych level). Initial resistance is now at 77.31 (Aug 10 high) followed by 78.47 (Aug 8 high).

Pound - 1.6465

Initial support at 1.6323 (Aug 16 low) followed by 1.6256 (Aug 15 low). Initial resistance is now at 1.6592 (Aug 17 high) followed by 1.6661 (May 3 high).



Australian Dollar - 1.0345

Initial support at 1.0331 (Aug 15 low) followed by the 1.0246 (Aug 12 low). Initial resistance is now at 1.0559 (Aug 18 high) followed by 1.0786 (Aug 3 High).

Gold - 1845

Initial support at 1800 (Big figure support) followed by 1784 (Aug 18 low). Initial resistance is now at 18500 (Psych level) followed by 1900 (Psych level).



Oil - 80.80

Initial support at 80.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday resistance) followed by 85.00 (Intraday Resistance).





Written by Anthony Darvall