U.S. Dollar Trading (USD) risk was off in Asia as China stocks lost 3% on tightening fears allowing the USD to get a bid tone. With the US away Europe dictated action with the Euro under pressure but most other pairs found support. In US stocks, closed for Bank Holiday for Martin Luther King Day. Looking ahead, November Long Term TIC Flows forecast at 40bn vs. 27bn previously. Also ahead, Bank of Canada rate decision forecast at 1%.
The Euro (EUR) the market is focusing on a stream of comments from EU officials on the prospect of European Stabilization fund being expanded. Germany is reluctant to expand the fund and this is causing tension with other members so far. EUR/USD traded with a low of 1.3243 and a high of 1.3382 before closing at 1.3280. Looking ahead, German January Economic Sentiment forecast at 6.8 vs. 4.3 previously.
The Japanese Yen (JPY) was quiet falling back from Y83 after failing to gain a foothold above the level. Support is found on dips with Yen crosses strong over the last week. Overall the USDJPY traded with a low of 82.34 and a high of 83.03 before closing the day around 82.65 in the New York session.
The Sterling (GBP) was strong testing above 1.5900 as EUR/GBP was sold off and GBP/JPY extended gains. Talk that the BOE might have to raise rates to fight stubborn inflation supported the market. Overall the GBP/USD traded with a low of 1.5833 and a high of 1.5957 before closing the day at 1.5915 in the New York session. December CPI is forecast at 0.75 vs. 0.4% previously m/m.
The Australian Dollar (AUD) dipped in Asia on Chinese concerns before recovering nicely in Europe on stronger stock markets. AUD/JPY is finding support under Y82 but upside is limited while USD/JPY struggles. Overall the AUD/USD traded with a low of 0.9861 and a high of 0.9971 before closing the US session at 0.9930.
Oil & Gold (XAU) was extremely contained staying close to the $1360 level throughout the trading day with US traders away. Overall trading with a low of USD$1356 and high of USD $1366 before ending the New York session at USD$1362 an ounce. Oil fell back slightly in light trading. WTI Oil Closed -$0.40 at $91.10 a barrel.
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.3275
Initial support at 1.3089 (Jan 13 low) followed by 1.2962 (Jan 12 low). Initial resistance is now located at 1.3457 (Jan 14 high) followed by 1.3499 (Dec 14 high)
Yen - 82.65
Initial support is located at 81.89 (Jan 5 low) followed by 81.61 (Jan 4 low). Initial resistance is now at 83.15 (Jan 13 high) followed by 84.11 (Dec 20 high).
Pound - 1.5910
Initial support at 1.5810 (Jan 14 Low) followed by 1.5719 (Jan 13 low). Initial resistance is now at 1.5955 (Jan 17 high) followed by 1.6000 (Big Figure Resistance).
Australian Dollar - 0.9920
Initial support at 0.9863 (Jan 17 low) followed by the 0.9804 (Jan 12 low). Initial resistance is now at 1.0000 (Big Figure) followed by 1.0076 (Jan 5 high).
Gold - 1362
Initial support at 1352 (Jan 7 low) followed by 1348 (Nov 22 low). Initial resistance is now at 1378 (Jan 14 high) followed by 1396 (61.8% retrace of 1424.05-1352.70).
Oil - 91.10
Initial support at 90.00 (Intraday Support) followed by 89.00 (Intraday Support). Initial resistance is now at 92.50 (Intraday Resistance) followed by 95.00 (Intraday Resistance).
Written by Anthony Darvall