U.S. Dollar Trading (US) stocks finished higher although after hours price action has been weak going into Asia. The main reason for the strong close for US stocks was the FED minutes which showed QE3 or some other easing was on the table even as 3 members voted against using the extended period of low interest rates. In US stocks on Friday, DJIA +20 points closing at 11560, S&P +2 points closing at 1212 and NASDAQ +14 points closing at 2576. Looking ahead, ADP August national Employment 100k vs. 114k previously. August PMI forecast at53.5 vs. 58.8 previously.
The Euro (EUR) the Euro underperformed on a number of negative stories. The FT had an article widely talked about suggesting the ECB will reevaluate the inflation risk and thus no need to raise rates. Also increase grumbling out of Germany regarding the Bailout of smaller EU countries is hampering the leader Merkal's ability make deals. Support is seen at 1.4400 but both stories have the potential to cause further selling. Looking ahead, German Unemployment Change forecast at -10k vs. -11k previously.
The Japanese Yen (JPY) was in a 30 pip range with very little action on the major. Crosses were more volatile with AUD/JPY rallying with stocks and EUR/JPY and GBP/JPY falling on European concerns. Weak US data is providing a constant source of downside pressure for the major struggling to sustain any rally.
The Sterling (GBP) concern the UK would slide back into a European led recession hurt sentiment towards the GBP/JPY and GBP/USD which fell heavily throughout the day. July Mortgage Approvals came in as expected at 49k. UPDATE August Consumer Confidence at -31 vs. -30 previously.
The Australian Dollar (AUD) the Aussie fell out of sync with other majors breaking above 1.0700 on the strong stock market reaction to growing expectations of QE3 from the US fed. The perverse reaction of weak US data leading to stock gains on expectations of more central bank easing is leaving the AUD/USD locked in an upward trend.
Oil & Gold (XAU) Gold surged on the QE3 talk up over $50oz from lows in the US session. Crude Oil lurched higher to $88 in another positive day.
Pairs to watch
XAU/USD heading for fresh record highs?
EUR/USD Will Politics Derail the Bailouts?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.4425
Initial support at 1.4328 (Aug 22 low) followed by 1.4226 (Aug 15 low). Initial resistance is now located at 1.4578 (Jul 4 high) followed by 1.4697 (Jun 7 high)
Yen - 76.60
Initial support is located at 76.34 (Aug 22 low) followed by 75.95 (Psych level). Initial resistance is now at 77.86 (Aug 9 high) followed by 78.86 (Aug 8 high).
Pound - 1.6310
Initial support at 1.6231 (76.4% retrace of 1.6111-1.6618) followed by 1.6167 (Aug 12 low). Initial resistance is now at 1.6534 (Aug 24 high) followed by 1.6573 (Aug 23 high).
Australian Dollar - 1.0665
Initial support at 1.0561 (Aug 29 low) followed by the 1.0419 (Aug 26 low). Initial resistance is now at 1.0700 (Psych level) followed by 1.0786 (Aug 3 High).
Gold - 1830
Initial support at 1757 (Aug 26 low) followed by 1702 (Aug 12 low). Initial resistance is now at 1839 (Aug 29 high) followed by 1853 (Aug 24 high).
Oil - 88.55
Initial support at 88.00 (Intraday Support) followed by 87.00 (Intraday Support). Initial resistance is now at 90.00 (Intraday resistance) followed by 92.50 (Intraday Resistance).
Written by Anthony Darvall