Europe Disagrees ahead of Wednesday's Deadline
U.S. Dollar Trading (USD) most markets finished higher with 'risk on' into the weekend on expectations of progress at the EU summit. The USD was under broad pressure with USD/JPY slipping to fresh all time lows under Y76 and EUR/USD edging above 1.3900. In US stocks, DJIA +267 points closing at 11808, S&P +22 points closing at 1238 and NASDAQ +38 points closing at 2637.
The Euro (EUR) with sentiment improving on Friday the market bought up the Euro aggressively but this is being pared back on Monday as some disagreements on the Grand Plan bailout emerged over the weekend. France has withdrawn demands for the ECB to be used as bank and is instead focusing a new fund with the IMF to provide a final solution to the debt crisis. Looking ahead, Flash Manufacturing PMI forecast at 48.1 vs. 48.5. October Flash Services PMI forecast at 48.5 vs. 48.8 previously.
The Japanese Yen (JPY) broke out of range to the downside and fresh all-time lows under Y76. The USD weakness was the main catalyst but the Y75 is widely seen as a level that main prompt intervention from Japanese Officials in either a verbal or real way. EUR/JPY and AUD/JPY are higher on the major's rally but these are largely dependent on whether a positive EU debt solution is found by Wednesday.
The Sterling (GBP) GBP/USD rallied sharply with stocks breaking above 1.5900 and threatening to test 1.6000 in coming sessions if the uptrend can continue. EUR/GBP selling added to the Pound support but the next direction is completely dependent on the EU Summit. Looking ahead, MPC Member Tucker speaks.
The Australian Dollar (AUD) the AUD/USD soared above 1.0300 with the large gains in US stocks propelling the risk currency higher. The market has been buying the Australian dollar aggressively in recent weeks on optimism of a positive outcome in the EU. Looking ahead, Q3 PPI forecast at 0.8% Q/Q. Also Chinese HSBC PMI previously at 49.9 with 50 being the key level.
Oil & Gold (XAU) broke higher on USD weakness to test $1650 and end the week on a strong footing. Talk of more government bailouts will only help the precious metal as an alternative investment. Oil Surged to $89 before paring back a lot of those gains into the close, back down to $87 a barrel.
Pairs to watch
EUR/USD Tensions to push Euro lower?
XAU/USD Buyers back in Control?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.3845
Initial support at 1.3653 (Oct 18 low) followed by 1.3566 (Oct 11 low). Initial resistance is now located at 1.3937 (Sept 15 high) followed by 1.4013 (61.8% retrace of 1.4549-1.3146)
Yen - 76.40
Initial support is located at 75.00 (big figure Support) followed by 74.44 (77.86 minus 0.618 of 81.48-75.95). Initial resistance is now at 77.09 (Oct 20 high) followed by 77.49 (Oct 12 high).
Pound - 1.5940
Initial support at 1.5754 (Oct 21 low) followed by 1.5681 (Oct 20 low). Initial resistance is now at 1.5991 (Sept 9 high) followed by 1.6104 (61.8% retrace of 1.6618-1.5272).
Australian Dollar - 1.0330
Initial support at 1.0203 (Oct 21 low) followed by the 1.0102 (Oct 13 low). Initial resistance is now at 1.0399 (Sept 16 high) followed by 1.0440 (76.4% retrace of 1.0765-0.9388).
Gold - 1641
Initial support at 1603 (Oct 20 low) followed by 1583 (Sept 29 low). Initial resistance is now at 1665 (Oct 19 high) followed by 1676 (Oct 18 low).
Oil - 87.05
Initial support at 85.00 (Intraday Support) followed by 83.00 (Intraday Support). Initial resistance is now at 88.00 (Intraday resistance) followed by 89.00 (Intraday Resistance).
Written by Anthony Darvall