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U.S. Dollar Trading (USD) stocks, commodities and most risk assets rose overnight as the FED showed optimism and fears over European debt subsided further. The FOMC Minutes showed the US central bank still believes a moderate recovery is underway and inflation will moderate. In US stocks, DJIA +80 points closing at 12560, S&P +11 points closing at 1340 and NASDAQ +31 points closing at 2815. Looking ahead, Weekly Jobless Claims forecast at 420k vs. 434k previously. Also, April Existing home Sales forecast at 5.2mn vs. 5.1mn previously.

The Euro (EUR) The EUR/USD fared well in the risk on environment before the FOMC minutes and then found support from EUR/JPY buying after stock markets continued to rally post the minutes release. Overall the EUR/USD traded with a low of 1.4193 and a high of 1.4288 before closing the day around 1.4280 in the New York session.

The Japanese Yen (JPY) The Yen remained under pressure across the board on strong Yen crosses and a rally in the on US Bonds yields. Concern about the Japanese economy was highlighted by the Q1 GDP at -0.9% vs. -0.5% forecast with the effects of the Japanese Earthquake still reverberating through the country. Overall the USD/JPY traded with a low of 80.92 and a high of 81.82 before closing the day around 81.60 in the New York session.

The Sterling (GBP) the Pound struggled in the risk on environment as the Data disappointed and EUR/GBP buying hurt sentiment. The BOE minutes remained unchanged from April at 6-3 unchanged-hike. The Unemployment data showed weakness in the jobs market with claims rising 12.4k in April. Overall the GBP/USD traded with a low of 1.6103 and a high of 1.6290 before closing the day at 1.6170 in the New York session. Looking ahead, April Retail Sales forecast at 0.8% vs.0.2% previously.

The Australian Dollar (AUD) the Aussie did well tracking stocks and commodities higher throughout the day. AUD/JPY also broke resistance heading towards Y87 in a strong move higher. Wage Price index was slower than expected at 0.8% vs. 1.0% previously. Overall the AUD/USD traded with a low of 1.0567 and a high of 1.0667 before closing the day at 1.0655 in the New York session.

Oil & Gold (XAU) Gold pushed higher towards the key $1500 level which has proven a pivot point between strength and weakness in recent. Overall trading with a low of USD$1484 and high of USD $1500 before ending the New York session at USD$1498 an ounce. Oil led the commodity bounce overnight up over $3 a barrel. WTI Oil Closed +$3.19 at $100.10 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4021

1.4121

1.4270

1.4340

1.4500

USD/JPY

78.83

80.00

81.55

81.69

82.28

GBP/USD

1.6000

1.6091

1.6165

1.6380

1.6517

AUD/USD

1.0443

1.0506

1.0650

1.0717

1.0953

XAU/USD

1462.00

1471

1498

1504

1526

OIL/USD

97.00

100.00

100.20

101.50

103.00

Euro – 1.4270

Initial support at 1.4121 (May 17 low) followed by 1.4021 (Mar 28 low). Initial resistance is now located at 1.4340 (May 13 high) followed by 1.4500 (Key level)

Yen – 81.55

Initial support is located at 80.00 (Psych support) followed by 78.83 (Mar 18 low). Initial resistance is now at 81.69 (May 2 low) followed by 82.28 (Apr 28 High).

Pound – 1.6165

Initial support at 1.6091 (Apr 5 low ) followed by 1.6000 (Big Level Support). Initial resistance is now at 1.6380 (May 12 high) followed by 1.6517 (May 11 high).

Australian Dollar – 1.0650

Initial support at 1.0506 (May 17 low) followed by the 1.0443 (Apr 19 low). Initial resistance is now at 1.0717 (May 13 high) followed by 1.0953 (May 3 high).

Gold – 1498

Initial support at 1471 (May 6 low) followed by 1462 (May 5 low). Initial resistance is now at 1504 (May 16 high) followed by 1526 (May 11 high).

Oil – 100.2

Initial support at 100.00 (Intraday Support) followed by 97.00 (Intraday Support). Initial resistance is now at 101.50 (Intraday resistance) followed by 100.00 (Intraday Resistance).

Written by Anthony Darvall