Daily Outlook - Fresh Year Highs as Rally Resumes

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U.S. Dollar Trading (USD) economic data around the world continued to improve with 7 year highs in the January US ISM Manufacturing at 60.8 vs. 58.5 previously. Stocks soared to fresh year highs with the Dow Jones breaking above 12000. The dollar was on the back foot as a result with investors searching for riskier investments. In US stocks, DJIA +140 points closing at 12040, S&P +21 points closing at 1307 and NASDAQ +51 points closing at 2751. Looking ahead, January ADP Employment change forecast at 145k vs. 297k previously.

The Euro (EUR) broke above 1.3800 as the ‘risk on’ trade pushed the single currency higher. German Unemployment Change of -13k and a fall in the Unemployment rate to 7.4% helped with sentiment but attention will now turn to the ECB meeting on Thursday and US jobs numbers Friday. EUR/USD traded with a low of 1.3699 and a high of 1.3845 before closing at 1.3825. Looking ahead, ECB Trichets Speaks.

The Japanese Yen (JPY) Dollar weakness could not be ignored and the major fell to the lower Y81 region. Yen Crosses however where very strong with AUD/JPY and EUR/JPY leading the market higher. Overall the USDJPY traded with a low of 81.30 and a high of 82.18 before closing the day around 81.45 in the New York session.

The Sterling (GBP) moved higher in Asia hitting 10 week highs before extended gains in the European session as the USD rout continued. EUR/GBP is quite stable as the two majors go step for step with 0.8600 the pivot point. Overall the GBP/USD traded with a low of 1.6022 and a high of 1.6167 before closing the day at 1.6135 in the New York session.

The Australian Dollar (AUD) broke back above parity in Asia after the RBA meeting (held 4.75%) showed the Central Bank giving an upbeat view of the economy and downplaying the effect of the floods on their outlook going forward. The market continued to power higher in Europe and the US moving nearly 2 big figures on the day. Overall the AUD/USD traded with a low of 0.9964 and a high of 1.0150 before closing the US session at 1.0110.

Oil & Gold (XAU) was contained to the recent range finding support below $1330 and resistance above $1340. Overall trading with a low of USD$1324 and high of USD $1344 before ending the New York session at USD$1340 an ounce. Crude came under profit taking pressure as the Egypt situation simmered. WTI Oil Closed -$1.50 at $90.66 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3541

1.3571

1.3830

1.3948

1.4000

USD/JPY

80.54

80.93

81.50

82.15

83.22

GBP/USD

1.5822

1.6010

1.6130

1.6154

1.6184

AUD/USD

0.9867

0.9964

1.0120

1.0149

1.0171

XAU/USD

1308.00

1323

1340

1353

1371

OIL/USD

89.50

90.00

90.80

91.50

92.50

Euro – 1.3830

Initial support at 1.3571 (Jan 31 low) followed by 1.3541 (Jan 24 low). Initial resistance is now located at 1.3948 (76.4% retrace of 1.4282-1.2867) followed by 1.4000 (Big Figure Resistance)

Yen – 81.50

Initial support is located at 80.93 (Jan 3 low) followed by 80.54 (Nov 9 low). Initial resistance is now at 82.15 (Feb 1 high) followed by 83.22 (Jan 27 high).

Pound – 1.6130

Initial support at 1.6010 (Feb 1 low) followed by 1.5822 (Jan 25 low). Initial resistance is now at 1.6154 (Nov 15 high) followed by 1.6184 (Nov 12 High).

Australian Dollar – 1.0120

Initial support at 0.9964 (Feb 1 low) followed by the 0.9867 (Jan 31 low). Initial resistance is now at 1.0149 (76.4% retrace of 1.0256-0.9804) followed by 1.0171 (Jan 4 high).

Gold – 1340

Initial support at 1323 (Jan 31 low) followed by 1308 (Sep 28 low). Initial resistance is now at 1353 (Jan 24 high) followed by 1371 (Jan 20 high).

Oil – 90.80

Initial support at 90.00 (Intraday Support) followed by 89.50 (Intraday Support). Initial resistance is now at 91.50 (Intraday Resistance) followed by 92.50 (Intraday Resistance).

Written by Anthony Darvall

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