U.S. Dollar Trading (USD) the markets consolidated the recent rally overnight pulling back in Europe on profit taking but ending close to the highs in the US as sentiment remained quite positive. Focus as always remains on the Eurozone but there was also some economic data releases from the US. Weekly Jobless Claims remained steady at the 404k vs. 405k. In US stocks, DJIA -40 points closing at 11478, S&P -3 points closing at 1203 and NASDAQ +15 points closing at 2620. Looking ahead, September Retail Sales forecast at 0.5% vs. 0.0% m/m.

The Euro (EUR) fell back to 1.3700 in quiet trade before reversing in the US session back to 1.3800 ahead of the G20 meeting starting today. German CPI forecast at 0.1% vs. 0.1% previously. Banks in Europe continued to come under pressure overnight after downgrades to large banks including UBS. BREAKING NEWS UPDATE Spain downgraded by S&P to AA-.

The Japanese Yen (JPY) the excitement from talk of a floor in the major on Wednesday was unwound easing the USD/JPY back below the key Y77. The market fell back to Y76.60 but found support again and will now be looking ahead to the G20 meeting this weekend where the Japanese FM will be asking for talks on the strength of the Yen.

The Sterling (GBP) the GBP/USD was down then up with the general market moves. August Trade Balance improved to 7.7bn vs. 8.2bn previously. The EUR/GBP has found resistance towards 0.8800 and is easing back below .08750 in gentle selling. The recent cable rally is reaching critical levels near 1.5800 -1.6000 which has proven pivotal in recent months.

The Australian Dollar (AUD) tracked the European stocks lower before rallying back to 1.0200 in the US session as the buyers came in on the dip. Today's Chinese CPI number will be critical in whether the AUD/USD can extend recent gains with the market now 800 pips off lows seen two weeks ago. AUD/JPY is holding above Y78 and is well supported.

Oil & Gold (XAU) was not interested in extending gains as most majors fell back due to profit taking in Europe. Gold found support eventually at $1650. Oil was under gentle selling pressure most of the day falling back to $83.50 before finding support.

Pairs to watch

AUD/USD China CPI to move the Aussie?

EUR/USD Downgrade of Spain to hurt rally?

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3346

1.3566

1.3755

1.3937

1.4013

USD/JPY

75.95

76.11

76.95

77.86

78.60

GBP/USD

1.5423

1.5525

1.5750

1.5869

1.5991

AUD/USD

0.9728

0.9866

1.0165

1.0239

1.0313

XAU/USD

1627.00

1654

1666

1704

1726

OIL/USD

82.00



83.50

84.00

85.00

86.50



Euro - 1.3755

Initial support at 1.3566 (Oct 11 low) followed by 1.3346 (Oct 10 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 - 76.95

Initial support is located at 76.11 (Sep 22 low) followed by 75.95 (Aug 19 low). Initial resistance is now at 77.86 (Sep 9 high) followed by 78.60 (61.8% retrace of 80.24-75.95).

Pound - 1.5750

Initial support at 1.5525 (Oct 10 low) followed by 1.5423 (Oct 7 low). Initial resistance is now at 1.5869 (Sept 15 high) followed by 1.5991 (Sep 9 low).



Australian Dollar - 1.0165

Initial support at 0.9866 (Oct 12 low) followed by the 0.9728 (Oct 7 low). Initial resistance is now at 1.0239 (61.8% retrace of 1.0765-0.9388) followed by 1.0313 (Sept 20 high).

Gold - 1666

Initial support at 1654 (Oct 11 low) followed by 1627 (Oct 7 low). Initial resistance is now at 1704 (Aug 25 high) followed by 1726 (50% retrace of 1921.15-1532.72).



Oil - 84.00

Initial support at 83.50 (Intraday Support) followed by 82.00 (Intraday Support). Initial resistance is now at  85.00 (Intraday resistance) followed by 86.50 (Intraday Resistance).





Written by Anthony Darvall