U.S. Dollar Trading (USD) risk aversion spread throughout the market on concerns that Greece will default despite the official line that everything was fine. Fitch downgraded Greece to B+ noting that any debt profiling/restructuring would result in a default. In US stocks, DJIA -93 points closing at 12512, S&P -10 points closing at 1333 and NASDAQ -19 points closing at 2803. Looking ahead, May National Index.
The Euro (EUR) once again in the eye of the storm falling from above 1.4300 to low 1.4100 on the back of the Fitch downgrade and the fresh Spanish concerns. On Monday, S&P put Italy on negative watch and the major tested 1.4100. Overall the EUR/USD traded with a low of 1.4137 and a high of 1.4345 before closing the day around 1.4176 in the New York session. Looking ahead, May PMI Manufacturing forecast at 57.4 vs. 58 and Services forecast at 56.5 vs. 56.7 previously.
The Japanese Yen (JPY) was very stable against the USD with both strong given risk aversion flows. EUR/JPY led the crosses lower with most falling over 1 Yen. The outlook for the Japanese economy is weak but traders are in no mood to sell Yen while the relationship with stock remains so strong. Overall the USD/JPY traded with a low of 81.46 and a high of 81.86 before closing the day around 81.65 in the New York session.
The Sterling (GBP) outperformed the rest of the market as the heavily beaten down GBP found support on the crosses helping to limit losses against the USD and Yen. EUR/GBP reversed sharply towards 0.8700 and GBP/AUD grinded above 1.5200. Overall the GBP/USD traded with a low of 1.6165 and a high of 1.6303 before closing the day at 1.6250 in the New York session.
The Australian Dollar (AUD) the risk sensitive currency was under pressure with the negative Euro news spilling over to the stock markets and the Aussie. The AUD/USD fell back towards 1.0600 and could fall further as the correction continues. Overall the AUD/USD traded with a low of 1.0605 and a high of 1.0710 before closing the day at 1.0660 in the New York session.
Oil & Gold (XAU) Gold did well with the sovereign risk increasing in Europe adding to safe haven demand for the alternative currency. Overall trading with a low of USD$1486 and high of USD $1516 before ending the New York session at USD$1513 an ounce. Oil volatility continued with a sharp drop to 96.50 reversed and the market ended above $100 a barrel. WTI Oil Closed +$1.20 at $100.10 a barrel.
Euro - 1.4085
Initial support at 1.4021 (Mar 28 low) followed by 1.4000 (Big level support). Initial resistance is now located at 1.4346 (May 20 high) followed by 1.4500 (Key level)
Yen - 81.95
Initial support is located at 80.94 (May 18 low) followed by 80.00 (Big Level support). Initial resistance is now at 82.28 (April 28 low) followed by 82.79 (Apr 27 High).
Pound - 1.6200
Initial support at 1.6091 (Apr 5 low) followed by 1.6000 (Big Level Support). Initial resistance is now at 1.6308 (May 13 high) followed by 1.6380 (May 12 high).
Australian Dollar - 1.0595
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 - 1511
Initial support at 1485 (May 18 low) followed by 1462 (May 5 low). Initial resistance is now at 1516 (May 13 high) followed by 1526 (May 11 high).
Oil - 99.30
Initial support at 98.00 (Intraday Support) followed by 96.50 (Intraday Support). Initial resistance is now at 100.00 (Intraday resistance) followed by 103.00 (Intraday Resistance).
Written by Anthony Darvall