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U.S. Dollar Trading (USD) stocks pared back some of the Jobs data with Greece missing the deadline for a deal and extending talks to avoid a default amongst warnings from the rest of Europe to find a solution. Traders continued to buy on pull backs however and stocks rallied off their lows in the US session and the EUR/USD and other risk assets bounced into the close. In US stocks, DJIA -17 points closing at 12845, S&P -1 points closing at 1343 and NASDAQ -3 points closing at 2904. Looking ahead, FED Chairman Bernanke Speaks. December Consumer Credit forecast at 7.7bn vs. 20bn previously.
The Euro (EUR) dipped towards 1.3000 as Greece missed the deadline to come to an agreement with the troika about a second bailout package and continued the talks into the night with the IMF/EU. German Industrial Orders jumped 1.7% in December vs. a -4.9% drop in November. EUR/JPY is providing support but EUR/GBP is still very heavy. Looking ahead, December Industrial Output forecast at -0.3% vs. -0.6% previously.
The Japanese Yen (JPY) the USD/JPY failed to extend gains and fell back as the USD came under pressure in the US session. The Y76.50 is the support and holding firm so far as the market looks to more US data and the EUR/JPY to see if Yen weakness can continue this week. The MOF confirmed more stealth intervention in the past 3 months but only through the USD/JPY.
The Sterling (GBP) Cable was bought aggressively on a pullback to 1.5730 to close back above 1.5800. The market expects the BOE to increase the Asset purchase program by 50bn at Thursday’s meeting. EUR/GBP is moving towards the 0.8250 support and a break could lead to 0.8000 on the cross and 1.6000 on the major. Looking ahead, BRC Retail Sales previously at 2.2%.
Australian Dollar (AUD) the AUD/USD consolidated the rally on Friday but did test the 1.0680 support level after the December Retail sales fell -0.1% vs. 0.2% forecast. The AUD/JPY was also supported below Y82 with traders looking to the firm resistance at Y85 in coming weeks which will correspond to the 1.1000 all-time high on AUD/USD. Looking ahead, RBA Rate announcement forecast to cut to 4.0% vs. 4.25% previously.
Oil & Gold (XAU) Gold fell back for a second day as the market continued to liquidate long positions searching for support eventually found under $1720. OIL/USD pivoted the $97 but the selling has stopped seen last week as the energy fell below $100.
Pairs to watch
EUR/USD Showing Resiliance
XAU/USD looking to resume rally?
Euro – 1.3120
Initial support at 1.3000 (Big Figure Support) followed by 1.2931 (Jan25 low). Initial resistance is now located at 1.3151 (Feb 6 high) followed by 1.3386 (Dec 12 high)
Yen – 76.55
Initial support is located at 76.00 (big figure) followed by 75.35 (Big Figure). Initial resistance is now at 76.87 (Jan 23 low) followed by 77.82 (Jan 26 high).
Pound – 1.5820
Initial support at 1.5642 (Jan 27 low) followed by 1.5517 (Jan 23 low). Initial resistance is now at 1.5889 (Nov 18 high) followed by 1.5932 (Nov 15 high).
Australian Dollar – 1.0725
Initial support at 1.0573 (Jan 23 high) followed by the 1.0428 (Jan 4 low). Initial resistance is now at 1.0765 (Sept 1 high) followed by 1.1007 (Aug 2 high).
Gold – 1720
Initial support at 1702 (Jan 26 low) followed by 1649 (Jan 25 high). Initial resistance is now at 1738 (Feb 6 high) followed by 1763 (Dec 2 high).
Oil – 97.30
Initial support at 96.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 98.50 (Intraday resistance) followed by 100.00 (Intraday Resistance).
Written by Anthony Darvall