CURRENCY TRADING SUMMARY - 2nd September (00:30 GMT)

Written by Anthony Darvall

U.S. Dollar Trading (USD) strong Chinese manufacturing data sent stocks higher in Asia and Europe and this accelerated in the US session on better than expected August ISM data at 56.3 vs. 55.5 previously. Also released August ADP Employment at -10k vs. +19k forecast. In US stocks, DJIA +254 points closing at 10254, S&P +30 points closing at 1080 and NASDAQ 62 points closing at 2176. Looking ahead, Weekly Jobless Claims are forecast at 475k vs. 473k previously. Also tonight, Fed Chief Bernanke speaks.

The Euro (EUR) risk appetite pushed the single currency back above 1.2800 and the topside is now in focus after support was found in the last 2 weeks above 1.2500. July German Retail Sales are missed at -0.3% vs. 0.5% previously. EUR/USD traded with a low of 1.2662 and a high of 1.2857 before closing at 1.2800. Looking ahead, Q2 GDP is forecast at 1.0% q/q. Also released, ECB rate announcement is forecast at 1.0%.

The Japanese Yen (JPY) buoyant crosses helped the major lift to the mid Y84 region after first testing  decade lows at Y83.70. AUD/JPY was the standout performer up nearly 2 Yen. The downtrend remains in place and Friday's Nonfarm will be critical for future direction. Overall the USDJPY traded with a low of 83.66 and a high of 84.69 before closing the day around 84.50 in the New York session.

The Sterling (GBP) was contained until NY opened when the underperforming Pound surged back to test 1.5500. GBP/JPY struggled above Y130 is a big reason for Pound weakness in recent sessions. Overall the GBP/USD traded with a low of 1.5334 and a high of 1.5495 before closing the day at 1.5445 in the New York session. Looking ahead, August HPI is forecast at -0.2% vs. -0.5%.

The Australian Dollar (AUD) the Aussie was the best performer of the day as the Q2 GDP beat expectations with a rise of 1.2% q/q. Adding fuel to the rally was strong Chinese PMI figures and a major move higher in US stocks. Resistance at 0.9000 was broken forcefully and sentiment has turned very bullish. Overall the AUD/USD traded with a low of 0.8914 and a high of 0.9119 before closing the US session at 0.9090. Update July Trade Balance at 1.8bn vs. 3.1bn previously.

Oil & Gold (XAU) new month highs above $1250 prompted profit taking back to lower $1240 regions. Overall trading with a low of USD$1242 and high of USD $1255 before ending the New York session at USD$1246 an ounce. Jumped with improving sentiment back towards $75.00. WTI Oil Closed +$1.99 at $73.91 a barrel.



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.2434

1.2588

1.2785

1.2933

1.3000

USD/JPY

81.85

83.60

84.10

86.38

88.12

GBP/USD

1.5125

1.5324

1.5435

1.5492

1.5713

AUD/USD

0.8634

0.8771

0.9050

0.9080

0.9222

XAU/USD

1210.00

1232

1245

1265

1300.00

OIL/USD

70.00

72.50

73.50

75.00

76.00





Euro - 1.2785

Initial support at 1.2588 (Aug 24 low) followed by 1.2434 (61.8% retrace of 1.1877-1.3334). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3000 (Big figure Resistance)

Yen - 84.10

Initial support is located at 83.60 (August 24 low) followed by 81.85 (May 1995 low). Initial resistance is now at 86.38 (August 13 high) followed by 87.15 (38.2% retrace of 92.89-83.60).

Pound - 1.5435

Initial support at 1.5324 (38.2% retrace of 1.4231-1.5999) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5475 (Aug 31 high) followed by 1.5713 (Aug 12 high).

Australian Dollar - 0.9050

Initial support at 0.8771 (Aug 25 low) followed by the 0.8634 (July 19 low). Initial resistance is now at 0.9080 (August 17 high) followed by 0.9222 (Aug 6 high).

Gold - 1245

Initial support at 1232 (Aug 31 low) followed by 1210 (Aug 24 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (round number).

Oil - 73.50

Initial support at 72.50 (Intraday Support) followed by 71.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).