U.S. Dollar Trading (USD) the USD enjoyed some solid gains during the Asian session as stocks and majors fell on fresh risk aversion that the European Debt crisis had spread to Italy. Talk that the Italian PM may resign helped reverse the losses as did news Greece had formed a new Unity government. In US stocks, DJIA +85 points closing at 11983, S&P +7 points closing at 1260 and NASDAQ +9 points closing at 2695.
The Euro (EUR) The EUR/USD fell aggressively at the start of Europe with traders now closely watching Italy as Italian bond yields surge and political pressure rises on the ruling government. The selling proved short-lived however as many official came out with supportive comments on the Greece. The major traded from below 1.3700 to test 1.3800 in the US session. Looking ahead, September Trade Balance forecast at 12.5bn vs. 13.8bn previously.
The Japanese Yen (JPY) the USD/JPY is almost untradeable as the major clings to the Y78 level. EUR/JPY and AUD/JPY provided some action dipping then bouncing later in the day. The outlook will be contingent on whether the BOJ continue to support the market either verbally or physically.
The Sterling (GBP) Tested 1.6000 on risk aversion early in Europe before reversing on EUR/GBP selling and strong Halifax House Prices which gained 1.2% in October m/m. EUR/GBP broke to fresh lows under 0.8600 finding support at 0.8560. Looking ahead, September Industrial output forecast at 0.1% vs. 0.2% previously.
The Australian Dollar (AUD) the Aussie was volatile falling from 1.0400 at the open to test support under 1.0300 before reversing with US stocks later in the day. AUD/JPY buying is providing plenty of support for the major on dips and is currently well supported above the Y80 level. UPDATE September Trade balance at 2564mln vs. 3000mln forecast.
Oil & Gold (XAU) the bullish environment for the alternative investment in gold sent the yellow metal to $1800 an ounce. Oil continued its uptrend not interested in selling off aggressively with Asian stocks to break above $95 a barrel in the US session.
Pairs to watch
EUR/USD Holding up well in the bad news
AUD/USD to retest 1.0500?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.3750
Initial support at 1.3657 (Nov 3 low) followed by 1.3609 (Nov 1 low). Initial resistance is now located at 1.3871 (Nov 1 high) followed by 1.4003 (61.8% retrace of 1.4247-1.3609)
Yen - 78.05
Initial support is located at 77.54 (50% retrace of 75.57-79.50) followed by 76.95 (61.8% retrace of 75.35-79.53). Initial resistance is now at 78.42 (Nov 2 high) followed by 78.98 (Nov 1 high).
Pound - 1.6050
Initial support at 1.5877 (Nov 3 low) followed by 1.5825 (38.2% retrace of 1.5272-1.6167). Initial resistance is now at 1.6097 (Nov 1 high) followed by 1.6167 (Oct 31 high).
Australian Dollar - 1.0355
Initial support at 1.0203 (Oct 21 low) followed by the 1.0148 (Oct 20 low). Initial resistance is now at 1.0447 (Nov 3 high) followed by 1.0567 (Nov 1 high).
Gold - 1792
Initial support at 1748 (Nov 4 high) followed by 1714 (Nov 2 low). Initial resistance is now at 1800 (Big Figure) followed by 1816 (Sep 21 high).
Oil - 95.50
Initial support at 95.00 (Intraday Support) followed by 94.00 (Intraday Support). Initial resistance is now at 96.50 (Intraday resistance) followed by 98.00 (Intraday Resistance).
Written by Anthony Darvall