U.S. Dollar Trading (USD) volatility was evident in the market Wednesday before the announcement of a Greek debt deal during the start of the Asian session Thursday sparked a major rally. The response was broadly positive and could be the main story of the rest of day as European and US investors respond. In US stocks, DJIA +162 points closing at 11869, S&P +12 points closing at 1242 and NASDAQ +12 points closing at 2650. Looking ahead, Q3 GDP forecast at 2.5% vs. 1.3% previously.
The Euro (EUR) the market moved towards 1.4000 on the news of the EU Summit deals but earlier had hit 1.3800 as disagreements spooked the markets. The New Greek deal is reportedly a 50% haircut and also announced was the expansion of the EFSF to 1.4trn through leveraging the current fund. Adding to the positive sentiment was comments that Europe will also look to further integrate economically. Looking ahead, traders will dissect the EU deal and react to commentary post summit.
The Japanese Yen (JPY) traded in a range around the Y76 level finishing near highs at Y76.20 ahead of the BOJ meeting later today which may announce new asset buying programs to help companies combat the strength of the Yen. Yen Crosses are soaring in response to the risk on rally. Looking ahead, BOJ Meeting ahead forecast to hold at 0.1%.
The Sterling (GBP) was up and down with the changing sentiment finishing above 1.6000 as the bailout package was announced and threatening to break above the 1.6040 highs. EUR/GBP buying is suppressing the Cable but if 1.6040 is broken then a sharp rally could ensue. Looking ahead, October CBI Distributive Trades forecasts -15 vs. -15 previously.
The Australian Dollar (AUD) the Aussie broke under 1.0400 yesterday after slower than expected Q3 CPI core measurements. The market is now pricing in a high chance of the RBA cutting rates at next weeks meeting and this is capping gains. Later, the AUD/USD soared on the Greek debt deal news and is threatening to break 1.0500.
Oil & Gold (XAU) Gold consolidated gains above $1700 before extending gains on weakness in the USD post EU summit. Oil came under heavy selling pressure for most of the day testing $90 but was able to reverse most of these losses after stocks rallied post EU deal announcements.
Pairs to watch
EUR/USD To break 1.4000 barriers?
AUD/SUD To break the key 1.0500 resistance?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.3960
Initial support at 1.3822 (Oct 24 low) followed by 1.3704 (Oct 21 low). Initial resistance is now located at 1.4013 (61.8% retrace of 1.4549-1.3146) followed by 1.4100 (Sept 8 high)
Yen - 76.05
Initial support is located at 75.00 (big figure Support) followed by 74.44 (77.86 minus 0.618 of 81.48-75.95). Initial resistance is now at 77.09 (Oct 20 high) followed by 77.49 (Oct 12 high).
Pound - 1.6010
Initial support at 1.5754 (Oct 21 low) followed by 1.5681 (Oct 20 low). Initial resistance is now at 1.6104 (61.8% retrace of 1.6618-1.5272) followed by 1.6203 (Sep 5 high).
Australian Dollar - 1.0470
Initial support at 1.0313 (Oct 24 low) followed by the 1.0203 (Oct 21 low). Initial resistance is now at 1.0500 (Big Figure) followed by 1.0666 (Sept 5 high).
Gold - 1725
Initial support at 1635 (Oct 24 low) followed by 1583 (Sept 29 low). Initial resistance is now at 1754 (Sept 23) followed by 1800 (big figure).
Oil - 91.80
Initial support at 90.00 (Intraday Support) followed by 89.00 (Intraday Support). Initial resistance is now at 92.50 (Intraday resistance) followed by 95.00 (Intraday Resistance).
Written by Anthony Darvall