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U.S. Dollar Trading (USD) in a dramatic rally given the relative stability in recent days, stocks rallied over 300 points in the US and risk was firmly ‘on’ throughout the day. November Housing Starts jumped to 0.685mn vs. 0.627mn previously. In US stocks, DJIA +337 points closing at 12103, S&P +35 points closing at 1241 and NASDAQ +80 points closing at 2603. Looking ahead, November Existing Home Sales forecast at 5.05mn vs. 4.97mn previously.
The Euro (EUR) the market was caught short yesterday with a positive Spanish bond auction the catalyst for a surge to 1.3180 in Europe. Today the ECB will launch a new lending facility that may further decrease pressure on European banks and Sovereign bonds and encourage the market to further gains. December German IFO at 107.2 vs. 106 forecast. Looking ahead, December Consumer Confidence previously at -20.4.
The Japanese Yen (JPY) USD/JPY fell back as the USD came under heavy selling pressure. Support was found at Y77.70 so the move was small but still disappointing for those looking for a breakout of the recent range to the topside. The 50 pip range has held for nearly 3 weeks now. AUD/JPY and EUR/JPY surged with stocks and risk appetite.
The Sterling (GBP) outperformed in a very positive trading session breaking to test 1.5700 before consolidating at 1.5660. EUR/GBP fell even further and was an example of how strong the Pound move was given the positive Euro news. December CBI Distributive Trades surged to 9 vs. -19 previously a seven month high. Looking ahead, MPC minutes from December meeting forecast at 0-9-0.
The Australian Dollar (AUD) the Aussie was the back overnight breaking above 1.0000 and surging to 1.0100 after opening under 0.9900 in Asia. The risk currency was supported by RBA minutes which suggest the December rate cut was only a precaution given the European downside risk and that economic data in Australia did not support it. The outlook is linked to stocks and if gains continue then 1.0250 resistance will come into view.
Oil & Gold (XAU) Gold broke above $1600 and went $1618 as the topside was tested and the USD weakened broadly. Crude Oil Surged to $97 after breaking above $95 and commodities tracked stocks higher.
Pairs to watch
EUR/USD to retest 1.3180?
XAU/USD Sell off over?
Euro – 1.3125
Initial support at 1.2983 (Dec 19 low) followed by 1.2867 (Jan 10 low). Initial resistance is now located at 1.3327 (Dec 13 high) followed by 1.3386 (Dec 12 high)
Yen – 77.85
Initial support is located at 77.49 (Dec 9 low) followed by 76.84 (Nov 22 low). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.98 (Nov 1 high).
Pound – 1.5670
Initial support at 1.5465 (Dec 19 low) followed by 1.5272 (Oct 6 low). Initial resistance is now at 1.5735 (Dec 9 high) followed by 1.5889 (Nov 18 high).
Australian Dollar – 1.0130
Initial support at 0.9920 (Dec 12 high) followed by the 0.9833 (76.4% retrace of 0.9664-1.0380). Initial resistance is now at 1.0163 (Dec 13 low) followed by 1.0225 (Dec 9 high).
Gold – 1625
Initial support at 1563 (Dec 14 high) followed by 1500 (Oct 4 low). Initial resistance is now at 1642 (Dec 12 low) followed by 1677 (Dec 13 high).
Oil – 98.30
Initial support at 96.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 99.00 (Intraday resistance) followed by 100.00 (Intraday Resistance).
Written by Anthony Darvall