Daily Outlook - Nikkei drops -10% on Nuclear Fear, Risk Off

By @ibtimes on

U.S. Dollar Trading (USD) an extremely volatile day in the markets began with massive selling in the Asian session on fear of a nuclear meltdown in Japan resulting the third biggest fall in history on the Nikkei. The USD and YEN both found support from safe haven bids. The market then reversed sentiment and direction at the hand of the FOMC statement which once again stated rates in the US would remain low for an 'extended period'. US stocks pared losses into the close and the USD experienced heavy selling pressure. In US stocks, DJIA -137 points closing at 11855, S&P -14 points closing at 1281 and NASDAQ -33 points closing at 2667. Looking ahead, February Housing Starts forecast at 0.57mn vs. 0.596mn previously.

The Euro (EUR) the EUR/USD held up better than most able to close near opening levels on the back of the widening FED/ECB divide on inflation. EUR/GBP surged above 0.8700 but EUR/JPY did end up falling with the USD/JPY slump. Overall the EUR/USD traded with a low of 1.3854 and a high of 1.4015 before closing the day around 1.3980 in the New York session. Looking ahead, February CPI forecast at 0.4% vs. -0.7% previously.

The Japanese Yen (JPY) was in the eye of the storm yesterday as news of radiation leaking and reports of radiation near Tokyo the world's largest city sent the Nikkei down over 13% at one stage. The market did stabilize in the afternoon session but the USD/JPY was under pressure for most of the day. Overall the USD/JPY traded with a low of 80.59 and a high of 82.06 before closing the day around 80.90 in the New York session. Looking Ahead, Attention of the ongoing Nuclear Plant disaster.

The Sterling (GBP) fell sharply below 1.6000 before rebounding gentle to 1.6100 in the US session. Crosses are not helping with EUR/GBP and GBP/JPY both adding weight to the major and both developing technically bearish for the Pound. Overall the GBP/USD traded with a low of 1.5975 and a high of 1.6188 before closing the day at 1.6075 in the New York session. Looking ahead, January Unemployment 7.9% vs. 7.9%.

The Australian Dollar (AUD) the risk currency was battered over 200 pips as the market sold out of long position in a stampede. 1.0000 broke in Asia and then 0.9900 broke down in Europe along with the Key Y80 level on the AUD/JPY cross. The market recovered slightly in the US Close but still very vulnerable. Overall the AUD/USD traded with a low of 0.9813 and a high of 1.0099 before closing the day at 0.9900 in the New York session.

Oil & Gold (XAU) fell heavily on liquidation by investors to cover losses in the other markets. Overall trading with a low of USD$1380 and high of USD $1426 before ending the New York session at USD$1396 an ounce. Oil was crushed lower on risk aversion. WTI Oil Closed -$3.50 at $97.45 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3705

1.3744

1.3980

1.4036

1.4086

USD/JPY

80.00

80.62

81.15

83.54

83.98

GBP/USD

1.5845

1.5962

1.6080

1.6243

1.6344

AUD/USD

0.9898

0.9944

0.9950

1.0000

1.0256

XAU/USD

1360.00

1376

1398

1429

1444

OIL/USD

96.50

98.00

98.20

98.50

100.00

Euro - 1.3980

Initial support at 1.3744 (Mar 2 low) followed by 1.3705 (Feb 24 low). Initial resistance is now located at 1.4036 (Mar 7 high) followed by 1.4086 (Nov 8 high)

Yen - 81.15

Initial support is located at 80.62 (Mar 14 low) followed by 80.00 (Big Figure Support). Initial resistance is now at 83.54 (Feb 22 high) followed by 83.98 (Feb 16 High).

Pound - 1.6080

Initial support at 1.5962 (38.2% retrace of 1.5345-1.6344) followed by 1.5845 (50% retrace of 1.5345-1.6344). Initial resistance is now at 1.6243 (March 9 low) followed by 1.6344 (Mar 2 high).

Australian Dollar - 0.9950

Initial support at 0.9776 (Dec 9 low) followed by the 0.9625 (Dec 2 low). Initial resistance is now at 1.0000 (Parity) followed by 1.0202 (Mar 1 high).

Gold - 1398

Initial support at 1376 (50% retrace of 1308.25-1444.95) followed by 1360 (61.8% retrace of 1308.25-1444.95). Initial resistance is now at 1429 (Mar 15 high) followed by 1458 (1410.32 plus 1392.65-1440.32).

Oil - 98.20

Initial support at 98.00 (Intraday Support) followed by 96.50 (Intraday Support). Initial resistance is now at 98.50 (Big figure resistance) followed by 100.00 (intraday resistance).

Written by Anthony Darvall

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