U.S. Dollar Trading (US) sentiment turned positive and global markets enjoyed a sharp rally which began in Asia and ended with US stocks up over 4%. Weekly Jobless Claims improved to 395k vs. 402k previously. June Trade Balance widened to -53bn vs. -48bn forecast. In US stocks on Friday, DJIA +423 points closing at 11143, S&P +51 points closing at 1172 and NASDAQ +111 points closing at 2492. Looking ahead, July Retail Sales forecast at 0.5% vs. 0.1%.
The Euro (EUR) was volatile in a 200 pip range between 1.4100 and 1.4300 but finishing well supported with EUR/CHF moving up near 6% on the day after talk the Swiss may peg their currency to the Euro. Eurozone banking stocks bounced after fears subsided but the market is still very cautious. Looking ahead, June Industrial Production forecast at 4.4% vs. 4% y/y previously.
The Japanese Yen (JPY) the USD/JPY calmed down with the market happy to stay within the Y76.5 and Y77 ranges. The larger volatility was seen on the AUD/JPY which moved aggressively with the large swings in US stocks. The BOJ Governor is still jawboning that the central bank is watching the FX moves closely.
The Sterling (GBP) rallied with the improving market sentiment to reclaim 1.4200. The market took relief from rioters leaving London and some constant EUR/GBP selling down to 0.8750. The outlook will be closely tied with the rolling investor sentiment which has been extremely fickle.
The Australian Dollar (AUD) the Aussie fell back on weak employment data but this was short lived with strong buying emerging in Asia after a strong rally in Chinese stocks. July Employment Change -0.1k vs. 10k forecast. July Unemployment Rate at 5.1% vs. 4.9% previously. The market finished at highs and could retest 1.0400 if sentiment can hold.
Oil & Gold (XAU) Gold was crunched lower from fresh all-time highs as the CME increased margin requirement and a relief rally flooded the markets. Crude surged with the rest of the market to break above the key $85 level.
Pairs to watch
XAU/USD will the dip provide attractive levels for buyers?
EUR/CHF can the safe haven extend gains on Swiss/Peg Talks
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.4200
Initial support at 1.4014 (July 18 low) followed by 1.3951 (Jul 13 low). Initial resistance is now located at 1.4454 (Aug 1 high) followed by 1.4536 (Jul 27 high)
Yen - 77.80
Initial support is located at 76.25 (Mar 15 low) followed by 75.00 (Psych level). Initial resistance is now at 77.31 (Aug 10 high) followed by 78.47 (Aug 8 high).
Pound - 1.6195
Initial support at 1.6069 (Jul 20 low) followed by 1.6006 (Jul 18 low). Initial resistance is now at 1.6336 (Aug 10 high) followed by 1.6411 (Aug 9 high).
Australian Dollar - 1.0290
Initial support at 1.0111 (Aug 11 low) followed by the 0.9928 (Aug 9 low). Initial resistance is now at 1.0447 (Aug 8 high) followed by 1.0527 (Aug 5 low).
Gold - 1764
Initial support at 1737 (Aug 10 low) followed by 1702 (Aug 9 low). Initial resistance is now at 1815 (Aug 11 high) followed by 1850 (Psych Resistance).
Oil - 84.75
Initial support at 82.50 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 85.00 (Intraday resistance) followed by 87.00 (Intraday Resistance).
Written by Anthony Darvall