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U.S. Dollar Trading (US) risk aversion and fresh Eurozone debt fears helped the USD gains overnight even with little progress on the US debt ceiling. June Durable Goods fell -2.1% vs. 1.9% previously and added to the bearish sentiment sweeping the markets. In US stocks, DJIA -198 points closing at 12302, S&P -27 points closing at 1304 and NASDAQ -75 points closing at 2764. Looking ahead, Weekly Jobless Claims are forecast at 415k vs. 418k previously. Also June Pending home sales forecast at -2% vs. 8.2% previously.

The Euro (EUR) the Euro pulled back sharply with Cyprus and Greece downgraded and comments from the German Fin min that the debt crisis is not over. German CPI climbed 0.5% m/m but is not expected to remain at the elevated levels. Overall the EUR/USD traded with a low of 1.4338 and a high of 1.4537 before closing the day around 1.4350 in the New York session. Looking ahead, July German Unemployment forecast at -13k vs. -8k.

The Japanese Yen (JPY) grinded lower for most of the day until the USD found some bids and rebounded above Y78. AUD/JPY was well supported on the strong inflation data whilst the EUR/JPY was the weakest cross falling under Y112 on risk aversion. Overall the USD/JPY traded with a low of 77.56 and a high of 78.19 before closing the day around 77.85 in the New York session.

The Sterling (GBP) fell back to the lower 1.6300 region with market wide USD strength and heavy GBP/JPY selling pushing Cable lower. EUR/GBP fell below 0.8800 but is still inside the recent range. July CBI Industrial trends showed a sharp slowdown to -10 vs. -2 previously. Overall the GBP/USD traded with a low of 1.6310 and a high of 1.6441 before closing the day at 1.6350 in the New York session. Looking ahead, CBI Realized sales forecast at 0 vs. -2 previously.

The Australian Dollar (AUD) was the strongest currency in the market breaking to fresh all time highs on the back of strong Q2 CPI figures at 0.9% vs. 0.7% forecast. AUD/USD soared above 1.1000 and went on a stop loss run towards 1.11 before falling back on the sharp drop in US stocks and resurgent USD. The market is bullish because the strong CPI numbers may lead to the RBA raising interest rates further this year. Overall the AUD/USD traded with a low of 1.0936 and a high of 1.1082 before closing the day at 1.1030 in the New York session. UPDATE July RBNZ Rate hold at 2.5%

Oil & Gold (XAU) traded fresh all-time highs above $1625 before falling sharply on profit taking in the US session. Overall trading with a low of USD$1608 and high of USD $1629 before ending the New York session at USD$1616 an ounce. Oil fell heavily with US stocks. WTI Oil Closed -$2.19 at $97.40 a barrel.

TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4134

1.4324

1.4350

1.4578

1.4653

USD/JPY

76.61

77.39

77.80

78.02

79.32

GBP/USD

1.6121

1.6262

1.6335

1.6473

1.6547

AUD/USD

1.0796

1.0944

1.1035

1.1198

1.1464

XAU/USD

1584.00

1599

1616

1628

1632

OIL/USD

95.00

98.00

99.75

100.00

100.50

Euro – 1.4350

Initial support at 1.4324 (Jul 22 low) followed by 1.4134 (Jul 20 low). Initial resistance is now located at 1.4578 (Jul 4 high) followed by 1.4653 (Jul 5 high)

Yen – 77.80

Initial support is located at 77.39 (81.48 minus 1.618 of 82.23-79.70) followed by 76.61 (79.60 minus 81.48-78.47). Initial resistance is now at 78.02 (Jun 27 high) followed by 79.32 (Jul 20 high).

Pound – 1.6335

Initial support at 1.6262 (Jul 25 low) followed by 1.6121 (Jul 20 low). Initial resistance is now at 1.6473 (Jun 7 high) followed by 1.6547 (May 31 high).

Australian Dollar – 1.1035

Initial support at 1.0944 (Jul 27 low) followed by the 1.0796 (Jun 25 low). Initial resistance is now at 1.1198 (1.0391 plus 0.618 of 0.9706-1.1012) followed by 1.1464 (0.8067 plus 0.9406-0.6009).

Gold – 1616

Initial support at 1599 (Jul 25 low) followed by 184 (Jul 22 low). Initial resistance is now at 1628 (1462.45 plus 0.618 of 1308.25-1577.57) followed by 1632 (1608.10 plus 0.618 of 1624.07-1584.23).

Oil – 99.75

Initial support at 98.00 (Intraday Support) followed by 95.00 (Intraday Support). Initial resistance is now at 100.00 (Intraday resistance) followed by 100.50 (Intraday Resistance).

Written by Anthony Darvall