U.S. Dollar Trading (US) with the initial shock of the potential Greece default wearing off most markets rallied softly throughout the day. Helping support was comments from Germany's Merkel that Greece would meet requirements for further aid and talk that the ECB was buying Italian bonds in the market. US Import prices down -0.4% vs. 0.0% forecast. In US stocks, DJIA +44 points closing at 11105, S&P +10 points closing at 1172 and NASDAQ +37 points closing at 2532. Looking ahead, August Retail Sales forecast at 0.2% vs. 0.5% previously.

The Euro (EUR) was supported from positive expectations from the EU finance ministers meeting later in the week with talk US Treasury Secretary Geithner will be attending and he will press for an increase in the EFSF bailout fund. Also talk that China and the other BRIC's may look to invest in European bonds. Looking ahead, July Industrial production forecast at 1.5% vs. 0.7% previously.

The Japanese Yen (JPY) was very contained ending slightly stronger against the USD but unchanged against the Euro after the cross found support under Y105. The USD/JPY range trading around the Y77 level is offering traders a fairly safe trading option away from the volatility of the majors. Looking ahead, July Japanese Industrial Output is forecast at 0.6%.

The Sterling (GBP) was under pressure in Europe falling to month lows under 1.5800 before finding support and grinding higher. The outlook is bearish with a crisis in the Eurozone seen hitting its neighbor the hardest going forward. Looking forward, August CPI increased to 4.5% vs. 4.4% previously.

The Australian Dollar (AUD) the Aussie underperformed as the usually well supported currency remaining on the backfoot with traders sitting on the sidelines watching the EU debt saga unfold. The potential for a banking crisis and the subsequent heavy selling that would cause in the AUD/USD is keeping buying timid. UPDATE September Westpac Consumer sentiment +8.1% vs. -3.5% previously.

Oil & Gold (XAU) Gold dipped below $1800 and then bounced sharply in the US session on safe haven demand and weaker USD. Crude continue to outperform breaking above the key $90 level before consolidating.

Pairs to watch

EUR/USD short squeeze as hopes grow?

OIL/USD can the rally continue now $90 is broken?


TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.3300

1.3525

1.3690

1.3937

1.4149

USD/JPY

76.43

76.70

76.90

77.86

78.47

GBP/USD

1.5719

1.5752

1.5790

1.5990

1.6203

AUD/USD

1.0200

1.0250

1.0355

1.0380

1.0666

XAU/USD

1757.00

1805

1845

1885

1921

OIL/USD

87.00



89.00

90.25

92.50

95.00



Euro - 1.3690

Initial support at 1.3525 (Feb 22 low) followed by 1.3300 (Big figure support). Initial resistance is now located at 1.3937 (Sept 9 high) followed by 1.4149 (Sept 7 high)



Yen - 76.90

Initial support is located at 76.70 (Sep 12 low) followed by 76.43 (Aug 31 low). Initial resistance is now at 77.86 (Aug 9 high) followed by 78.47 (Aug 8 high).

Pound - 1.5790

Initial support at 1.5752 (Jul 12low) followed by 1.5719 (Jan 25 low). Initial resistance is now at 1.5990 (Sept 9 high) followed by 1.6203 (Sep 5 high).



Australian Dollar - 1.0355

Initial support at 1.0250 (Sep 12 low) followed by the 1.0200 (Big Figure Support). Initial resistance is now at 1.0380 (hourly resistance) followed by 1.0666 (Sept 5 high).

Gold - 1845

Initial support at 1805 (Sept 8 low) followed by 1757 (Aug 29 low). Initial resistance is now at 1885 (Sept 9 high) followed by 1921 (Sept 6 high).



Oil - 90.25

Initial support at 89.00 (Intraday Support) followed by 88.00 (Intraday Support). Initial resistance is now at 92.50 (Intraday resistance) followed by 95.00 (Intraday Resistance).





Written by Anthony Darvall