U.S. Dollar Trading (US) sentiment improved overnight with a large rally in US stocks over expectations that the US Fed Chairman Bernanke will announce new measures on Friday to help the economy recover. While QE3 is the simple choice traders are also talking of more creative measure to that will help markets stabilize. In US stocks on Friday, DJIA +322 points closing at 1176, S&P +38 points closing at 1162 and NASDAQ +100 points closing at 2446. Looking ahead, July Durable Good Sales forecast at 2% vs. -1.9% previously.
The Euro (EUR) the Euro rallied to 1.4500 and found resistance before falling back into the close but in on a strong footing with risk appetite improving lately. August PMI Manufacturing at 49.7 vs. 49.6 forecast and services PMI at 51.5 vs. 51 forecast. There is some concern with talk Finland may pull out of the Greece bailout and this is causing some jitters. Looking ahead, German August IFO forecast at 111 vs. 112.9 previously.
The Japanese Yen (JPY) weakened broadly yesterday as risk appetite picked up and crosses rallied. EUR/JPY pushed to Y111 and AUD/JPY pushed to the top of its recent range at Y81. The outlook is closely linked to the US Fed speech on Friday and whether stocks will be able to extend rallies.
The Sterling (GBP) was extremely stable with the 1.6500 level proving a key pivot. The market was not interested in pushing higher even with the 300 point rally in the Dow jones index. The EUR/GBP is also calm with the little direction. August CBI orders at 1 vs. -10 previously.
The Australian Dollar (AUD) The Aussie was the best performing currency in the market with the Chinese PMI impressing and the RBA Deputy Battellino talking positively about the Australian outlook. The stock markets added to the rally and the Aussie pushed above 1.0500 in the US session.
Oil & Gold (XAU) Gold experienced its biggest pullback in 18 months overnight, crashing $80 an ounce with the bubble having a mini correction from the $1900 level. Crude Oil broke above the key $85 level with the positive risk appetite.
Pairs to watch
AUD/USD to rally with stocks?
EUR/USD will the 1.4500 level hold another test?
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.4410
Initial support at 1.4347 (Aug 22 low) followed by 1.4150 (Aug 12 low). Initial resistance is now located at 1.4452 (Aug 18 high) followed by 1.4536 (Jul 27 high)
Yen - 76.80
Initial support is located at 75.95 (Aug 19 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 - 1.6480
Initial support at 1.6421 (Aug 18 low) followed by 1.6256 (Aug 15 low). Initial resistance is now at 1.6592 (Aug 17 high) followed by 1.6661 (May 3 high).
Australian Dollar - 1.0485
Initial support at 1.0315 (Aug 19 low) followed by the 1.0246 (Aug 12 low). Initial resistance is now at 1.0559 (Aug 18 high) followed by 1.0786 (Aug 3 High).
Gold - 1850
Initial support at 1821 (Aug 19 low) followed by 1784 (Aug 18 low). Initial resistance is now at 1913 (Aug 23 high) followed by 1931 (1723.70 plus 0.618 of 1478.83-1814.95).
Oil - 85.60
Initial support at 85.00 (Intraday Support) followed by 82.50 (Intraday Support). Initial resistance is now at 87.00 (Intraday resistance) followed by 88.00 (Intraday Resistance).
Written by Anthony Darvall