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U.S. Dollar Trading (US) an historic day in currency markets with the Swiss National Bank intervening by placing a lower limit on the EUR/CHF at 1.2000. The immediate effect was a move from 1.12 to 1.21 on the EUR/CHF and this helped the USD/CHF from 0.7900 to 0.8500. Stocks markets globally welcomed the move and in US data ISM Services at 52.7 vs. 53.3 previously. Looking ahead, FED Beige Book released.
The Euro (EUR) the EUR/USD spiked higher to above 1.4200 on the EUR/CHF move before reversing on the debt crisis fears to break 1.4000. EUR/CHF held above the 1.2000 level outlined by the SNB but the market is so far very cautious to push higher. July German Industrial orders fell -2.8% vs. 1.8% previously. Looking ahead, German Industrial Output forecast at 0.5% vs. -1.1% m/m.
The Japanese Yen (JPY) USD/JPY leapt on the USD/CHF move to break above Y77 and threaten to push higher. The BOJ may embark on a similar intervention process if they believe the Yen strength is threatening their fragile recovery. AUD/JPY finished higher but EUR/JPY and GBP/JPY managed to still fall on the day with fears about Greece and Italy debt causing constant selling pressure. Looking ahead, BOJ Rate decision.
The Sterling (GBP) followed the Euro movements broadly, rallying on GBP/CHF flows before reversing sharply and breaking 1.6000. EUR/GBP moved up above 0.8800 on talk the BOE may increase the asset purchase program at tomorrow’s rate meeting. Looking ahead, July Industrial Output forecast at 0% m/m.
The Australian Dollar (AUD) the Aussie tested 1.0500 multiple times throughout the day on Euro debt fears but was able to find support under the figure and close unchanged. The RBA held at 4.75% and noted concerns on the global financial markets that could negatively affect the Australian economy. Still the central bank was upbeat on the local economy and expected Chinese growth to be strong. UPDATE Q2 GDP at 1.2% vs. 0.9% previously.
Oil & Gold (XAU) Gold broke to $1920 to print fresh all time highs before reversing to $1860 after the Swiss intervention. The volatility continued for the rest of the day with traders uncertain how to position themselves with central bank interventions ahead of the G7 meeting. Crude surged to $86 on a very positive day for the energy on strong stocks and storm fears.
Pairs to watch
EUR/USD Broke below 1.4000 are more losses coming?
EUR/CHF will the 1.2000 SNB line in the sand hold?
Euro – 1.4035
Initial support at 1.3951 (Jul 13 low) followed by 1.3837 (July 12 low). Initial resistance is now located at 1.4220 (Sept 5 high) followed by 1.4288 (Sept 2 high)
Yen – 77.35
Initial support is located at 76.55 (Sep 2 low) followed by 75.95 (Psych level). Initial resistance is now at 77.70 (Aug 25 high) followed by 78.86 (Aug 8 high).
Pound – 1.5980
Initial support at 1.5921 (Sep 6 low) followed by 1.5781 (Jul 12 low). Initial resistance is now at 1.6061 (Sept 5 high) followed by 1.6334 (Aug 31 high).
Australian Dollar – 1.0575
Initial support at 1.0419 (Aug 26 low) followed by the 1.0363 (Aug 22 low). Initial resistance is now at 1.0666 (Sept 5 high) followed by 1.0734 (Sep 2 high).
Gold – 1874
Initial support at 1824 (Sep 2 low) followed by 1776 (Aug 29 low). Initial resistance is now at 1933 (1308.25 plus 1.618 of 1044.85-1431.25) followed by 1950 (Psych level).
Oil – 86.40
Initial support at 85.00 (Intraday Support) followed by 83.00 (Intraday Support). Initial resistance is now at 87.00 (Intraday resistance) followed by 88.00 (Intraday Resistance).
Written by Anthony Darvall