U.S. Dollar Trading (USD) the market hit day highs on the back of better than expected September Non Farm Payrolls. This positive mood though was trumped into the close by Fitch downgrading Spain and Italy which sent US stocks slightly negative. The USD finished strong with the Euro dragging the other majors lower. In US stocks, DJIA -20 points closing at 11103, S&P -9 points closing at 1155 and NASDAQ -27 points closing at 2479. Looking ahead, US BANK HOLIDAY.

The Euro (EUR) the Euro opened Monday low after the downgrade of Spain and Italy causing lingering concerns with the rating on negative outlook. The market was supported over the weekend by a show of unity from Sarkozy and Merkal saying they will do whatever it takes to support the Eurozone. Looking ahead, August German Trade Balance forecast at 10.3bn vs. 10.1bn previously.

The Japanese Yen (JPY) the USD/JPY reacted positively to the US Jobs data but failed to break Y77 and fell back to Y76.60 with weakness in the EUR/JPY cross. EUR/JPY fell 1 Yen after the downgrades but is still supported as it rallies from year lows at Y101. AUD/JPY is also grinding higher support on dips and above the Y75 level.

The Sterling (GBP) was still recovering from the shock increase in the BOE asset purchase program at Thursday's meeting. The GBP/USD rallied with the strong US data but gave up all these gain into the close as the EUR/USD selling weighed.

The Australian Dollar (AUD) finished unchanged with a rally above 0.9800 reversed sharply in the US session. The market is eager to buy the high yielding Aussie with the fear seen in previous weeks leaving the market and the commodity currency at relatively cheap levels.

Oil & Gold (XAU) Gold fell back from $1660 to $1630 before finding support and closing slightly higher. The outlook is mixed with the demand for Gold seen tempered if the fear of a Eurozone banking Crisis subsides. Crude Oil was volatile as always surging $2 a barrel on strong US jobs data before reversing to fresh day lows on the Spanish downgrade.

Pairs to watch

EUR/USD Will the Merkal/Sarkozy pact be enough to support?

AUD/USD back to buying on the dip for the risk currency?

TECHNICAL COMMENTARY

CurrencySup 2Sup 1SpotRes 1Res 2
EUR/USD1.31461.32421.34451.36011.3690
USD/JPY75.0076.1176.7577.2877.86
GBP/USD1.53281.54001.55901.56661.5716
AUD/USD0.96220.97280.98200.99280.9986
XAU/USD1583.001596165316781704
OIL/USD80.0082.0083.7085.0086.00

 

Euro - 1.3445

Initial support at 1.3242 (Oct 6 low) followed by 1.3146 (Oct 4 low). Initial resistance is now located at 1.3601 (Sept 30 high) followed by 1.3690 (Sept 28 high)

Yen - 76.75

Initial support is located at 76.11 (Sep 22 low) followed by 75.00 (Psych Support). Initial resistance is now at 77.28 (Sep 15 high) followed by 77.86 (Sep 9 high).

Pound - 1.5590

Initial support at 1.5400 (big figure support) followed by 1.5328 (Sept 22 low). Initial resistance is now at 1.5666 (Sept 30 high) followed by 1.5716 (Sept 29 high).

Australian Dollar - 0.9820

Initial support at 0.9728 (Oct 7 low) followed by the 0.9622 (Oct 6 low). Initial resistance is now at 0.9928 (Aug 9 high) followed by 0.9986 (Sep 27 high).

Gold - 1653

Initial support at 1596 (Oct 4 low) followed by 1583 (Sept 29 low). Initial resistance is now at 1678 (Oct 4 high) followed by 1704 (Aug 25 low).

Oil - 83.70

Initial support at 82.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 85.00 (Intraday resistance) followed by 86.00 (Intraday Resistance).

Written by Anthony Darvall

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