U.S. Dollar Trading (US) the panic in the markets was caught and relief flooded in after the FOMC statement stated interest rates would be held low for at least 2 years. The defined time period help create investor confidence and the Dow Jones rallied 600 points from lows. The Dollar and in particular the USD/CHF reacted sharply, falling to all time lows under 0.71 before stabilizing. In US stocks on Friday, DJIA +429 points closing at 10239, S&P +53 points closing at 1172 and NASDAQ +124 points closing at 2482. Looking ahead, Crude Oil Inventories Forecast.
The Euro (EUR) the Euro surged against the greenback after the FOMC statement prompted the large stock rally. Resistance at 1.4400 stopped the rally and the market consolidated at highs. The next move will related to whether stocks can maintain gains and the effect this will have on the EUR/CHF and EUR/JPY. Yields on Italian and Spanish long term debt fell again yesterday which is positive for stabilizing the Euro debt crisis.
The Japanese Yen (JPY) the Yen was sold aggressively on the crosses and even sold against the USD after the stock gains overwhelmed the USD/JPY selling. AUD/JPY soared from Y77 to Y80 and EUR/JPY reclaimed the key Y110 level. Traders have been selling the crosses on rallies and today's price action will be critical to see if the downtrend is over.
The Sterling (GBP) the Pound underperformed the rest of the FX market on the back of continued rioting in London which is sidelining traders while a rally in stocks would traditionally have supported the UK currency. Looking ahead, Bank of England Governor King Speaks and releases the inflation report.
The Australian Dollar (AUD) the Aussie tracked the intraday volatility falling through parity for the first time since April before reversing sharply with US stocks to finish just under 1.0400. The large moves are creating the best conditions for momentum day traders seen this year. AUD/JPY closed at the key Y80 level.
Oil & Gold (XAU) Gold had very large swings falling from all time highs over $50 oz before rallying $60 oz to print fresh all-time highs and reversing again for a final time into the US close. Crude Oil slumped in Asia to $77 a barrel but reversed with the positive change of sentiment throughout the day and closed at $82 a barrel.
Pairs to watch
EUR/USD and EUR/CHF recovery rally
XAU/USD profit taking as risk aversion abates
|Currency||Sup 2||Sup 1||Spot||Res 1||Res 2|
Euro - 1.4345
Initial support at 1.4055 (Aug 5 low) followed by 1.4014 (Jul 18 low). Initial resistance is now located at 1.4454 (Aug 1 high) followed by 1.4536 (Jul 27 high)
Yen - 76.95
Initial support is located at 76.61 (79.60 minus 81.48-78.47) followed by 76.25 (Mar 17 low). Initial resistance is now at 78.47 (Aug 8 high) followed by 80.24 (Aug 4 high).
Pound - 1.6285
Initial support at 1.6224 (Aug 2 low) followed by 1.6121 (Jul 21 low). Initial resistance is now at 1.6473 (Jun 7 high) followed by 1.6547 (May 31 high).
Australian Dollar - 1.0335
Initial support at 1.0000 (Parity) followed by the 0.9850 (Previous support). Initial resistance is now at 1.0400 (Previous support) followed by 1.0500 (Big figure).
Gold - 1753
Initial support at 1700(Psych Support) followed by 1640 (Jul 28 low). Initial resistance is now at 1750 (Psychological Level) followed by 1800 (Psychological level).
Oil - 81.35
Initial support at 80.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday resistance) followed by 85.00 (Intraday Resistance).
Written by Anthony Darvall