U.S. Dollar Trading (US) a massive relief rally in Asia reversed sharply in the US session on weak ISM data and concerns the debt debate may not be over. Earlier in the Asian session a speech by Obama that a deal had been agreed upon left the market to focus on the House/Senate votes. July ISM Manufacturing dropped sharply to 50.9 vs. 55.3 previously and caused the sharp sell off in stock markets. In US stocks, DJIA -10 points closing at 12230, S&P -5 points closing at 1286 and NASDAQ -11 points closing at 2744. Looking ahead, June Personal Income forecast at 0.3% vs. 0.3% previously.

The Euro (EUR) the positive mood from Asia waned in Europe and turned to heavy selling in both stocks and the EUR/USD. June EU Unemployment remained at 9.9%. Italian Debt is in focus after the downgrade of some investments and the EUR/USD tumbled with US stocks to 1.4200.  The EUR/USD traded with a low of 1.4183 and a high of 1.4455 before closing the day around 1.4250 in the New York session. Looking ahead, June PPI forecast at 0.1% vs. -0.2% previously.

The Japanese Yen (JPY) rallied sharply in Asia to above Y78 before reversing aggressively to fresh multi month lows on EUR/JPY selling and US debt downgrade concerns. Intervention threats at these levels are growing louder and the shorts are careful. Overall the USD/JPY traded with a low of 76.28 and a high of 78.05 before closing the day around 77.20 in the New York session.

The Sterling (GBP) rallied in Asia before falling back to opening levels and finding support under 1.6300. EUR/GBP fell as the Pound outperformed relative to the troubled Euro. GBP/JPY was extremely volatile falling from Y128 to Y124 as the USD/JPY gyrated wildly. UK Factory PMI slipped into contractionary levels for the first time in 2 years. Overall the GBP/USD traded with a low of 1.6235 and a high of 1.6477 before closing the day at 1.6310 in the New York session. Looking ahead, July PMI Construction forecast at 53 vs. 53.4 previously.

The Australian Dollar (AUD) soared above 1.1000 on the strong AUD/JPY rally in Asia but could not hold onto the gains and reversed to fresh day lows in the US session as stock markets slumped. The outlook is mixed with buyers cautious of being caught long if the debt deal fails. Overall the AUD/USD traded with a low of 1.0921 and a high of 1.1067 before closing the day at 1.1010 in the New York session.

Oil & Gold (XAU) Dipped but was well supported and finished at opening levels. Overall trading with a low of USD$1609 and high of USD $1632 before ending the New York session at USD$1620 an ounce. Oil crashed from $98 to $93 with the weak US Manufacturing figures before closing above the key $95 level. WTI Oil Closed -$0.80 at $94.89 a barrel.



TECHNICAL COMMENTARY

Currency

Sup 2

Sup 1

Spot

Res 1

Res 2

EUR/USD

1.4187

1.4230

1.4250

1.4536

1.4653

USD/JPY

76.25

76.61

77.50

78.02

79.32

GBP/USD

1.6121

1.6262

1.6320

1.6473

1.6547

AUD/USD

1.0796

1.0911

1.1005

1.1081

1.1198

XAU/USD

1584.00

1599

1620

1633

1650

OIL/USD

92.50



95.00

95.30

98.00

100.00



Euro - 1.4250

Initial support at 1.4230 (July 29 low) followed by 1.4187 (50% retrace of 1.3837-1.4536). Initial resistance is now located at 1.4536 (Jul 27 high) followed by 1.4653 (Jul 5 high)



Yen - 77.50

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 78.02 (Jun 27 high) followed by 79.32 (Jul 20 high).

Pound - 1.6320

Initial support at 1.6262 (Jul 25 low) followed by 1.6121 (Jul 20 low). Initial resistance is now at 1.6473 (Jun 7 high) followed by 1.6547 (May 31 high).



Australian Dollar - 1.1005

Initial support at 1.0911 (Jul 29 low) followed by the 1.0796 (Jun 25 low). Initial resistance is now at 1.1081 (Jul 27 high) followed by 1.1198 (1.0391 plus 0.618 of 0.9706-1.1012).

Gold - 1620

Initial support at 1599 (Jul 29 low) followed by 1 (Jul 22 low). Initial resistance is now at 1633 (1478.83 plus 1.618 of 1462.45-1558.25) followed by 1650 (psychological level).



Oil - 95.30

Initial support at 95.00 (Intraday Support) followed by 92.50 (Intraday Support). Initial resistance is now at 98.00 (Intraday resistance) followed by 100.00 (Intraday Resistance).





Written by Anthony Darvall