U.S. Dollar Trading (USD) strengthened against the major currencies overnight, joining the equity markets in shaking off last weeks soft U.S jobs data as news that Americas largest savings and loan bank, Washington Mutual, will be receiving a $5 billion capital injection from equity group TPG. Whilst acting like a shot of confidence in the market, U.S consumer credit rose by US$5.16 billion for the month of February. However, this was below the expected amount of US$5.5 billion so there may be indications the Federal Reserves drastic easing of monetary policy is beginning to flow through the economy. The NASDAQ lost 6 points (-0.3%) whilst the Dow Jones had a volatile day after being up 124 points at one stage, before closing 3 points up. Oil prices surged almost 3% on Monday, up $2.86 a barrel to US$109.09 amid supply concerns following a large refinery fire in Finland over the weekend. Not much data coming out from the U.S as eyes are beginning to look ahead to the weekends G7 meeting to see what plans will come out to help fight the ongoing credit crisis.
The Euro (EURO) dropped slightly against the greenback partly due to the increased sentiment around the U.S following Washington Mutuals capital injection. The EURUSD traded at a high of 1.5736 and a low of 1.5628, before closing in New York at 1.5704. Looking ahead, the focus is on the ECB rate announcement on Thursday, with expectations the bank will maintain its current rate at 4.0%, particularly following the German Industrial Output data release on Monday which saw a growth of 0.4%, this after forecasts of -0.5%, indicating the Euro is remaining solid.
The Japanese Yen (JPY) traded sideways throughout Monday following the U.S slight recovery. The USDJPY had a high of 102.65 and a low of 101.35 before closing at 102.42 in New York. The big announcement for Tuesday is the BoJ rate announcement with forecasts expecting the bank to maintain its current stance of 0.5%.
The Sterling (GBP) weakened overnight as speculation grows the BoE will cut interest rates on Thursday to help stimulate the slowing economy. The GBPUSD traded at a high of 1.9951 and a low of 1.9836 before closing out a 1.9867 in New York.
The Australian Dollar (AUD) had a volatile day as news of Australias worse than expected trade deficit seen at -$3.29 billion, outstripping expectations of -$2.5 billion, caused the Aussie Dollar to bottom out at 0.9180 before gaining momentum in New York on the back of an increasing investor risk appetite for high yielding assets. The AUDUSD traded at a high of 0.9283 and a low of 0.9180 before closing at 0.9263 in New York trading.
Gold (XAU) rose on Monday following an increased interest from commodity focused investors along with tracking oils inflating price. Prices rose US$13.60 an ounce (1.5%) to US$926.80 a barrel.
Initial support at 1.5628 (Apr 7 low) followed by 1.5510 (Apr 3 Low). Initial resistance is now located at 1.5774 (Apr 4 high) followed by 1.5787 (Apr 1 high).
Initial support is located at 1021.27 (38.2% retracement of the 98.56 to 102.95 advance) followed by 100.24 (61.8% retracement of the 98.56 to 102.95 advance). Initial resistance is now at 102.95 (Apr 3 high) followed by 103.59 (Mar 11 high).
Initial support at 1.9730 (Apr 1 low) followed by 1.9722 (Mar 5 low). Initial resistance is now at 1.9957 (Apr 7 high) followed by 2.0048 (Apr 4 high).
Australian Dollar 0.9259
Initial support a 0.9177 (Apr 7 low) followed by 0.9100 (Apr 4 low). Initial resistance is now at 0.9285 (Apr 7 high) followed by 0.9290 (61.8% retracement of the 0.9499 to 0.8953 decline).
Initial support at 900.50 (Apr 4 low) followed by 888.20 (Apr 3 low). Initial resistance is now at 929.40 (Apr 7 high) followed by 940.60 (Mar 31 high).