U.S. Dollar Trading (USD) was stronger against risk currencies on the back of a $2 fall in Oil but finished the day significantly off highs as US stock markets rallied into the close. Buoying the market was the better than expected June ISM Non-Manufacturing which climbed to 47 vs. 44 previously. In After Hours trade, California long term GO Debt was downgraded by Fitch to BBB from A-, one grade above Junk Bond status. Crude Oil down $2.68 at $64.05. In US share markets, S&P ended +2.3 points (+0.26%) at 898.72, NASDAQ ended -9.12 points (-0.51%) at 1787.40 and DOW JONES ended +44.13 points (+0.53%) at 8324.87.

The Euro (EUR) fell through support at 1.3950 in Early Europe after showing surprising strength in the Asian session even as the Nikkei slumped. Support below 1.3900 held firm and the pair was able to bounce with US stocks back towards the key 1.4000 level. EUR/JPY bounced off last week support at 132 Yen. July Sentix disappointed at -31 vs. -24 forecast. Overall the EUR/USD traded with a low of 1.3875 and a high of 1.4000 before closing at 1.3970. Looking ahead, May German Industrial Orders forecast at 0.5% vs. 0.0% previously m/m.

The Japanese Yen (JPY) was very strong as USD/JPY broke support at 95.80 and 95 before rallying off lows with US stocks after the ISM Services helped to improve investor sentiment. GBP/JPY was very weak off over 3 Yen at one point as the Pound was sold aggressively during Europe. AUD/JPY followed equity movements but was also weighed by large falls in Oil sliding to support around 75 Yen. Overall the USDJPY traded with a low of 94.65 and a high of 96.27 before closing the day around 95.30 in the New York session. Looking ahead, FX Reserves for June previously at 1024Bn.

The Sterling (GBP) shunted lower in Early Europe not finding support until 1.6100 with the market selling ahead the BOE meeting on Thursday. EUR/GBP strength and GBP/JPY weakness added to the pounds woes. The UK Times reported that PM Brown will warn the G8 that the worst of the recession lies ahead. Overall the GBP/USD traded with a low of 1.6094 and a high of 1.6330 before closing the day at 1.6280 in the New York session. Looking ahead, May Industrial Production is forecast at 0.2% vs. 0.3% previously and Manufacturing Production is forecast at 0.2% vs.0.2% previously m/m.

The Australian Dollar (AUD) came under pressure in Asia as stock losses mounted and AUD/JPY selling intensified going into Europe. Support at 0.7900 on the AUD/USD and 75 Yen on the AUD/JPY helped slow the selling and the Aussie was able to rebound with US stocks during the US session. Overall the AUD/USD traded with a low of 0.7878 and a high of 0.7982 before closing the US session at 0.7965. Looking ahead, RBA Interest rate Meeting widely forecast to remain at 3.0%.

Gold (XAU) was sold initially with Oil but held the recent $920-40 range with fresh direction still waiting to be found. Overall trading with a low of USD$919 and high of USD$932 before ending the New York session at USD$925 an ounce.