• U.S. Dollar Trading (USD) received a massive boost yesterday as Fed Chairman Ben Bernanke ramped up his anti-inflation rhetoric. In his strongest wording to date he emphasized that the FED will strongly resist inflationary pressures whilst also downplaying the risks to the economy. Fed Futures reacted accordingly pricing in as many as two rate hikes this year and propelling the USD to its largest 2 day rally since 2005. The April Trade Balance widened on increasing Oil costs, jumping to $60.9Bln up 4.9Bln from March. The US share markets had a mixed day, the NASDAQ was down 10.52 points (-0.43%) and the Dow Jones was up 9.44 points (0.08%). Crude Oil closed down $-2.78 ending the New York session at $131.57 per barrel. Looking ahead, the FED Beige book is released.
• The Euro (EUR) bowed to the USD momentum with stronger industrial numbers failing to slow the descent. French industrial Production for April came in strong at 1.4% and Italian Industrial Production also picked up to 0.7% vs. the -0.2% expected. Overall the EUR/USD traded with a low of 1.5438 and a high of 1.5653 before closing the day at 1.5459 in the New York session. Looking ahead, French CP expected at 0.4% up from 0.3% last month.
• The Japanese Yen (JPY) was broadly offered even as equities turned negative giving the USD/JPY impetus to break through the 107 level. Aprils Machinery Orders rose 5.5% much stronger then the 2.6% economists forecasted. Overall the USDJPY traded with a low of 106.25 and a high of 107.45 before closing the day around 107.30 in the New York session. Looking ahead, Final GDP for 1st Quarter released on Wednesday. UPDATE: Final GDP revised up 1.0% vs 0.8% (q/q) expected for the first quarter.
• The Sterling (GBP) traded lower against the greenback yesterday but held its ground on the crosses quite well. Flat Economic data provided little support, April Industrial production came in at 0.2% better than the 0.0% forecast and Manufacturing came in at 0.1% slightly better than 0.0% forecast. Overall the GBP/USD traded with a low of 1.9538 and a high of 1.9756 before closing the day at 1.9538 in the New York session. Looking ahead, Claimant Count Change expected at 8K for May along with the Average Earning Index expected to rise to 4.1% from 4.0%. The April trade Balance is also released with the market expecting a narrowing deficit from -7.4Bln to -7.3Bln.
• The Australian Dollar (AUD) broke through the lower range as gold continued to fall and USD strengthened. AUD/JPY held up well with the carry trade story being replaced with Japans lack of natural resources helping to cap the Yen. Overall the AUDUSD traded with a low of 0.9442 and a high of 0.520 before closing the day at 0.9452 in the New York session.
• Gold (XAU) dipped below the key $873 level finding support at $865 as central banks step up the fight against inflation. Overall trading with a low of $864.73 and high of $894 ending the New York session at $867 an ounce.
• Euro – 1.5465
Initial support at 1.5441 (Jun 10 low) followed by 1.5366 (Jun 5 low). Initial resistance is now located 1.5657 (Jun 10 High) at followed by 1.5844 (Jun 9 high).
• Yen – 107.40
Initial support is located at 106.24 (June 10 low) followed by 104.42 (Jun 9 low). Initial resistance is now at 107.45 (Jun 10 high) followed by 108.61 (Feb 14 high).
• Pound – 1.9535
Initial support at 1.9520 (Jun 10 low) followed by 1.9500 (Big Number). Initial resistance is now at 1.9755 (Jun 10 high) followed by 1.9801 (Jun 9 high)
• Australian Dollar – 0.9460
Initial support at 0.9442 (Jun 10 low) followed by 0.9430 (61.8% Fib entrancement .9292 to .9655). Initial resistance is now at 0.9648 (Jun 9 high) followed by 0.9655 (May 21 high).
• Gold – 870
Initial support at 864 (Jun 10 low) followed by 860.5 (May 14 low). Initial resistance is now at 909.2 (June 9 high) followed by 930.9 (May 27 high).