USD tumbles as Euro breaks key level of 1.30. Markets jittery about fx reserve diversification.
CURRENCY TRADING SUMMARY –27 NOVEMBER 06 (23:30GMT)
- U.S. Dollar Trading (USD) fell considerably against the majors in the Friday night forex session as the Euro finally broke through 1.30 for the first time since April 2005 triggering heavy USD selling. There are concerns creeping into the markets that central banks worldwide are thinking of diversifying out of their US dollar denominated assets and buying into other major currencies and commodities. Comments from Deputy Governor of the PBoC Wu Xiaoling that dollar weakness is starting to hurt foreign exchange reserves of East Asian countries added to the USD slide. In other markets, the Dow Jones slipped 46pts and the NASDAQ fell 5pts. Crude oil rose US24c to US$59.48 benefiting from US weakness.
- The Euro (EUR) traded within a low of 1.2944 and a high of 1.3109, before closing at 1.3086 in the New York session. Looking ahead, EU12 Finance ministers and ECB President meet.
- The Japanese Yen (JPY) traded within a low of 115.59 and a high of 116.48 versus the dollar, before closing at 115.84 in the New York session.
- The Sterling (GBP) traded within a low of 1.9147 and a high of 1.9351, before closing at 1.9315 in the New York session. On the data front, the UK GDP for the third quarter came in at 0.7% as expected.
- The Australian Dollar (AUD) traded within a low of 0.7745 and a high of 0.7789, before closing at 0.7782 in the New York session.
- Gold (XAU) rose by US$8.00 to US$638.60 an ounce on the back of USD weakness.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.2942 | 1.2980 | 1.3140 | 1.3185 | 1.3220 |
| USD/JPY | 115.18 | 115.56 | 115.65 | 116.83 | 117.12 |
| GBP/USD | 1.8984 | 1.9182 | 1.9400 | 1.9419 | 1.9551 |
| AUD/USD | 0.7705 | 0.7731 | 0.7795 | 0.7795 | 0.7810 |
| XAU/USD | 614.80 | 626.27 | 640.00 | 640.20 | 640.60 |
- Euro 1.3140
Initial support at 1.298 (Jun 5 high and former key breakout level) followed by 1.2942 (Nov 24 low). Initial resistance is now located at 1.3185 (76.4% retracement of the 1.3663-1.1638 decline) followed by 1.322 (Mar 22, 2005 high).
- Yen 115.65
Initial support is located at 115.56 (Sep 5 low) followed by 115.18 (Aug 17 low). Initial resistance is now at 116.83 (Nov 23 low & neckline of head & shoulders pattern) followed by 117.12 (Nov 13 high).
- Pound – 1.9400
Initial support at 1.9182 (Nov 10, 2005 high) followed by 1.8984 (Nov 22 low). Initial resistance is now at 1.9419 (Dec 28, 2004 high) followed by 1.9551 (Nov 2004 high).
- Australian Dollar – 0.7795
Initial support at 0.7731 (Nov 23 low) followed by 0.7705 (Nov 22 low). Initial resistance is now at 0.7795 (May 11 reaction high) followed by 0.781 (Jun 21 reaction high).
- Gold – 640
Initial support at 626.27 (Trend line support) followed by 614.8 (Nov 17 low). Initial resistance is now at 640.2 (Nov 24 high) followed by 640.6 (Sep 6 high).
