Dollar climbs on the back of better than expected ISM Manufacturing and surging equity markets.
CURRENCY TRADING SUMMARY – 2 MAY 2008 (00:30GMT)
·U.S. Dollar Trading (USD) strengthened against most of the majors on Thursday as the U.S saw positive data released combined with a surging equity market and more interest rate conviction which prompted confidence in the dollar. The ISM Manufacturing Index for April came in above expectations of 48, matching March’s index of 48.6. The PCE Index for March came in above the previous level of 0.1%, seeing a result of 0.3%. Core PCE bettered suggestions of 0.1%, with a result of 0.2%. Jobless claims did come in worse than the expected 360k with a result of 380k. U.S personal income rose 0.3% in March with spending up 0.4%, ahead of expectations. In share market news, U.S equities soared as more certainty in interest rates and positive corporate news gave investors confidence. The Dow Jones finished 189 points higher (1.5%), whilst the NASDAQ surged 67 points (2.8%). Oil prices fell in response to a stronger dollar, weakening U.S demand and the ending of a strike by oil workers in
·The Euro (EURO) fell to a five week low against the dollar as stronger than predicted U.S data results and rising equity markets prompted investors to support the dollar and sell-off the Euro, despite it being a public holiday with no data being released. The EURUSD traded at a high of 1.5643 and a low of 1.5431, before closing at 1.5458 in
·The Japanese Yen (JPY) remained weak against the dollar owing to rising U.S equity markets and more confidence in the Fed’s rate stance prompting investors toward the higher yielding dollar. The USDJPY traded at a high of 104.58 and a low of 103.55, before closing at 104.39 in
·The Sterling (GBP) was resilient against the dollar and pushed higher against its European counterparts on Thursday.
·The Australian Dollar (AUD) weakened on Thursday as the U.S dollar strengthened and commodity prices softened. The Aussie was also hit by weak dwelling approvals yesterday. The AUDUSD traded at a high of 0.9445 and a low of 0.9308, before closing at 0.9337 in
·Gold (XAU) prices fell on Thursday in line with commodity prices as a whole owing to U.S dollar strength. Prices fell US$14.20 an ounce to US$850.90.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.5408 | 1.5510 | 1.5465 | 1.5661 | 1.5707 |
| USD/JPY | 102.68 | 103.23 | 104.75 | 104.88 | 105.58 |
| GBP/USD | 1.9600 | 1.9624 | 1.9775 | 1.9913 | 1.9966 |
| AUD/USD | 0.9294 | 0.9308 | 0.9310 | 0.9445 | 0.9473 |
| XAU/USD | 845.80 | 847.10 | 850.00 | 881.90 | 896.50 |
·Euro – 1.5465
Initial support at 1.5510 (Apr 3 reaction low) followed by 1.5408 (Mar 25 Low). Initial resistance is now located at 1.561 (Apr 29 high) followed by 1.5707 (Apr 25 high).
·Yen – 104.75
Initial support is located at 103.23 (Apr 29 low) followed by 102.68 (Apr 22 low). Initial resistance is now at 104.88 (Apr 30 high) followed by 105.58 (76.4% retracement of the 108.61 to 95.76 decline).
·Pound – 1.9775
Initial support at 1.9624 (Apr 30 low) followed by 1.9600 (Apr 16 reaction low). Initial resistance is now at 1.9913 (Apr 29 high) followed by 1.9966 (Apr 28 high).
·Australian Dollar – 0.9310
Initial support a 0.9308 (May 1 low) followed by 0.9294 (Apr 29 low). Initial resistance is now at 0.9445 (May 1 high) followed by 0.9473 (Apr 30 high).
·Gold – 850.00
Initial support at 847.10 (May 1 low) followed by 845.80 (Former resistance Nov 8). Initial resistance is now at 881.90 (May 1 high) followed by 896.50 (Apr 25 high).
