China rebounds and US stocks Soar
CURRENCY TRADING SUMMARY – 31st July (00:30GMT)
U.S. Dollar Trading (USD) weakened as US stocks broke to fresh year highs and risk appetite returned, pushing high yielding currencies up. Crude Oil rebounded as much as it fell yesterday up 6% with the China government countered speculation that it would limit credit growth in the 2nd quarter. Weekly Jobless claims jumped to 584k vs. 559k previously. Crude Oil ended up $3.59 to close at $66.94. In US share markets, S& P ended +11 points (1.19%) at 986, NASDAQ ended +16 points (0.84%) at 1984 and DOW JONES ended 83 points (0.92%) at 9070. Looking ahead, GDP Q2 m/m forecast at -1.5% vs. -5.5% previously.
The Euro (EUR) bounced off the 1.4000 level to remain in a tight range as the market consolidated recent losses and struggled to rally. EUR/GBP tested 0.8500 and more comments from the IMF kept the bulls under control. German July Unemployment remained at 8.3% due to -6k Change in Unemployment vs. 45k forecast. Overall the EUR/USD traded with a low of 1.4013 and a high of 1.4097 before closing at 1.4080. Looking ahead, July Inflation is forecast at -0.4% vs. -0.1% previously y/y.
The Japanese Yen (JPY) was sold as risk appetite improved and caution on the majors meant that USD/JPY shot higher above resistance at 95.50. AUD/JPY and GBP/JPY surged higher with US stocks and could retest year highs above of 80 and 162. June Industrial Output at 2.4% meets expectations. Overall the USDJPY traded with a low of 94.00 and a high of 95.39 before closing the day around 95.10 in the New York session. UPDATE June Unemployment 5.4% vs. 5.2% previously.
The Sterling (GBP) strengthened on good economic data and risk appetite. July Nationwide HPI at 1.3% vs. 0.3% forecast was the third month in a row of gains. EUR/GBP and GBP/JPY were the main crosses that moved significantly in the Pounds favor. Overall the GBP/USD traded with a low of 1.6352 and a high of 1.6529 before closing the day at 1.6490 in the New York session. UPDATE GFK index at -25 vs. -23 forecast.
The Australian Dollar (AUD) rebounded well as China concerns faded and Oil rallied over 6%. AUD/JPY tracked the DOW higher. Aussie buying emerged from all directions as the market already heavily long increased bets the gains will continue. The Australian government has so far been quiet on the AUD strength as higher export prices are offset by cheaper imports. Building Permits rose 9.3%m/m in July. Overall the AUD/USD traded with a low of 0.8124 and a high of 0.8281 before closing the US session at 0.8250.
Gold (XAU) tracked Oil higher but was noticeable sluggish. Overall trading with a low of USD$928 and high of USD$937 before ending the New York session at USD$933 an ounce.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.3983 |
1.4008 |
1.4075 |
1.4304 |
1.4338 |
|
USD/JPY |
93.10 |
94.02 |
95.55 |
96.24 |
97.19 |
|
GBP/USD |
1.6266 |
1.6311 |
1.6505 |
1.6586 |
1.6745 |
|
AUD/USD |
0.7925 |
0.8090 |
0.8255 |
0.8378 |
0.8519 |
|
XAU/USD |
905.00 |
918.00 |
934.00 |
958.00 |
965.00 |
Euro – 1.4075
Initial support at 1.4008 (Jul 29 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4304 (Jul 28 high) followed by 1.4338 (June 3 high)
Yen – 95.55
Initial support is located at 94.02 (Jul 29 low) followed by 93.10 (July 22 low). Initial resistance is now at 96.24 (Jul 6 high) followed by 97.19 (June 19 high).
Pound – 1.6505
Initial support at 1.6311 (July 22 low) followed by 1.6266 (Jul 13 low). Initial resistance is now at 1.6586 (Jun 23 high) followed by 1.6745 (June 30 high).
Australian Dollar – 0.8255
Initial support at 0.8090 (July 15 low) followed by the 0.7925 (July 14 low). Initial resistance is now at 0.8378 (Sept 26 high) followed by 0.8519 (Sept 22 low).
Gold – 934
Initial support at 918 (Jul 14 low) followed by 905 (July 8 low). Initial resistance is now at 958 (July 27 high) followed by 965 (Jun 10 high).
