Earnings season stalls equity market rally. XAU sets fresh record high.
CURRENCY TRADING SUMMARY – 14th October (00:30GMT)
U.S. Dollar Trading (USD) was weakened considerably on Tuesday as Russian Finance Minister said he expected the diversification of reserves to continue. Any further downside was limited as Equity markets in the US failed to rally prompting a temporary risk aversion reaction, hence the USD was able to pair back much of its losses. Disappointing readings in profit earnings and downgrading in Goldman Sachs to neutral by an influential analyst ensured that the risk appetite was limited in the North American session. The DJIA closed slightly lower by -14.74 points (-0.15%) whilst the NASDAQ was slightly higher by 0.75 pts (+0.04%). Key Data out of the US on Wednesday include the FOMC meeting Minutes and Retail Sales.
The Euro (EUR) set fresh 2009 highs on Tuesday despite a disappointing German ZEW survey declining to 56 from the previous 57.7 for the month of October, which is likely to keep pressure on the ECB in maintaining the flat monetary policy. However comments by Russian FinMin that diversification of reserves away from the USD were likely to continue ensured large demand on the single currency. Overall the EUR traded with a low of 1.4757 and a high of 1.4876 before closing the day at 1.4855. Industrial Production data is due out of the EZ on Wednesday, expected to see a rise of 0.9% versus previous -0.3%.
The Japanese Yen (JPY) gained as heavy longs on the AUDJPY and the EURJPY were paired for profits on Tuesday. Surprisingly, reports the North Korea were poised to launch short range missiles had little impact. The Yen was further supported following calls by FinMin Fujii for Government to cut spending plans in 2010/11. Overall the USDJPY traded with a low of 89.41 and a high of 90.19 before closing the day at 89.70. The BoJ conclude their two day meeting widely expected to hold with focus on the Press Conference as the market looks for indication on ending corporate buying and any mention of concern surrounding the JPY strength.
The Sterling (GBP) was stronger initially on improving UK RICS Housing (at 22, two year high) and Retail Sales figures (2.8% for September), although upside momentum was limited following speculation that UK inflation had been at its lowest level in 5 years. Overall the GBPUSD traded at a low of 1.5705 and a high of 1.5938 before closing the day at 1.5919. Jobs data headlines the UK today with Unemployment expected to rise to 8.0% from previous 7.9%, focus will also be placed on Claimant change forecasted to rise to 25.1K from previous 24.4K
The Australian Dollar (AUD) set a fresh 14 month high before profit taking and the Equity market rally in the US stalled the Aussie. Upside momentum was also hindered as speculators fear that recent rallies have been excessive. Overall the AUDUSD traded with a low of 0.9030 and a high of 0.9126 before closing the day at 0.9086.
Oil & Gold (XAU) XAU set fresh record highs of 1069.70 on Tuesday capitalizing on a weaker US dollar and rally in Oil Prices. Oil was buoyed by OPEC raising it demand by 200K barrels a month in 2010. As a result Oil rose by US$0.88 a barrel to US$74.15.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.4481 |
1.4646 |
1.4845 |
1.4908 |
1.4980 |
|
USD/JPY |
88.01 |
89.35 |
89.85 |
91.63 |
92.53 |
|
GBP/USD |
1.5296 |
1.5450 |
1.5915 |
1.6120 |
1.6207 |
|
AUD/USD |
0.8866 |
0.8985 |
0.9075 |
0.9130 |
0.9206 |
|
XAU/USD |
1015.70 |
1036.90 |
1063.50 |
1069.70 |
1100.00 |
|
OIL/USD |
71.21 |
72.15 |
74.72 |
73.94 |
74.79 |
Euro – 1.4845
Initial support at 1.4646 (Oct 6 low) followed by 1.4481 (Oct 2 low). Initial resistance is now located at 1.4908 (Aug 22 high) followed by 1.4980 (August 13 ’08 high)
Yen – 89.85
Initial support is located at 89.35 (Oct 12 low) followed by 88.01 (Oct 7 low). Initial resistance is now at 91.63 (sep 24 high) followed by 92.53 (Sept 21 high).
Pound – 1.5915
Initial support at 1.5450 (May 20 low) followed by 1.5296 (May 19 low). Initial resistance is now at 1.6120 (Oct 8 high) followed by 1.6207 (23.6% retracement 1.3503 – 1.7043).
Australian Dollar – 0.9075
Initial support at 0.8985 (Oct 12 low) followed by the 0.8866 (Oct 7 low). Initial resistance is now at 0.9130 (Aug 07 ’08 high) followed by 0.9206 (Aug 14 ’08 high).
Gold – 1063.70
Initial support at 1036.90 (Oct 7 low) followed by 1015.70 (Oct 6 low). Initial resistance is now at 1069.70 (13 Oct high) followed by 1100 (Psych Level).
Oil – 74.72
Initial support at 72.15 followed by 71.21.Initial resistance is now at 73.94 followed by 74.79.
