Bernanke Halts Dollar Rally
CURRENCY TRADING SUMMARY – 8th December (00:30GMT)
U.S. Dollar Trading (USD) continued Friday’s rally in Europe with the Euro breaking below 1.4800 for fresh 5 week lows before a speech from Ben Bernanke signaled that the markets speculation about the timing of US interest rate hikes was off. Stocks rebounded and the USD gave up much of its gains. DJIA +2 points closing at 10390, S& P -2 points closing at 1103 and NASDAQ -5 points closing at 2189. Looking ahead, December IBD Economic Optimism previously at 47.9.
The Euro (EUR) stops under 1.4800 carried the pair to 5 week lows at 1.4760 before the USD weakened with US stocks and Bernanke’s speech. Weighing on the single currency was profit taking in the EUR/JPY and sluggish Oil and Gold. Trichet’s comments that current EU interest rates were appropriate added little to the market. Overall the EUR/USD traded with a low of 1.4756 and a high of 1.4906 before closing at 1.4825. Looking ahead, October German Industrial Output is forecast at 1% vs. 2.7% previously.
The Japanese Yen (JPY) profit taking and Bernanke’s speech saw the USD/JPY make a substantial pullback from Friday’s high. Crosses were also weaker with the EUR/JPY falling over 1.5 yen and GBP/JPY over 2 yen. The market is focusing on the proposed Japanese stimulus package size and scope due to be released this week. Overall the USDJPY traded with a low of 89.02 and a high of 90.21 before closing the day around 89.45 in the New York session. Looking ahead, October Leading indicators previously at 3.2.
The Sterling (GBP) was sold going into Europe on weekend news reports that UK banks were heavily exposed to Dubai and that other Dubai company’s may default on their debt. The market found support near 1.6300 and rebounded on Bernanke’s speech. UK’s Darling spoke about the the need for patience when withdrawing stimulus. Overall the GBP/USD traded with a low of 1.6312 and a high of 1.6519 before closing the day at 1.6445 in the New York session. Looking ahead, October Industrial Output forecast at -7.7% y/y vs. -10.3% previously. October Manufacturing Production forecast at -7.2% vs. -9.3% previously.
The Australian Dollar (AUD) fell hard at the start of Europe through support at 0.9100 as gold and the Euro fell aggressively. Bernanke’s dovish comments helped the market to recover and the pair rallied to 0.9180 resistance before a late sell off in US stocks sent the pair lower once again. Overall the AUD/USD traded with a low of 0.9051 and a high of 0.9191 before closing the US session at 0.9145. Looking ahead, November Business Confidence previously at 16. Also today, RBA Governor Stevens speaks.
Oil & Gold (XAU) Heavy selling in Europe on further long liquidation was reversed the and market ended close to opening levels. Overall trading with a low of USD$1134 and high of USD$1165 before ending the New York session at USD$1158 an ounce. Fell heavily at the end of the US session. Crude Oil was down -$1.80 ending the New York session at $74.00.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.4626 |
1.4702 |
1.4820 |
1.5091 |
1.5144 |
|
USD/JPY |
87.32 |
88.00 |
89.50 |
90.77 |
91.32 |
|
GBP/USD |
1.6241 |
1.6273 |
1.6440 |
1.6722 |
1.6746 |
|
AUD/USD |
0.8907 |
0.8947 |
0.9120 |
0.9323 |
0.9406 |
|
XAU/USD |
1118.00 |
1127 |
1158.00 |
1162.00 |
1212.00 |
|
OIL/USD |
72.50 |
73.70 |
74.00 |
75.00 |
78.00 |
Euro – 1.4820
Initial support at 1.4702 (November 4 low) followed by 1.4626 (Nov 3 low). Initial resistance is now located at 1.5091 (Dec 4 high) followed by 1.5144 (Nov 25 high)
Yen – 89.50
Initial support is located at 88.00 (Dec 4 low) followed by 87.32 (Dec 3 low). Initial resistance is now at 90.77 (Dec 4 high) followed by 91.32 (Nov 4 High).
Pound – 1.6440
Initial support at 1.6273 (Nov 27 low) followed by 1.6241 (Oct 19 low). Initial resistance is now at 1.6722 (Dec 3 high ) followed by 1.6746 (Nov 25 high).
Australian Dollar – 0.9120
Initial support at 0.8947 (Nov 27 low) followed by the 0.8907 (Nov 2 low). Initial resistance is now at 0.9323 (Nov 25 high) followed by 0.9406 (Nov 16 high).
Gold – 1158
Initial support at 1127 (Nov 17 former high) followed by 1118 (Nov 16 low). Initial resistance is now at 1162 (Dec 7 high) followed by 1212 (Dec 4 high).
Oil – 74.00
Initial support at 73.70 (Dec 7 low) followed by 72.00 (Intraday support). Initial resistance is now at 75 (intraday resistance) followed by 78 (Year highs).
