US Stocks Crash on Recession Confirmation
CURRENCY TRADING SUMMARY – 2nd December 2008 (00:30GMT)
·U.S. Dollar Trading (USD) benefited from a major reversal of market mood as US stocks slumped. The drop lower was precipitated by a very weak Manufacturing PMI coming in at 36.2 in November. New Orders component fell sharply to below 30, pointing to a weakening economic climate. The numbers indicate that the US is install for a deep recession. In U.S. share markets, the NASDAQ was down 137 points (-8.95%) and the Dow Jones was down 679 points (-7.7%) Crude Oil closed down $5.15 ending the New York session at $49.28 per barrel. Looking ahead, Treasury Secretary Paulson speaks tonight.
·The Euro (EUR) came under pressure as Oil and Stocks crashed lower on recession fears. Eurozone manufacturing fell to 35.6 in November but 1.2600 provided support during the day and losses were limited. Of Concern was the slump in October German Retail Sales to -1.6% vs. +0.5% expected. Overall the EUR/USD traded with a low of 1.2583 and a high of 1.2704 before closing the day at 1.2600. Looking ahead, Eurozone PPI is expected to fall -0.3% in October.
·The Japanese Yen (JPY) made a major move lower as weak US stocks caused risk aversion to spike higher and support at 95 gave way. All the crosses moved lower as the JPY enjoyed its status as the safe haven of choice. GBP/JPY fell over 8 big figures as the Pound took a battering. Overall the USDJPY traded with a low of 92.90 and a high of 95.74 before closing the day around 93.10 in the New York session.
·The Sterling (GBP) crashed lower as risk aversion and renewed scrutiny of the UK economy hurt sentiment. UK manufacturing PMI hit a new record low at 34.4 vs. 39.9 expected and indicates the UK recession will be deeper than previously thought. Overall the GDP/USD traded with a low of 1.4810 and a high of 1.5357 before closing the day at 1.4920 in the New York session.
·The Australian Dollar (AUD) held up well considering the large equities falls but was still significantly down ahead of the RBA meeting today. The market is wary of any RBA buying given recent intervention but continued weakness in commodities and stocks will eventually overwhelm such fears. Overall the AUD/USD traded with a low of 0.6335 and a high of 0.6522 before closing the US session at 0.6350. Looking ahead the RBA is expected to cut rates from 5.25% to 4.50%. UPDATE October Retail Sales beat expectations +0.7% vs -0.4% expected.
·Gold (XAU) broke lower tracking Oil and other commodity weakness. Overall trading with a low of USD$763 and high of USD$816 before ending the New York session at USD$776 an ounce.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2423 |
1.2563 |
1.2615 |
1.2717 |
1.2968 |
|
USD/JPY |
91.90 |
92.49 |
93.65 |
95.95 |
97.43 |
|
GBP/USD |
1.4703 |
1.4807 |
1.4895 |
1.5398 |
1.5412 |
|
AUD/USD |
0.6232 |
0.6333 |
0.6370 |
0.6558 |
0.6618 |
|
XAU/USD |
743.00 |
769.00 |
776.00 |
830.50 |
856.00 |
·Euro – 1.2615
Initial support at 1.2563 (Nov 28 low) followed by 1.2423 (Nov 21 low). Initial resistance is now located at 1.2717 (Dec 1 low) at followed by 1.2968 (Nov 27 high)
·Yen – 93.65
Initial support is located at 92.49 (Nov 28 low) followed by 91.9 (Oct 27 low). Initial resistance is now at 9 (Nov 25 high) followed by 97.55 (Nov 17 high).
·Pound – 1.4895
Initial support at 1.4807 (Dec 1 low) followed by 1.4703 (Nov 21 low). Initial resistance is now at 1.5398 (Dec 1 high) followed by 1.5412 (Nov 27 high).
·Australian Dollar – 0.6370
Initial support at 0.6333 (Nov 25 low) followed by the 0.6232 (Nov 24 low). Initial resistance is now at 0.6558 (Dec 1 high) followed by 0.6618 (Nov 25 high).
·Gold – 776
Initial support at 769 (Nov 24 low) followed by 743 (Nov 21 low). Initial resistance is now at 830.5 (Nov 25 high) followed by 856 (Oct 15 high).
