China Crashes, Oil Soars
CURRENCY TRADING SUMMARY – 20th August (00:30GMT)
U.S. Dollar Trading (USD) was extremely strong in Asia as China dropped -5% and risk aversion stepped up a notch. Europe stabilized before US stocks reversed stock direction and rallied on the back of Oil up 5%. The Dollar then weakened across the board to new day lows. Crude Oil inventories fell -8.4m vs. 1.1m forecast build. Crude Oil Closed up $3.23 at $72.42. In US share markets, S& P ended +6 points (+0.69%) at 996, NASDAQ ended +13 points (+0.68%) at 1969 and DOW JONES ended +61 points (+0.66%) at 9279. Looking ahead, Weekly Jobless Claims forecast at 548k vs. 558k previously. Also released, August Philly Fed Manufacturing Index forecast at -1.9 vs. -7.5 previously.
The Euro (EUR) gyrated with stocks and oil testing 1.4100 in early Europe before surging to fresh day highs above 1.4200 in New York. German PPI was very weak at -1.5% vs. -0.2% in July. The move higher in the US session after the crude report was also fueled by a opinion piece by Warren buffet about the USD outlook. Overall the EUR/USD traded with a low of 1.4085 and a high of 1.4267 before closing at 1.4230. Looking ahead, German PPI forecast at -0.2% vs. -0.1% previously.
The Japanese Yen (JPY) USD/JPY broke on the downside through 94.50 and 94.00 fueled by risk aversion. USD/JPY failed to bounce with US stocks as the USD came under widespread weakness. Most crosses did however recover some losses especially the EUR/JPY. Overall the USDJPY traded with a low of 93.67 and a high of 94.88 before closing the day around 94.10 in the New York session.
The Sterling (GBP) was extremely volatile as the market absorbed the MPC split decision between 50bn and 75bn QE expansion program in a shocked to the market. The Recovery from under 1.6400 to above 1.6500 came throughout the rest of the day but some are concerned about willingness of the MPC led by Governor King to print money. August CBI orders were slightly worse than expected at -54 vs. -50 forecast. Overall the GBP/USD traded with a low of 1.6377 and a high of 1.6590 before closing the day at 1.6520 in the New York session. Looking ahead, July retail Sales forecast at 0.3% vs. 1.2% previously.
The Australian Dollar (AUD) broke lower at the end of the Asian session on china stock losses before Central bank buying caught the market short and the pair surged with Oil and US stocks. 0.8200-0.8300 has contained a lot of the price action with the market split on the direction of the next move. Overall the AUD/USD traded with a low of 0.8176 and a high of 0.8314 before closing the US session at 0.8290.
Gold (XAU) rallied with Oil but once again underperformed the rest of the market. Overall trading with a low of USD$934 and high of USD$945 before ending the New York session at USD$942 an ounce.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.3833 |
1.4008 |
1.4220 |
1.4327 |
1.4447 |
|
USD/JPY |
92.72 |
93.10 |
94.10 |
95.29 |
96.73 |
|
GBP/USD |
1.6034 |
1.6266 |
1.6525 |
1.6665 |
1.6719 |
|
AUD/USD |
0.7925 |
0.8126 |
0.8285 |
0.8478 |
0.8519 |
|
XAU/USD |
918.00 |
925.00 |
942.00 |
960.00 |
971.00 |
Euro – 1.4220
Initial support at 1.4008 (July 29 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4327 (Aug 13 high) followed by 1.4447 (Aug 5 High)
Yen – 94.10
Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.49 (August 14 high) followed by 96.73 (Aug 12 high).
Pound – 1.6525
Initial support at 1.6266 (July 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6665 (AUG 13 high) followed by 1.6719 (AUG 10 high).
Australian Dollar – 0.8285
Initial support at 0.8126 (July 29 low) followed by the 0.7925 (July 15 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sep 22 high).
Gold – 942
Initial support at 925 (July 29 low) followed by 918 (July 14 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).
