Daily Outlook 22nd September 2010
Fed Hints as New Easing, Dollar Weak
U.S. Dollar Trading (USD) was sold aggressively across the board on comments in the FOMC Policy statement the FED was ready to provide additional accommodation if the economy needed. Such support would probably be in the form of further Quantitative easing. Stocks reacted positively but failed to hold the gains into the close on profit taking.In US stocks, DJIA +7 points closing at 10761, S& P -2 points closing at 1139 and NASDAQ -6 points closing at 2349. Looking ahead, July HPI forecast at -0.1% vs. -0.3% m/m.
The Euro (EUR) the Euro was the main beneficiary of the Dollar as the alternate reserve currency was bought aggressively on US QE2 concerns. The major rallied aggressively towards 1.3300 before profit taking slowed the accent. EUR/GBP stops above 0.8500 where hit in a major up move. EUR/USD traded with a low of 1.3058 and a high of 1.3292 before closing at 1.3280. Looking ahead, July Industrial Orders forecast at -1.1% vs. 2.5% previously.
The Japanese Yen (JPY) fell after the FOMC statement to test the key Y85 level. Traders will be watching for any comments or actions from BOJ today as last week’s intervention is tested by USD weakness. Overall the USDJPY traded with a low of 84.95 and a high of 85.75 before closing the day around 85.10 in the New York session.
The Sterling (GBP) weakness on Monday was reversed but the market was hesitant to test highs after rallies failed to hold in recent weeks. EUR/GBP strength was a major source of the Pound’s underperformance. Overall the GBP/USD traded with a low of 1.5502 and a high of 1.5647 before closing the day at 1.5630 in the New York session. Looking ahead, September BoE Minutes.
The Australian Dollar (AUD) AUD/USD broke above 0.9500 and extended gains tracking the EUR/USD higher. The RBA minutes released earlier in Asia for the September Meeting were bullish as expected with the central bank signaling that further rate hikes are on the way. Overall the AUD/USD traded with a low of 0.9440 and a high of 0.9567 before closing the US session at 0.9550.
Oil & Gold (XAU) fresh all time highs above $1290 on the back of Dollar weakness was seen as the market closed in on $1300 an ounce. Overall trading with a low of USD$1270 and high of USD $1290 before ending the New York session at USD$1288 an ounce. Oil weakness returned bucking the trend of the rest of the market. WTI Oil Closed -$1.30 at $75.10 a barrel.
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2588 |
1.2919 |
1.3295 |
1.3334 |
1.3509 |
|
USD/JPY |
82.88 |
84.04 |
84.90 |
85.93 |
86.70 |
|
GBP/USD |
1.5297 |
1.5449 |
1.5640 |
1.5731 |
1.5999 |
|
AUD/USD |
0.9171 |
0.9351 |
0.9570 |
0.9637 |
0.9850 |
|
XAU/USD |
1232.00 |
1263 |
1289 |
1300 |
1324 |
|
OIL/USD |
72.50 |
75.00 |
75.10 |
76.00 |
78.00 |
Euro – 1.3295
Initial support at 1.2919 (Sep 6 low) followed by 1.2588 (Aug 24 low). Initial resistance is now located at 1.3334 (Aug 6 High) followed by 1.3509 (50% retrace of 1.5141-1.1877)
Yen – 84.90
Initial support is located at 84.04 (61.8% retrace of 1.5999-1.5297) followed by 82.88 (Sept 15 low). Initial resistance is now at 85.93 (Sep 16 high) followed by 86.70 (38.2% retrace of 92.89-81.88).
Pound – 1.5640
Initial support at 1.5449 (Sept 15 low) followed by 1.5297 (Sep 7 low). Initial resistance is now at 1.5731 (61.8% retrace of 1.5999-1.5297) followed by 1.5999 (Aug 6 high).
Australian Dollar – 0.9570
Initial support at 0.9351 (Sept 17 low) followed by the 0.9171 (Sep 9 low). Initial resistance is now at 0.9637 (July 24 2008) followed by 0.98500 (July 15, 2008 high).
Gold – 1289
Initial support at 1263 (Sept 15 low) followed by 1232 (Aug 31 low). Initial resistance is now at 1300 (Round Number) followed by 1324 (1263.20 plus 1.618 of 1236.80-1274.95).
Oil – 75.10
Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 76.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).
Written by Anthony Darvall
