Dollar Bulls run on Hawkish FED comments.
CURRENCY TRADING SUMMARY – 23rd July 2008 (00:30GMT)
·U.S. Dollar Trading (USD) came under selling pressure early in the European session as stocks turned negative and Wachovia Bank reported a record loss. The rebound and subsequent rally in the USD was spurred buy a combination of Treasury’s Paulson strong Dollar comments and FED’s Plosser stating that ‘interest rate policy reversal should happen sooner rather than later’ and ‘there is no need to wait for a recovery in labor or financial markets’. Also supporting the greenback was a further pull back in Oil and Gold as Hurricane Dolly looked like missing the Gulf Production Areas. In the U.S. share markets, the NASDAQ was up 24 points (1.07%) and the Dow Jones was up 135 points (1.18%). Crude Oil closed down $3.09 ending the New York session at $127.95 per barrel.
·The Euro (EUR) fell heavily as US Fed comments spurred Dollar buying. Falling oil and concerns over the Euro economy also weighed. Overall the EUR/USD traded with a low of 1.5758 and a high of 1.5945 before closing the day at 1.5781 in the New York session. Looking ahead, May Industrial Orders are seen falling -1.3% in May down from +2.5% in April.
·The Japanese Yen (JPY) rebounded inline with a recovery in US stocks lead by large gains in the USD/JPY pulling most crosses higher. EUR/JPY was unable to make new highs though as the pace of EUR/USD declines were faster than USD/JPY gains. Overall the USDJPY traded with a low of 106.06 and a high of 107.45 before closing the day around 107.16 in the New York session.
·The Sterling (GBP) notched higher early in the European session but fell in sympathy with the Euro breaking back through the Key 2.00 level and support at 1.9950. BoE Governor King lamented on not being given the power to intervene directly in a banking crisis. Strong buying of GBP/JPY supported although 214 has proven a strong resistance. Overall the GBP/USD traded with a low of 1.9898 and a high of 2.0075 before closing the day at 1.9908 in the New York session. Looking ahead, July CBI orders are seen at -5% and the July Bank of England Meeting Minutes are released.
·The Australian Dollar (AUD) fell against the USD but held up well against most other currencies as renewed risk taking propped up the AUD/JPY. Falling commodities did weigh though with gold off more than $20 an ounce from day highs. Overall the AUD/USD traded with a low of 0.9686 and a high of 0.9788 before closing the day at 0.9710. Looking ahead, 2nd Quarter CPI seen at 1.3% Q/Q and 4.3% Y/Y.
·Gold (XAU) fell heavily as the USD gained strength on Plosser’s inflation fighting rhetoric. Overall trading with a low of USD$944.50 and high of USD$976 ending the New York session at USD$947 an ounce.
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.5692 |
1.5756 |
1.5785 |
1.5948 |
1.6038 |
|
USD/JPY |
103.78 |
104.76 |
107.30 |
107.45 |
107.76 |
|
GBP/USD |
1.9815 |
1.9898 |
1.9915 |
2.0097 |
2.0157 |
|
AUD/USD |
0.9664 |
0.9675 |
0.9715 |
0.9818 |
0.9849 |
|
XAU/USD |
942.00 |
944.10 |
948.00 |
978.50 |
988.00 |
·Euro – 1.5785
Initial support at 1.5756 (July 22 low) followed by 1.5692 (July 10 low). Initial resistance is now located 1.5948 (July 16 high) at followed by 1.6038 (July 15 High).
·Yen – 107.30
Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.45 (July 21 high) followed by 107.76 (July 7 high).
·Pound – 1.9915
Initial support at 1.9898 (July 22 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).
·Australian Dollar – 0.9715
Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High).
·Gold – 948
Initial support at 944.1 (July 22 low) followed by 942 (July 11 low). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).
