Post election slump, Obama fails to inspire stock market
CURRENCY TRADING SUMMARY – 6th November 2008 (00:30GMT)
·U.S. Dollar Trading (USD) had a mixed day after initially gaining on the back of Barack Obama’s US Presidential win. The rally was short lived however as economic data weakened and US stocks slumped. The October ADP employment report showed a -157K decline vs. -100K forecast. Also released the October Non-factory ISM plunged to 44.4 vs. 50.2 previously.In the U.S. share markets, the NASDAQ was down 98.48 points (-5.53%) and the Dow Jones was down 486 points (-5.05%). Crude Oil closed down $5.23 ending the New York session at $65.30 per barrel. Looking ahead, weekly jobless claims are seen at 480K vs. 479K last week. Also released Q3 Productivity and Labor Costs are seen at 0.8% and 2.8% respectively.
·The Euro (EUR) fell to USD strength in Asia before weak US data allowed the 1.30 level to be targeted again. EUR/JPY selling weighed as US stock losses mounted. September European Retail Sales were weak at -0.2% vs. +0.3% previously. Overall the EUR/USD traded with a low of 1.2529 and a high of 1.3115 before closing the day at 1.2980 in the New York session. Looking ahead, the ECB meets tonight and is expected to cut to 3.25% from 3.75%.
·The Japanese Yen (JPY) gained as US stocks plummeted and profit taking intensified. USD/JPY dropped below 99 but the crosses were supported by their respective majors. Overall the USDJPY traded with a low of 98.10 and a high of 99.85 before closing the day around 98.20 in the New York session. Looking ahead, Bank of Japan minutes from last weeks meeting.
·The Sterling (GBP) tracked the Euro initially falling on the back of the US Presidential election before rallying on the back of weak US data. The gains couldn’t be maintained though as equities losses mounted. September Manufacturing output fell -0.8% vs. -0.3% expected. October PMI services also fell to 42.4 vs. 50.2 previously. Overall the GDP/USD traded with a low of 1.5754 and a high of 1.6197 before closing the day at 1.5900 in the New York session. Looking ahead, Bank of England is expected to cut rates to 4.0% from 4.5%.
·The Australian Dollar (AUD) came off impressive gains yesterday easing back from the key 0.7000 level as USD gained some traction and traders took some profits. Poor US data allowed a retest of 0.7000 during the US session but this was repelled and as stock losses mounted the Aussie melted into the US close. Overall the AUD/USD traded with a low of 0.6767 and a high of 0.7011 before closing the US session at 0.6800. Looking ahead, Unemployment rate is expected at 4.4% vs. 4.3% previously with a change of -10K jobs.
·Gold (XAU) fell inline with large falls in Oil as speculation that the coming global recession would decrease demand for commodities. Overall trading with a low of USD$742.20 and high of USD$768 before ending the New York session at USD$745 an ounce.
TECHNICAL COMMENTARY
| Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
| EUR/USD |
1.2526 |
1.2794 |
1.2925 |
1.3116 |
1.3299 |
| USD/JPY |
96.39 |
98.17 |
98.20 |
100.57 |
102.16 |
| GBP/USD |
1.5604 |
1.5752 |
1.5865 |
1.6197 |
1.6264 |
| AUD/USD |
0.6551 |
0.6603 |
0.6790 |
0.7065 |
0.7239 |
| XAU/USD |
707.50 |
718.25 |
741.00 |
777.50 |
803.30 |
·Euro – 1.2925
Initial support at 1.2794 (Nov 5 low) followed by 1.2526 (Nov 4 low). Initial resistance is now located at 1.3116 (76.4% retrace 1.3298 to 1.2526) at followed by 1.3299 (38.2% retrace 1.4867 to 1.2329 and Oct 30 high).
·Yen – 98.20
Initial support is located at 98.22 (Nov 3 low) followed by 96.36 (Oct 31 low). Initial resistance is now at 100.57 (Oct 22 high) followed by 102.16 (Oct 21 high).
·Pound – 1.5865
Initial support at 1.5752 (Nov 5 low) followed by 1.5604 (Nov 4 low). Initial resistance is now at 1.6197 (Nov 5) followed by 1.6264 (61.8% retrace 1.6672 to 1.5604).
·Australian Dollar – 0.6790
Initial support at 0.6603 (Nov 3 low) followed by the 0.6551 (Oct 31 low). Initial resistance is now at 0.7065 (Oct 20 high) followed by 0.7239 (Oct 14 high).
·Gold – 741
Initial support at 718 (61.8% retrace 777.90-682.41) followed by 707 (Oct 27 low). Initial resistance is now at 777.5 (Oct 30 high) followed by 803.65 (Oct 21 Level).
