Sunday, August 2, 2009

Risk Appetite Improved In The Market

U.S. Dollar Trading (USD)

U.S. Dollar Trading (USD) was put squarely on the back foot as the largest currency pair EUR/USD broke through the topside of the recent range at 1.4200. Good news on the CIT front and a broad rally in the DOW let risk appetite surge and become the main theme of the trading day. Oil, GBP, CAD and AUD all made major gains. In US share markets, S&P ended +10.75 points (+1.14%%) at 951.13, NASDAQ ended +22.68 points (+1.20%) at 1909.29 and DOW JONES ended +104.21 points (+1.19%) at 8848.15. looking ahead, Federal Reserve Chief Ben Bernanke to testify on the Semi-Annual Monetary Policy Report before the House Financial Services Committee in what could be a significant market moving event.

European Euro

The Euro (EUR) with help from its crosses especially the EUR/JPY the EURO as stated above made a fresh leg higher into the 1.42's running out of steam just before 14250 but holding the level for the rest of the day. June German PPI at -0.1% vs. +0.5% confirmed that Producer Prices are falling at the fastest rate in 40 years as cheaper Oil and Higher Unemployment reduces demand. The next major level for the EUR/USD is the 2009 Year high at 1.4338. Overall the EUR/USD traded with a low of 1.4126 and a high of 1.4252 before closing at 1.4225.

Japanese Yen (JPY)

The Japanese Yen (JPY) kept to a tight range against the USD but with Japan away on holiday's the market took advantage and pushed most crosses higher. GBP/JPY and EUR/JPY were major movers tracking their respective majors. Some Focus is turning to the Japanese Government issues with Speculation the Lower House will be dissolved Tuesday. Overall the USDJPY traded with a low of 93.49 and a high of 94.37 before closing the day around 94.25 in the New York session. Looking ahead, BoJ Meeting Minutes released.

Pound Sterling (GBP)

The Sterling (GBP) found strength in the improved risk appetite see in the market with US futures trading higher in Asia and 1.6500 broken on the topside. GBP/JPY provided a lot of support but so did EUR/GBP selling which was not an easy feat with the Euro also making major moves. Overall the GBP/USD traded with a low of 1.6364 and a high of 1.6560 before closing the day at 1.6535 in the New York session. Looking ahead, PSNCR in June forecast at 20Bn vs. 18.78Bn previously.

Australian Dollar (AUD)

The Australian Dollar (AUD) was well supported from the open in Asia trending higher to test 0.8080 first then 0.8150 in the US session on improved risk appetite. AUD/JPY flows returned and the year highs at 80 Yen are now squarely in focus of the bulls as global equity markets test year highs. Commodities including Oil and Gold made substantial gains and this in turn supports the Commodity currency. Overall the AUD/USD traded with a low of 0.8002 and a high of 0.8183 before closing the US session at 0.8150. Looking ahead, July RBA minutes released.


Gold (XAU) track Oil higher breaking above $950 an ounce. Gold is historically used by investors as an inflation and weak USD hedge. Overall trading with a low of USD$936 and high of USD$955 before ending the New York session at USD$949 an ounce.

Technical Analysis: Risk Appetite Improved In The Market

Euro (EUR)

Euro – 1.4230 : Initial support at 1.4056 (Jul 16 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4267 (Jun 5 high) followed by 1.4338 (Jun 3 high)

Yen (JPY)

Yen – 94.10 : Initial support is located at 93.26 (Jul 15 low) followed by 92.72 (July 14 low). Initial resistance is now at 94.89 (Jul 8 high) followed by 95.46 (Jul 7 high).

Pound Sterling (GBP)

Pound – 1.6545 : Initial support at 1.6266 (July 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6745 (Jun 30 high) followed by 1.7000 (Big Figure).

Australian Dollar (AUD)

Australian Dollar – 0.8150 : Initial support at 0.7925 (July 15 low) followed by the 0.7814 (July 14 low). Initial resistance is now at 0.8170 (June 20 high) followed by 0.8237 (Jun 11 high).

Gold (XAU)

Gold – 938 : Initial support at 932 (Jul 17 low) followed by 918 (July 14 low). Initial resistance is now at 965 (June 10 high) followed by 990 (Jun 3 high).


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