Another Black Monday Stock crash, AUD Plummets

U.S. Dollar Trading (USD) with sentiment souring over the weekend Monday was always going to be a negative event. The market didn’t disappoint with a record plunge in the Dow Jones causing mayhem in Commodities and FX markets. Huge deleveraging saw carry trades and commodities sharply lower. As a result the USD was a major winner during the day. In the U.S. share markets, the NASDAQ was down -84 points (-4.34%) and the Dow Jones was down 369 points (-3.58%). Crude Oil closed down -$6.07 ending the New York session at $87.81 per barrel. Looking Ahead, August Consumer Credit forecast at 5.2B vs. 4.6B.

The Euro (EUR) was hard hit as banking troubles ravaged sentiment. Also weighing were conflicting political views on how to fix the EU banking system. Germany announced that all bank deposits would be guaranteed. October Sentix was at expectations at -27.8. The large drop in Oil also weighed.  Overall the EUR/USD traded with a low of 1.3444 and a high of 1.3730 before closing the day at 1.3500 in the New York session. Looking ahead, August German Industrial Orders are seen -0.1% vs. 17% previously.

The Japanese Yen (JPY) was the biggest gainer in the market turmoil, surging against all currencies. AUD/JPY was especially hard hit, off over 10% on the day. USD/JPY challenged 100 but this critical level held. EUR/JPY and GBP/JPY all hit multiyear lows. Overall the USDJPY traded with a low of 100.22 and a high of 105.50 before closing the day around 101.80 in the New York session. Looking ahead, BOJ interest rate decision.  

The Sterling (GBP) came under pressure from heavy GBP/JPY selling and a flight into the USD.   As stocks crashed fresh 2 year lows on the cable were hit. EUR/GBP selling supported. Overall the GDP/USD traded with a low of 1.7559 and a high of 1.7839 before closing the day at 1.7715 in the New York session. Looking ahead, August Industrial Output seen down -0.2% and Manufacturing Production -0.2%.

The Australian Dollar (AUD) was the worse hit currency dropping over 11% in the AUD/JPY and 5 cents against the USD. Large drops in Commodities and speculation of aggressive rate cuts from the RBA combined with risk aversion for a perfect storm. Overall the AUD/USD traded with a low of 0.6990 and a high of 0.7735 before closing the US session at 0.7215. looking ahead, RBA rate announcement widely expected to be a 0.5% cut to 6.5% from 7.0%

Gold (XAU) gained over $30 as safe haven flows overcame the USD strength and investors fled to the precious metal. Overall trading with a low of USD$827.40 and high of USD$875.50 before ending the New York session at USD$860 an ounce.

TECHNICAL COMMENTARY

 

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3319	1.3361	1.3510	1.3773	1.3907
USD/JPY	100.00	100.24	101.95	105.43	106.96
GBP/USD	1.7131	1.7231	1.7435	1.7720	1.7389
AUD/USD	0.6776	0.6990	0.7210	0.7743	0.7818
XAU/USD	808.82	820.00	862.00	876.00	893.00

Euro – 1.3510  

Initial support at 1.3361 (Aug 16 2006 low) followed by 1.3319 (61.8% retrace 1.1639 to 1.6038). Initial resistance is now located at 1.3773 (Oct 6 high) at followed by 1.3907 (Oct 3 high).

Yen – 101.95

Initial support is located at 100.24 (Oct 6 low) followed by 100 (Key level). Initial resistance is now at 105.43 (Oct 6 high) followed by 106.96 (Sept 29 high).

Pound – 1.7435

Initial support at 1.7231 (Mar 2006 low) followed by 1.7131 (Dec 2005 low). Initial resistance is now at 1.772 (Oct 6 high) followed by 1.7839 (Oct 3 high).

Australian Dollar – 0.7210

Initial support at 0.6990 (Oct 6 low) followed by the 0.7676 (June 2004 low). Initial resistance is now at 0.7743 (Oct 6 high) followed by 0.7818 (Oct 3 high).

Gold – 862

Initial support at 820 (Oct 3 low) followed by 808.82 (61.8% retrace 737.00 to 925.00). Initial resistance is now at 876 (Oct 2 high) followed by 893.25 (Oct 1 high).