Bailout Plan soured by weak Non Farm Payrolls

U.S. Dollar Trading (USD) was able to make gains against a broad range of currencies even as US Jobs data weakened. September Non Farm Payrolls were -159K vs. -100K forecast and -73K in August. Also drawing attention was the passing of the US Bailout plan that caused a brief rally in stocks. The rally was short-lived however as traders focused back on the weakening fundamentals and stocks reversed a 300 point rally to end down 150. In the U.S. share markets, the NASDAQ was down -29 points (-1.48%) and the Dow Jones was down 157 points (-1.50%). Crude Oil closed down -$0.09 ending the New York session at $93.88 per barrel.

The Euro (EUR) the Euro was unable to take advantage of the weak US data as Europe’s banking problems took precedence. Fortis, Hypo and Dexia banks all required immediate funding and this helped the Euro to weaken into the weekend. August Sales were better than expected at +0.3% vs. 0.1% forecast. Overall the EUR/USD traded with a low of 1.3702 and a high of 1.3905 before closing the day at 1.3780 in the New York session. Looking ahead, October Sentix is seen at -27 vs. 20.2 previously.

The Japanese Yen (JPY) was initially sold as the Bailout plan was passed and stocks surged. As sentiment reversed though, the Yen gained against all majors going into the weekend. The EUR/JPY was especially weak. Overall the USDJPY traded with a low of 104.50 and a high of 106.15 before closing the day around 105.30 in the New York session.

The Sterling (GBP) tracked the Euro lower as the USD strengthened and UK banking sector was also put under the spotlight. September Services were weaker than expected at 46 vs. 48 expected. 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.

The Australian Dollar (AUD) suffered considerable as risk aversion spiked and stocks slumped to multi year lows in the US. Expectations of aggressive easing from the RBA added to the bearish tone. AUD/NZD traded at multi month lows. Overall the AUD/USD traded with a low of 0.7713 and a high of 0.7814 before closing the US session at 0.7740.

Gold (XAU) couldn’t gain on increased risk aversion and remained weak into the US close as the USD strengthened.  Overall trading with a low of USD$820.70 and high of USD$846.70 before ending the New York session at USD$835 an ounce.

TECHNICAL COMMENTARY

Euro – 1.3680  

Initial support at 1.3663 (Sep 07 2007 low) followed by 1.3551 (Sept 04 low). Initial resistance is now located at 1.3907 (Oct 3 high) at followed by 1.4025 (Oct 2 high).

Yen – 105.00

Initial support is located at 104.51 (Oct 3 low) followed by 103.50 (Sept 30 low). Initial resistance is now at 106.96 (Sep 29 high) followed by 107.02 (Sept 25 high).

Pound – 1.7675

Initial support at 1.7544 (Sept 12 low) followed by 1.7447 (Sep 11 low). Initial resistance is now at 1.7875 (Oct 1 high) followed by 1.7978 (38.2% retrace 1.8668 to 1.7555).

Australian Dollar – 0.7730

Initial support at 0.7700 (Oct 2 low) followed by the 0.7676 (Sept 17 2007 low). Initial resistance is now at 0.7818 (Oct 3 high) followed by 0.7944 (Oct 2 high).

Gold – 836

Initial support at 820 (Oct 3 low) followed by 808.82 (61.8% retrace 737.00 to 925.00). Initial resistance is now at 847 (Oct 3 high) followed by 876 (Oct 2 high).