Biggest US Stock rally in 70 years

U.S. Dollar Trading (USD) News that the US was taking part in the Global coordinated Banking Bailout sent US stocks surging. The 900 point rally negated a lot of the risk aversion seen in the market last week and led to profit taking on long USD positions seen in the market. In the U.S. share markets, the NASDAQ was up 194 points (11.81%) and the Dow Jones was up 936 points (11.08%). Crude Oil closed up $3.49 ending the New York session at $81.19 per barrel.

The Euro (EUR) was able to make small gain against the USD although fell against the GBP and AUD. The stock recovery enabled large gains against the YEN but the market was not as enthusiastic to change direction as in other pairs. Overall the EUR/USD traded with a low of 1.3460 and a high of 1.3681 before closing the day at 1.3600 in the New York session. Looking ahead, the October German ZEW Economic Survey is expected at -15 vs. -1 previously. Also released the August Industrial Production is expected at +1.1% vs. -0.3%.

The Japanese Yen (JPY) was sold across the board as the main recipient of safe haven flows gave back some of its significant gains from last week. Resistance on the USD/JPY up towards 102 held for some time before being overwhelmed by record breaking stock gains. AUD/JPY jumped over 10%. Overall the USDJPY traded with a low of 99.59 and a high of 102.20 before closing the day around 102.00 in the New York session.

The Sterling (GBP) surged inline with other carry currencies gaining against all except the exuberant AUD. EUR/GBP dropped below 0.7800 and cable found resistance above 1.7400. A BoE member warned of a ‘prolonged and severe recession’. Overall the GDP/USD traded with a low of 1.6869 and a high of 1.7447 before closing the day at 1.7400 in the New York session. Looking ahead, September CPI is seen up 0.4% vs. 0.6%. Also released September Retail Price Index seen at 0.5% vs. 0.3% previously.

The Australian Dollar (AUD) jumped higher as the market regained confidence in the banking sector and the US FED flooded dollars into the money market. Buoyant Oil also helped the view that recent falls in commodities may have found a bottom. Huge AUD/JPY buying supported. Overall the AUD/USD traded with a low of 0.6546 and a high of 0.7080 before closing the US session at 0.7000. Looking ahead, September business confidence fell to -8 from -7 previously.

Gold (XAU) fell as the precious metal’s safe haven status was dented by the record breaking stock market rally.  Overall trading with a low of USD$823 and high of USD$871 before ending the New York session at USD$833 an ounce.

TECHNICAL COMMENTARY

 

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.3259	1.3405	1.3600	1.3684	1.3786
USD/JPY	97.91	99.58	102.05	103.29	104.00
GBP/USD	1.6781	1.6909	1.7410	1.7442	1.7658
AUD/USD	0.6437	0.6877	0.6995	0.7148	0.7355
XAU/USD	820.00	823.00	833.00	872.00	930.00

Euro – 1.3600  

Initial support at 1.3405 (Oct 13 low) followed by 1.3259 (Oct 10 trend low). Initial resistance is now located at 1.3684 (Oct 13 high) at followed by 1.3786 (Oct 9 high).

Yen – 102.05

Initial support is located at 99.58 (Oct 13 low) followed by 97.91 (Oct 10 trend low). Initial resistance is now at 103.29 (Oct 7 low) followed by 104 (Key level).

Pound – 1.7410

Initial support at 1.6909 (Oct 10 low) followed by 1.6781 (June Nov 11 2003 low). Initial resistance is now at 1.7442 (Oct 9 low) followed by 1.7658 (Oct 7 high).

Australian Dollar – 0.6995

Initial support at 0.6877 (Oct 8 low) followed by the 0.6437 (Oct 10 low). Initial resistance is now at 0.7148 (Oct 8 high) followed by 0.7355 (Oct 7 high).

Gold – 833

Initial support at 823 (Oct 13 low) followed by 820 (Oct 2 low). Initial resistance is now at 872 (Oct 13 high) followed by 930.25 (round number).