Choppy, quiet start to the Week

CURRENCY TRADING SUMMARY – 19th August 2008 (00:30GMT)
 

U.S. Dollar Trading (USD) traded in a tight range against most of the majors, buoyed by continued weakness in Oil but hurt as stocks weakened. Speculation that government backed Fannie Mae and Freddie Mac would have to be bailed out cast a shadow of the banking sector. In the U.S. share markets, the NASDAQ was down 35 points (-1.45%) and the Dow Jones was down 180 points (-1.55%). Crude Oil closed down $0.90 ending the New York session at $112.87 per barrel. Looking ahead, July Building Permits are forecasted at .97M and Housing Starts at .96M. Also released PPI expected at 0.6% in July with a Core reading of 0.2%.

The Euro (EUR) made day highs as storms threatened Oil platforms in the Gulf of Mexico sending Oil above $115 per barrel. As the storms look set to miss, Oil retreated taking the Euro along for the ride. A blow out in Eurozone Trade Deficit by 3 Billion in June also weighed on the single currency.  Overall the EUR/USD traded with a low of 1.4645 and a high of 1.4768 before closing the day at 1.4700 in the New York session. Looking ahead, German PPI is expected at 0.7% in July along with the August ZEW survey seen improving slightly to -62.

The Japanese Yen (JPY) was relatively unchanged against the USD but gained against most currencies as weak US banking stocks sparked further Yen Buying.  Overall the USDJPY traded with a low of 109.96 and a high of 110.55 before closing the day around 110.10 in the New York session. Looking ahead, Bank of Japan Rate announcement and Press Conference widely expected to hold at 0.5% on weakening growth outlook.

The Sterling (GBP) bounced inline with the Euro but was unable to hold gains retreating during the US session. The Market is becoming increasingly certain that the BOE will cut rates before the year’s end and this could weigh on the Pound going forward. Overall the GDP/USD traded with a low of 1.8618 and a high of 1.8720 before closing the day at 1.8650 in the New York session.

The Australian Dollar (AUD) gained as the commodity complex bounced lead by Oil and Gold which reclaimed the $800 level briefly before retreating with the Aussie. Attempts to rally were met with very good selling pressure especially as support for the AUD/JPY faded. Markets still see a 50/50 chance of 50 basis point cuts in September. Overall the AUD/USD traded with a low of 0.8652 and a high of 0.8748 before closing the US session at 0.8680. Looking ahead, RBA minutes from the August Meeting.

Gold (XAU) reclaimed the $800 an ounce level briefly as Oil surged and the USD weakened. US banking concerns also supported but a rally in the Dollar during New York capped gains. Overall trading with a low of USD$790.55 and high of USD$803.65 before ending the New York session at USD$800 an ounce.

TECHNICAL COMMENTARY
 
  

Euro – 1.4690

Initial support at 1.4646 (Aug 18 low) followed by 1.4611 (Feb 18 low). Initial resistance is now located 1.4808 (Aug 15 low) at followed by 1.4981 (Aug 13 high).

Yen – 110.10

Initial support is located at 109.64 (Aug 15 low) followed by 109.04 (Aug 14 low). Initial resistance is now at 110.67 (Aug 15 high) followed by 112.15 (Jan 2 high).

Pound – 1.8635

Initial support at 1.8513 (Aug 15 low) followed by 1.8385 (Jul 25, 2006). Initial resistance is now at 1.8722 (Aug 18 high) followed by 1.8787 (Aug 14 high).

Australian Dollar – 0.8680

Initial support at 0.8652 (Aug 18 low) followed by 0.8593 (Aug 13 low). Initial resistance is now at 0.8797 (Aug 14 High) followed by 0.8846 (Aug 12 high).

Gold – 795

Initial support at 773.5 (Aug 15 low) followed by 773 (Nov 20 reaction low). Initial resistance is now at 804.2 (Aug 15 low) followed by 836.8 (Aug 14 high).