Doller flayed as US mortgage lenders come under pressure

·U.S. Dollar Trading (USD) was sold across the board on Friday as speculation of trouble in the US banking sector reached fever pitch. Freddie Mac and Fannie Mae the two largest mortgage lenders in the US were at one stage down 50% before recovering on comments from the Federal Reserve that the two GSE’s would be able to use the FED discount loan facility. On the Economic news front the May US trade balance was better than expected at -59.8 Billion vs. forecasts of -62.5B. The Preliminary University of Michigan Consumer Sentiment was slightly improved from 55.5 in June to 56.6 in July. Oil soared to above $147 per barrel as the weak dollar and continued geopolitical concerns boosted. In the U.S. share markets, the NASDAQ was down 18 points (0.83%) and the Dow Jones was down 128 points (1.14%). Crude Oil closed up $3.43 ending the New York session at $145.08 per barrel.

·The Euro (EUR) made solid gains against the dollar as banking concerns weighed breaking above 1.5900 as Oil and Gold surged higher. With the Euro close to all time highs of 1.6019 there was once again talk in the markets of intervention to stem the Euros rise. Overall the EUR/USD traded with a low of 1.5765 and a high of 1.5949 before closing the day at 1.5925 in the New York session. Looking ahead, May Industrial Production for the Eurozone is expected to fall -2.3% down from +0.9% in April.

·The Japanese Yen (JPY) was able to make some solid gains against the Dollar as the Dow Jones traded briefly below 11000. Equities were able to recover from there lows and this allowed the USD/JPY to recover lead by strong gains in the EUR/JPY cross. Overall the USDJPY traded with a low of 105.66 and a high of 107.30 before closing the day around 106.46 in the New York session.

·The Sterling (GBP) made solid gains against the USD but weakened against the EUR breaking through the key 0.8000. The market continues to debate whether the next movement from the BoE will be a rate hike to counter inflation or a rate cut to combat economic weakness. Overall the GBP/USD traded with a low of 1.9755 and a high of 1.9958 before closing the day at 1.9870 in the New York session. Looking ahead, June PPI Output Prices is expected to rise 1.2% (1.6% May) and Input Prices 2.5% (3.8% May).

·The Australian Dollar (AUD) broke through record highs of 0.9667 before surging through 0.9700 to hit a new all time record of 0.9717. The weak USD and surge in Gold both supported. Overall the AUD/USD traded with a low of 0.9592 and a high of 0.9717 before closing the day at 0.9663.

·Gold (XAU) broke through topside resistances surging to multi-month highs. New records in Crude Oil and safe haven flows supported the rally. Overall trading with a low of USD$942 and high of USD$967.60 ending the New York session at USD$964 an ounce.
 
·Euro – 1.5895
Initial support at 1.5765 (July 11 low) followed by 1.5692 (July 10 low). Initial resistance is now located 1.5948 (July 11 high) at followed by 1.6019 (Apr 22 high).

·Yen – 106.65
Initial support is located at 105.66 (July 11 low) followed by 104.99 (Jun 30 low). Initial resistance is now at 107.3 (July 11 high) followed by 107.76 (July 7 high).

·Pound – 1.9840
Initial support at 1.9754 (July 11 low) followed by 1.9673 (July 9 low). Initial resistance is now at 1.99959 (July 11 high) followed by 2.0008 (July 1 high)

·Australian Dollar – 0.9670
Initial support at 0.9597 (July 11 low) followed by 0.9546 (July 10 low). Initial resistance is now at 0.9718 (July 11 high) followed by 0.9792 (July open + June range* 0.618).

·Gold – 964
Initial support at 942 (Jul 11 low) followed by 926 (Jul 10 low). Initial resistance is now at 967.95 (July 11 high) followed by 988.49 (76.4% retracement of the 1032.50-846.00 decline).