Eurozone and UK interest rates in Focus.

U.S. Dollar Trading (USD) continued to strengthen broadly gaining against all currencies as Oil continued to slide and US Treasury’s rallied. Stocks remained buoyant as mining and energy shares rebounded from large sell offs and Cisco reported better that estimated earnings. The Weekly MBA Purchases Index rose to 315.2 from 309.5. In the U.S. share markets, the NASDAQ was up 28 points (1.21%) and the Dow Jones was up 40 points (0.35%). Crude Oil closed down $0.59 ending the New York session at $118.59 per barrel. Looking ahead, Weekly Jobless Claims are seen down to 423K from 448K last week. June Pending Homes Sales seen down -1%.

The Euro (EUR) remained on the back foot as economic data disappointed and speculation mounted ECB President Trichet might change tone on the European economy. June German Factory Orders fell -2.9% in a surprise fall with the markets expecting a +0.4%. Overall the EUR/USD traded with a low of 1.5398 and a high of 1.5517 before closing the day at 1.5415 in the New York session. Looking ahead, ECB Interest Rate announcement widely expected to hold at 4.25%. Also released the June German Trade Balance seen at $15 Billion, and Import Prices forecast to rise 1.4%. June German Industrial Production is expected at 0.8%.  

The Japanese Yen (JPY) was sold heavily as USD/JPY popped through multiple resistance levels shooting through 109 before heavy offers before the key 110 levels finally contained the surge. Crosses remained bid and made solid gains across the board. Core Machinery Orders m/m was better than expected at -2.6% vs. forecast of -9.6%.  Overall the USDJPY traded with a low of 108.25 and a high of 109.88 before closing the day around 108.80 in the New York session.  

The Sterling (GBP) fell below the Key 1.9500 level on USD strength but was able to make gains against the JPY. Overall the GDP/USD traded with a low of 1.9467 and a high of 1.9595 before closing the day at 1.9555 in the New York session. Looking ahead, BOE Interest Rate announcement widely tipped to stay at 5.00%.   

The Australian Dollar (AUD) came under continued pressure as home loan data confirmed a weakening in the housing industry and the commodity complex continued to fall. AUD/JPY did manage to eek out small gains.  Overall the AUD/USD traded with a low 0.9065 and a high of 0.9203 before closing the US session at 0.9080. Looking ahead, Unemployment Rate is expected to rise to 4.3% in July with a employment change +1.25K.  

Gold (XAU) traded in a tighter range declining as the USD continued to gain and Oil remained under pressure. Overall trading with a low of USD$873 and high of USD$894 ending the New York session at USD$875 an ounce.

TECHNICAL COMMENTARY
 

Euro – 1.5425

Initial support at 1.5342 (June 16 low) followed by 1.5303 (Jun 13 reaction low). Initial resistance is now located 1.5517 (Aug 6 high) at followed by 1.5578 (Aug 5 high).

Yen – 109.40

Initial support is located at 108.22 (Aug 6 low) followed by 107.29 (Aug 1 low). Initial resistance is now at 109.96 (50 retrace 124.15 to 95.76) followed by 110.12 (Jan 9 high).

Pound – 1.9480

Initial support at 1.9410 (Jun 13 reaction low) followed by 1.9363 (May 14 low). Initial resistance is now at 1.9595 (Aug 6 high) followed by 1.9625 (Aug 5 high).

Australian Dollar – 0.9090

Initial support at 0.9032 (Apr 1 low) followed by 0.9023 (61.8% retrace 0.8513 to 0.9849). Initial resistance is now at 0.9206 (Aug 6 high) followed by 0.9301 (Aug 5 High).

Gold – 880

Initial support at 873 (Aug 5 low) followed by 858 (Jun 12 low). Initial resistance is now at 894.6 (Aug 5 high) followed by 916.75 (Aug 1 high).