German IFO pummels Euro, Boosts Dollar

U.S. Dollar Trading (USD) gained again during the Asian session this time lead by the Antipodean currencies AUD and NZD. Weak EU data allowed new multimonth highs against most currencies except the Yen which outperformed as banking worries continued. Gains in Oil as a hurricane formed off the Gulf Coast pared some of USD gains. US data was mixed with a rise in CB Consumer Confidence to 56.9(53 Expected) for August being offset by a fall in New Home Sales for July to 515K (530K expected). FOMC minutes from last Fed meeting also released but offered little new to the debate over future rate movements. In the U.S. share markets, the NASDAQ was down 3 points (-0.15%) and the Dow Jones was up 26 points (0.23%). Crude Oil closed up $1.16 ending the New York session at $116.27 per barrel. Looking ahead, July Durable Goods Orders are seen at -0.5% vs. 2% in June. US Crude Inventories are expected to build .9M Barrels.

The Euro (EUR) was on a weak footing as USD strengthened broadly before being knocked lower on weaker than expected data. GFK Consumer Confidence dropped to 1.5 in September vs. 2 expected and Q2 German GDP was confirmed at -0.5%. The big market mover was August IFO Index which fell more than expected to 94.8 vs. the 97.1 forecast. The Euro broke through support at 1.4600 before a rally in Oil allowed some relief. Overall the EUR/USD traded with a low of 1.4570 and a high of 1.4760 before closing the day at 1.4650 in the New York session.  Looking ahead, German Import Prices are expected to rise 0.5% in July.

The Japanese Yen (JPY) one of the only currencies to stand up to USD strength gaining against most currencies especially the EUR/JPY which took out option barriers at 160. Ongoing unwinding of carry trades supported gains. Overall the USDJPY traded with a low of 109.14 and a high of 109.94 before closing the day around 109.60 in the New York session.

The Sterling (GBP) new multi year lows where plumbed as USD gained all day and support at 1.8400 gave way. Heavy selling in the GBP/JPY added pressure. Overall the GDP/USD traded with a low of 1.8330 and a high of 1.8530 before closing the day at 1.8400 in the New York session.

The Australian Dollar (AUD) broke support at .8590 during the Asian session and extended losses as the EUR/USD continued its fall. Strong Support in the low .85’s propped up the pair as Oil and Gold rebounded. NZD/USD also suffered as Trade data weakened and support at .7000 gave way. Overall the AUD/USD traded with a low of 0.8493 and a high of 0.8647 before closing the US session at 0.8550.
Gold (XAU) was able to counter USD strength as Oil jumped higher on supply concerns and risk aversion remained relatively high. Overall trading with a low of USD$829.70 and high of USD$807.70 before ending the New York session at USD$824 an ounce.
 
 
TECHNICAL COMMENTARY
 
 

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4440	1.4571	1.4650	1.4762	1.4808
USD/JPY	108.43	109.02	109.55	110.29	110.67
GBP/USD	1.8177	1.8331	1.8390	1.8531	1.8590
AUD/USD	0.8276	0.8488	0.8550	0.8647	0.8693
XAU/USD	801.00	807.40	824.00	830.60	838.60

Euro – 1.4650

Initial support at 1.4571 (Aug 26 low) followed by 1.4444 (Feb 7 reaction low). Initial resistance is now located 1.4762 (Aug 26 high) at followed by 1.4808 (Aug 25 high).

Yen – 109.55

Initial support is located at 109.02 (Aug 25 low) followed by 108.43 (Aug 22 low). Initial resistance is now at 110.29 (Aug 25 high) followed by 110.67 (Aug 15 high).

Pound – 1.8390

Initial support at 1.8331 (Aug 26 low) followed by 1.8177 (July 17, 2006). Initial resistance is now at 1.8531 (Aug 26 high) followed by 1.8590 (Aug 25 high).

Australian Dollar – 0.8550

Initial support at 0.8488 (Sep 19 2007) followed by 0.8276 (Sep 18 low). Initial resistance is now at 0.8647 (Aug 26 High) followed by 0.8693 (Aug 25 high).

Gold – 824

Initial support at 807.40 (Aug 22 low) followed by 801 (Aug 20 low). Initial resistance is now at 830.60 (Aug 26 high) followed by 838.60 (Aug 21 high).