Major USD rally as Key Technical levels broken.

U.S. Dollar Trading (USD) continued its post Trichet rally into the Asian session, gaining against every currency. US economic data missed targets but this was overlooked, Q2 Non productivity rose 2.2% vs. 2.5% expected and Labor Costs rose 1.3% around expectations. Oil continued to slide and prompted a major US equity rally also supporting the dollar. In the U.S. share markets, the NASDAQ was up 58 points (2.48%) and the Dow Jones was up 302 points (2.65%). Crude Oil closed down $4.82 ending the New York session at $115.20 per barrel.  

The Euro (EUR) broke through the Key 1.5300 level in early Asian trade and continued to fall testing the 1.5000 level during the US session. Falling Oil and a readjustment of Eurozone economic outlooks the main catalyst. Overall the EUR/USD traded with a low of 1.4997 and a high of 1.5336 before closing the day at 1.5005 in the New York session. Looking ahead, German Wholesale Price index is expected at 0.5% in July.

The Japanese Yen (JPY) gained against most crosses as the major’s weighed lead by the EUR/USD on the EUR/JPY. USD/JPY did gain though breaking through the key 110 level as US stocks surged. Overall the USDJPY traded with a low of 109.30 and a high of 110.37 before closing the day around 110.20 in the New York session. Looking ahead, July Corporate Goods Price expected at 0.8%.
The Sterling (GBP) tracked the Euro lower breaking through supports at 1.9410 to year lows. Market is awaiting the BOE Inflation report for further Interest rate direction. Overall the GDP/USD traded with a low of 1.9146 and a high of 1.9439 before closing the day at 1.9200 in the New York session. Looking ahead, July PPI Core Output is seen at 0.4%, PPI input at 1% and PPI Output at 0.5%. Also released the June trade Balance seen at -7.4Bln.

The Australian Dollar (AUD) continued its recent plunge this time as the USD strengthened, breaking through .9000 for the first time since March and confirming the biggest 3 week fall since 1980. Overall the AUD/USD traded with a low of 0.8866 and a high of 0.9077 before closing the US session at 0.8990. Looking ahead, RBA Monetary Policy statement.

Gold (XAU) broke lower as USD strengthened and Oil dropped off. Strong support at $850 held. Overall trading with a low of USD$851.50 and high of USD$873.50 ending the New York session at USD$857 an ounce.

TECHNICAL COMMENTARY
 

Euro – 1.4955

Initial support at 1.4956 (Feb 1 low) followed by 1.4778 (Feb 28 low). Initial resistance is now located 1.5025 (Aug 8 low) at followed by 1.5335 (Aug 8 high).

Yen – 109.80

Initial support is located at 109.14 (Aug 7 low) followed by 108.22 (Aug 6). Initial resistance is now at 110.24 (AUG 8 high) followed by 112.15 (Jan 2 high).

Pound – 1.9165

Initial support at 1.9105 (50% retrace 1.7048 to 2.1161) followed by 1.8838 (Nov 15 2006). Initial resistance is now at 1.9438 (Aug 8 high) followed by 1.9538 (Aug 7 high).

Australian Dollar – 0.9860

Initial support at 0.8875 (Feb 7 low) followed by 0.8819 (Jan 31 low). Initial resistance is now at 0.9074 (Aug 8 high) followed by 0.9131 (Aug 7 high).

Gold – 860

Initial support at 851.73 (Aug 8 low) followed by 846 (May 2 low). Initial resistance is now at 873.5 (Aug 6 high) followed by 886.5 (Aug 5 high).