Oil advances on Hurricane watch, Dollar down.

CURRENCY TRADING SUMMARY – 22nd July 2008 (00:30GMT)

U.S. Dollar Trading (USD) experienced a slow start to the week with Japan away for Ocean day and little economic data out. The Greenback lost some ground as Oil advanced on news of hurricane Dolly in the Gulf. Bank of America results offered the Dollar and Stocks some support but enthusiasm waned and both lost ground into the US session close. After market earning reports from American Express has put extra pressure on the USD and stock futures for Tuesday. June leading Indicators came in as expected at -0.1%.  In the U.S. share markets, the NASDAQ was down 3 points (0.14%) and the Dow Jones was down 29 points (0.25%). Crude Oil closed up $2.16 ending the New York session at $131.04 per barrel. Looking ahead, Treasury Secretary Paulson speaks tonight. The July Richmond Fed Index which is also released came in at -12 in June.

The Euro (EUR) gained against most currencies as Oil rebounded and the equity rally stalled. New all time records of 169.92 traded in the EUR/JPY just below the critical 170 level. Overall the EUR/USD traded with a low of 1.5830 and a high of 1.5909 before closing the day at 1.5900 in the New York session. 

The Japanese Yen (JPY) was sold heavily after Bank of Americas results were positive with the USD/JPY trading briefly above the 107 level before easing as market sentiment reversed. The crosses were lead by the EURO and AUD which made new year highs. Overall the USDJPY traded with a low of 106.37 and a high of 107.15 before closing the day around 106.65 in the New York session. 

The Sterling (GBP) was able to rebound off the lows of the day as markets digested comments from ultra dove MPC member Blanchflower that the UK was already in recession and news that HBOS share offering was severely undersubscribed. Strong buying of GBP/JPY supported.  Overall the GBP/USD traded with a low of 1.9908 and a high of 1.9990 before closing the day at 1.9984 in the New York session.  Looking ahead, Bank of England Governor King speaks.

The Australian Dollar (AUD) shrugged off lower than expected (1.6%) 2nd Quarter PPI of 1.0% as Gold and Oil made solid gains. Diverging economic outlooks sent the AUD/NZD to year highs above 1.2800. Overall the AUD/USD traded with a low of 0.9707 and a high of 0.9767 before closing the day at 0.9754.

Gold (XAU) gained in sympathy with Oil and soft equities. Overall trading with a low of USD$956.55 and high of USD$968.25 ending the New York session at USD$965 an ounce.

TECHNICAL COMMENTARY

Yen – 106.55
Initial support is located at 104.76 (July 17 low) followed by 103.78 (July 16 low). Initial resistance is now at 107.16 (July 21 high) followed by 107.76 (July 7 high).

Pound – 2.0015
Initial support at 1.9907 (July 18 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0097 (July 16 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).

Australian Dollar – 0.9765
Initial support at 0.9675 (July 17 low) followed by 0.9664 (July 14 low). Initial resistance is now at 0.9818 (July 16 high) followed by 0.9849 (July 15 High).

Gold – 967
Initial support at 950.50 (Jul 18 low) followed by 942 (July 11 low). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high).