Oil slides lower, New Zealand cuts rates

CURRENCY TRADING SUMMARY – 24th July 2008 (00:30GMT)

 

·         U.S. Dollar Trading (USD) was able to make solid gains last night on the back of increasing speculation that the Fed will begin tightening rates to fight inflation. Oil slipped another $4 per barrel and equities performed well as the US government moved closer to approving the  housing bill. The latest Beige book showed concern for weakening growth and rising price pressures.   In the U.S. share markets, the NASDAQ was up 21 points (0.95%) and the Dow Jones was up 29 points (0.26%). Crude Oil closed down $3.98 ending the New York session at $124.44 per barrel. Looking ahead, Weekly Jobless Claims are seen at 376K and June Home Sales at 3.14 Million up 2% from May.

·         The Euro (EUR) continued to slide against the dollar as commodities fell and economic data weakened. May Industrial Orders were down 3.5%. Overall the EUR/USD traded with a low of 1.5670 and a high of 1.5798 before closing the day at 1.5695 in the New York session. Looking ahead, heavy data day with July German PMI services seen at 51.5 while Eurozone’s is seen at 48.8. Eurozone’s PMI manufacturing is forecast at 48.7. The July German IFO index is keenly anticipated with the market forecasting 100.  

·         The Japanese Yen (JPY) remained buoyant but was unable to penetrate the 108 level. EUR/JPY failed to break through 170. GBP/JPY broke throught the critical 214 level racing to highs of 215.88. Overall the USDJPY traded with a low of 107.17 and a high of 107.97 before closing the day around 107.90 in the New York session.  

·         The Sterling (GBP) received a major boost yesterday gaining against all the major currencies as the July MPC meeting minutes came in a surprising 7-1-1. MPC member Beasley voted for a rate hike on concerns that medium inflation was the most important threat to the UK economy. EUR/GBP traded at month lows of 0.7840.  Overall the GBP/USD traded with a low of 1.9902 and a high of 2.0032 before closing the day at 1.9995 in the New York session.  Looking ahead, June Retail Sales are seen at -2.5% down from May’s surprising 3.5% rise.

·         The Australian Dollar (AUD) fell hard for the 3rd day as the commodity complex continued to slide. New Zealand surprised the markets with an interest rate cut today, putting inflation fears aside to combat the deteriorating economic outlook. AUD/NZD scaled new peaks on the back of the news above 1.2900.  Overall the AUD/USD traded with a low of 0.9601 and a high of 0.9739 before closing the day at 0.9620.

·        Gold (XAU) fell heavily as the USD gained strength and Oil continued to slide. Overall trading with a low of USD$918.80 and high of USD$948.75 ending the New York session at USD$920 an ounce.

TECHNICAL COMMENTARY
 
 

·         Euro – 1.5680

Initial support at 1.5670 (July 23 low) followed by 1.5612 (July 23 low). Initial resistance is now located 1.5799 (July 23 high) at followed by 1.949 (July 16 High).

·         Yen – 107.85

Initial support is located at 106.06 (July 22 low) followed by 104.76 (July 17 low). Initial resistance is now at 108.19 (Jun 26 high) followed by 108.59 (Jun 16 high).

·         Pound – 1.9965

Initial support at 1.9898 (July 22 low) followed by 1.9815 (July 14 low). Initial resistance is now at 2.0077 (July 22 high) followed by 2.0157 (Jul 15 high and 76.4% retrace of 2.0398-1.9363).

·         Australian Dollar – 0.9585

Initial support at 0.9565 (76.4% retrace of 0.9477-0.9849 rally) followed by 0.9477 (July 9 low). Initial resistance is now at 0.9738 (July 23 high) followed by 0.9794 (July 22 High).

·         Gold – 918

Initial support at 912.9 (July 8 low) followed by 908.65 (Jun 19 low). Initial resistance is now at 978.5 (July 17 high) followed by 988.0 (July 15 high)