US and Australia hold Rates, Greenback gains on Oil

U.S. Dollar Trading (USD) gained all day as investors sold Oil, Gold and other commodities. Stronger than forecast Non Manufacturing ISM for July 49.5 (vs. 48.8 expected) and Oil below $120 a barrel sent equities off on an impressive rally. The Feds decisions to hold rates at 2.00% and tone down the accompanying statement halted the USD rally but added fuel to stocks. Dropped from the FED statement was the sentence downside risks seem to have diminished, but added was that inflation was a significant concern. In the U.S. share markets, the NASDAQ was up 64 points (2.81%) and the Dow Jones was up 331 points (2.94%). Crude Oil closed down $2.24 ending the New York session at $119.17 per barrel. Looking ahead, Weekly MBA Purchase index.

The Euro (EUR) punched through 1.5500 in early European trading as Oil fell below the key $120 per barrel level and European sales were negative at -0.6% in June. A brief rally after the FOMC held at 2.00% was quickly reversed with euro hovering at day lows for the remainder of the US session.  Overall the EUR/USD traded with a low of 1.5446 and a high of 1.5578 before closing the day at 1.5469 in the New York session. Looking ahead, German Industrial Orders for June forecast 0.4% from -0.9% in May.

The Japanese Yen (JPY) made gains against most currencies except the USD as heavy selling of GBP/JPY, AUD/JPY and EUR/JPY supported the Yen. Better US data and Buoyant stocks help off the crosses off there lows and USD/JPY reclaim the 108 handle. Overall the USDJPY traded with a low of 107.68 and a high of 108.34 before closing the day around 108.18 in the New York session. Looking ahead, June leading indicators seen at -1.8.

The Sterling (GBP) fell in sympathy with the Euro in the face of broad based USD strength. June PMI services were slightly better than expected at 47.4 vs. forecasts of 46.7. June Industrial Production weakened -0.2%. Overall the GDP/USD traded with a low of 1.9524 and a high of 1.9611 before closing the day at 1.9555 in the New York session.  

The Australian Dollar (AUD) continued to fall yesterday after the RBA held rates at 7.25% and released a dovish accompanying statement. The RBA opened the door to rate cuts with the comment ‘scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing’. AUD/JPY sales weighed and heavy falls in the CRB index (commodity index) hurt sentiment. Overall the AUD/USD traded with a low 0.9134 and a high of 0.9299 before closing the US session at 0.9155.

Gold (XAU) continued to fall as both Crude Oil dropped below the key $120 and the USD strengthened. Gold broke below $889 an ounce the 200 day moving average. 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 – 1.5475

Initial support at 1.5463 (Aug 5 low) followed by 1.5462 (76.4% retracement of 1.5284 to 1.6038). Initial resistance is now located 1.5578 (Aug 5 high) at followed by 1.5632 (Aug 4 high).

Yen – 108.40

Initial support is located at 107.29 (Aug 1 low) followed by 106.58 (July 25 low). Initial resistance is now at 108.59 (Jun 16  high) followed by 108.61 (Feb 14 high).

Pound – 1.9555

Initial support at 1.9525 (Aug 5 low) followed by 1.9410 (Jun 13 low). Initial resistance is now at 1.9625 (Aug 5 high) followed by 1.9762 (Aug 4 high).

Australian Dollar – 0.9175

Initial support at 0.9091 (Apr 3 low) followed by 0.9032 (April 1 low). Initial resistance is now at 0.9301 (Aug 5 high) followed by 0.9347 (Aug 4 High).

Gold – 878

Initial support at 874 (Jun 24 low) followed by 858 (Jun 12 low). Initial resistance is now at 894.6 (Aug 5 high) followed by 916.75 (Aug 1 high).