US data leads rebound in US stocks and Greenback.

U.S. Dollar Trading (USD) Strong US data lead to a bounce in the equity markets and a surge in the Greenback. Oil fell over $4 at one point as the USD strengthened also helping to keep stocks buoyant. The Case Schiller May House Price Index fell less than expected to -15.8% Y/Y and July Consumer Confidence improved slightly from 51.0 to 51.9. In the U.S. share markets, the NASDAQ was up 55.40 points (2.45%) and the Dow Jones was up 266 points (2.39%). Crude Oil closed down $2.54 ending the New York session at $122.19 per barrel. Looking ahead, July ADP Private Employment Change seen at -60K slightly better than the -79K surprise drop in June.

The Euro (EUR) fell heavily as the US data was digested and the market pared EURO longs. The sharp fall in Oil and weakening EU economic data also weighed. Strong July German CPI of 3.3%Y/Y provided some support but as energy costs come off peaks some analysts suggest July’s reading could be a cycle high. Overall the EUR/USD traded with a low of 1.5553 and a high of 1.5758 before closing the day at 1.5590 in the New York session.  

The Japanese Yen (JPY) gained against most currencies except the USD which broke above 108 as US equities surged. Heavy falls in the EUR/USD and GPB/USD were too large to offset an increase in risk appetite. June Industrial Output was slightly weaker than forecast at -2% vs. market expectations of 1.7%.   Overall the USDJPY traded with a low of 107.30 and a high of 108.30 before closing the day around 108.10 in the New York session.  

The Sterling (GBP) broke to the downside on woeful UK data released yesterday. June Mortgage Approvals fell to 36K with Total Lending falling to 4 billion from 5.1 Billion in May. It was the July CBI Orders that started the rout though falling to -36 from -9 in June. Market’s had been expecting a much tamer -15 and confirms that UK Retails Sales are plummeting justifying the record drop seen in June Retail Sales. Overall the GBP/USD traded with a low of 1.9760 and a high of 1.9969 before closing the day at 1.9800 in the New York session.

The Australian Dollar (AUD) weakened in sympathy with the sharp falls seen in commodities. Recent banking reports suggest the Australian Financial sector may not be as sound as once thought. AUD/JPY was able to trade steady though as risk appetite increased. Overall the AUD/USD traded with a low 0.9499 and a high of 0.9586 before closing the US session at 0.9520. Looking ahead, June Building Permits are seen up 1% recovering from a -6.5% drop last month.

Gold (XAU) Fell sharply as the USD strengthened and Oil dropped. Buoyant equities also weighed as safe haven flows decreased. Overall trading with a low of USD$914.80 and high of USD$933 ending the New York session at USD$919 an ounce.

TECHNICAL COMMENTARY

Euro – 1.5590

Initial support at 1.5584 (61.8% retracement of the 1.5303 to 1.6038 advance) followed by 1.5476 (76.4% retracement of the 1.5303 to 1.6038 advance). Initial resistance is now located 1.5758 (July 29 high) at followed by 1.5769 (July 28 High).

Yen – 108.10

Initial support is located at 107.30 (July 29 low) followed by 106.58 (July 25 low). Initial resistance is now at 108.31 (Jun 29 high) followed by 108.59 (Jun 16 high).

Pound – 1.9800

Initial support at 1.9754 (July 11 low) followed by 1.9650 (July 7 low). Initial resistance is now at 1.9990 (July 24 high) followed by 2.0077 (July 22 high).

Australian Dollar – 0.9520

Initial support at 0.9477 (July 9 low) followed by 0.9451 (76.4% retracement of the 0.9328 to 0.9849 advance). Initial resistance is now at 0.9590 (July 17 low) followed by 0.9637 (July 24 low).

Gold – 918

Initial support at 912.9 (July 8 low) followed by 908.65 (Jun 19 low). Initial resistance is now at 935.3 (July 25 high) followed by 949.25 (July 23 high).