High Yielder's continue to spiral, as Japanese Yen surges

High Yielder’s continue to spiral, as Japanese Yen surges. AUD trades at 0.7800.

CURRENCY TRADING SUMMARY
U.S. Dollar Trading (USD) continued to gain on the back of other majors with on ongoing carry trades being unwound. Furthermore, benchmark stock indexes sold off more than 1 percent as a report showing housing starts in July dropped more than expected. The data added to nervousness about the outlook for the U.S. economy as losses related to the U.S. sub-prime mortgage sector mounted. The sharp increase in risk aversion came after shares in Countrywide Financial, the largest U.S. mortgage lender; plunged on Wednesday amid rumors it was having trouble raising funding. Countrywide shares tumbled another 15 percent on Thursday after it said it had to draw all of an $11.5 billion credit line to fund operations after it was effectively shut out of other credit markets. In U.S. share markets the NASDAQ was down 7.76 points (-0.32%) whilst the Dow Jones was also down a further 15.69 points (-0.12%). Crude oil tumbled on Thursday by US$2.33 a barrel to US$71.00. Looking ahead, key data will be released in the form of Michigan Sentiment survey.

The Euro (EUR) initially lost ground on the back of ongoing credit worries prompting carry trade unwinding. However, the Euro posted a slight recovery against the dollar following poor housing data out of the U.S. In other data, inflationary data out of the EZ was flat on consensus. Overall the EURUSD traded with a low 1.3360 and a high of 1.3448 before closing the day at 1.3403 in the New York session.

The Japanese Yen (JPY) rallied to its highest level against the dollar in more than a year as investor’s unwound risky trades financed with borrowed yen on fears of a global funding crisis. The Japanese Yen was the best performing currency, gaining rapidly against all high yielder’s’. Overall the USDJPY traded with a low 112.01 and a high of 116.74 before closing the day at 113.11 in the New York session.

The Sterling (GBP) continued to spiral as its recognition of being the G7 highest interest bearing currency continued to ay heavy on the pound. Highlighted by Sterling falling 2% against a revived Japanese currency. Overall the GBPUSD trade with a low 1.9772 and a high of 1.9890 before closing the day at 1.9790.

The Australian Dollar (AUD) was battered on Thursday along with it neighboring high yielder in the NZD. The Aussie Dollar continued its free fall, also tumbling against the Japanese Yen. Overall the AUDUSD traded with a low 0.7820 and a high of 0.8201 before closing the day at 0.7863 in the New York session. Looking ahead, RBA Governor Stevens is scheduled to speak on Friday.

COMMODITY IN FOCUS
Gold (XAU) dropped more than 2% in the early session of Thursday’s trade following further dwindling global equities. Gold broke key levels of support at 658.85 to trade with a low of 642.40 and a high of 667.80.

Euro 1.3425
Initial support at 1.3360 (Aug 16 low) followed by 1.3305 (Jun 15 low). Initial resistance is now located at 1.3449 (Aug 16 high) followed by 1.3541 (Aug 15 high).

Yen 113.60
Initial support is located at 112.00 (Aug 16 low) followed by 111.32 (Jun 2, 2006 low). Initial resistance is now at 116.76 (Aug 16 high) followed by 117.67 (Aug 15 high).

Pound  1.9815
Initial support at 1.9769 (Aug 16 low) followed by 1.9753 (Jun 18 low). Initial resistance is now at 1.9891(Aug 16 high) followed by 1.9974 (Aug 15 high)

Australian Dollar  0.7885
Initial support a 0.7798 (Mar 13 low) followed by 0.0.7751 (Mar 8 low). Initial resistance is now at 0.8205 (Aug 16 high) followed by 0.8350 (Aug 15 reaction high)

Gold  647.70
Initial support at 642.45 (Aug 16 low) followed by 640.00 (Jun 26 low). Initial resistance is now at 668.90 (Aug 16 high) followed by 676.80 (Aug 8 high)