Share Markets continue to fall adding volatility to FX markets

Share Markets continue to fall adding volatility to FX markets. US housing starts due out.

CURRENCY TRADING SUMMARY
U.S. Dollar Trading (USD) continued on its gains trading well away from 15 year lows seen in recent weeks. Once again the credit crunch in the U.S. prompted investors to unwind carry trades against the USDJPY, pulling all high yielding majors down against the USD. In the United States, foreign exchange markets showed little reaction to a report on consumer prices for July and a U.S. Treasury department release on capital inflows for June. Government reports showed increases in U.S. consumer prices and industrial output in line with expectations in July. In U.S. share markets the NASDAQ was down -40.29 points (-1.61%) whilst the Dow Jones -167.45 points (-1.29%). Crude oil rose by US$0.95 a barrel to US$73.33. Looking ahead, key data is out of the U.S. in the form of Housing Starts, Building Permits and the Philly Fed survey. 

The Euro (EUR) continued to lose ground against the USD, for the third consecutive session to continue its worse slide in 6 months. An attributing factor was that investors remained concerned that the credit crunch will prevent the ECB from increasing rates next month. Overall the EURUSD traded with a low 1.3455 and a high of 1.3539 before closing the day at 1.3462 in the New York session. Looking ahead key inflationary data is scheduled for release out of the EZ.

The Japanese Yen (JPY) continued to gain against all other majors as ongoing unwinding relieved the currency of further pressure. The Japanese Yen trade with a low of 116.61 and a high of 117.65 before closing the day at 116.98 in the New York session.

The Sterling (GBP) reached a two month low against the USD and a four month low against the Japanese Yen, as poor data out of the UK scaled back expectations of future rate hike. Supporting this were Minutes from the Bank of England's last rate-setting meeting which showed policymakers voted unanimously to keep interest rates at 5.75 percent and most had no firm view on whether rates may need to rise further. Overall the GBPUSD traded with a range of a low 1.9858 and a high of 1.9972 before closing the day at 1.9925 in the New York session.  

The Australian Dollar (AUD) traded at an 11 week low of 0.8157 against the USD in the early part of Thursday’s day of trade. As a high yielding currency the Aussie Dollar was sold of against the Japanese Yen in favor of risk aversion. Overall the AUDUSD traded with a range of a low 0.8204 and a high of 0.8346 before closing the day at 0.8227 in the New York session. 

COMMODITY IN FOCUS
Gold (XAU) steadied in the latter part of Wednesday having succumbed to a broadly stronger USD. XAU traded with a low of 662.60 and a high of 670.70 fallen almost 4% from an 11 week high on July the 4th.

Euro 1.3415
Initial support at 1.3605 (Aug 13 low) followed by 1.3558 (50% retracement of the 1.3262 to 1.3853 advance). Initial resistance is now located at 1.3711 (Aug 13 high) followed by 1.3819 (Aug 9 high).

Yen 116.55
Initial support is located at 117.68 (Aug 13 low) followed by 117.18 (Aug 6 low). Initial resistance is now at 118.76 (Aug 10 high) followed by 119.85 (Aug 8 high).

Pound  1.9865
Initial support at 2.0057 (Jul 6 low) followed by 2.0017 (61.8% retracement of the 1.9622 to 2.0656 advance). Initial resistance is now at 2.0270 (Aug 10 high) followed by 2.0400 (Aug 8 high)

Australian Dollar  0.8165
Initial support a 0.8354 (Jun 27 low) followed by 0.8333 (Jun 14 low). Initial resistance is now at 0.8511 (Aug 10 high) followed by 0.8664 (Aug 9 reaction high)

Gold  667.20
Initial support at 658.75 (Aug 10 low) followed by 645.60 (Jul 6 low). Initial resistance is now at 676.80 (Aug 8 high) followed by 687.40 (Jul 24 high)