UAE to end 30 year peg with Dollar. UK Retail Sales spur talks of rate cuts

U.S. Dollar Trading (USD) was choppy on Thursday as risk aversion was prominent in a number of markets. Ongoing write downs from large financial institutions spurred market concerns, with Barclays announcing a 2.7 billion loss and reports circulating that UBS will are also poised to confirm significant losses. On the data front, US Consumer Prices were in line with expectations coming in at 0.3% and 0.2% for the headline and core readings respectively. In Other news, rumors surrounding the UAE abandoning a thirty year link against the dollar, choosing to peg its currency versus a basket of majors. In U.S. share markets the NASDAQ was down by -25.81 (-0.98%) whilst the Dow Jones also fell by -120.96 (-0.91%). Crude oil gained by US$0.79 a barrel to US$93.33 in light of a drop in U.S. supplies. Looking ahead, TIC flows appear to be the major release out of the U.S. on Friday with figures forecasted to come in at 70 bln for the month of September, well above the previous decline of -69.3 bln.    

The Euro (EUR) fell almost 0.3% against the USD as the dollar was relieved against a number of high yielder’s following recent credit woes. In data specific news the Core CPI figure were released above expectations whilst headline numbers were relatively on consensus, doing little to provide the Euro with added cause. Overall the EURUSD traded with a low of 1.4605 and a high of 1.4703 before closing the day at 1.4617 in the New York session.

The Japanese Yen (JPY) strengthened across the board as risk aversion prompted investors to unwind carry trade bets against the Japanese Yen. The AUD and NZD were the worst affected falling by 1% and 1.1% versus the Yen. Overall the USDJPY traded with a low 110.22 and a high of 111.60 before closing the day at 110.31 in the New York session.

The Sterling (GBP) tumbled in an environment where speculators found little appeal for high interest bearing currencies. Downside moves were compounded as reports indicated that UK retail sales fell for the first times in 9 months spurring talk of an interest rate cut by the BoE. Overall the GBPUSD traded with a low of 2.0422 and a high of 2.0617 before closing the day at 2.0428 in the New York session.

The Australian Dollar (AUD) eased form levels above 90 cents as risk aversion ensured the currency had little appeal amongst investors. Overall the AUDUSD traded with a low of 0.8856 and a high of 0.9017 before closing the day at 0.8859 in the New York session.

Gold (XAU) slumped on Thursday trading with a low of 783.05 and a high of 817.90 before closing the session at 787.30 an ounce.
 
TECHNICAL COMMENTARY

Euro – 1.4615
Initial support at 1.4569 (Nov 13 reaction low) followed by 1.4521 (Nov 13 low). Initial resistance is now located at 1.4753 (Nov 9 trend high) followed by 1.4782 (Nov open + (Oct range * 0.618).
 
Yen – 110.45
Initial support is located at 109.13 (Nov 12 low) followed by 108.99 (May 17, 2006 reaction low). Initial resistance is now at 111.76 (Nov 14 high) followed by 112.88 (Nov 8 high)
 
Pound – 2.0435
Initial support at 2.0419 (Nov 15 low) followed by 2.0243 (Oct 12 low). Initial resistance is now at 2.0618 (Nov 16 high) followed by 2.0846 (Nov 14 high)

Australian Dollar – 0.8865
Initial support a 0.8754 (Nov 13 low) followed by 0.8749 (Oct 22 reaction low). Initial resistance is now at 0.9017 (Nov 15 high) followed by 0.9073 (Nov 14 high)
 
Gold – 788.60
Initial support at 782.80 (Nov 15 low) followed by 777.25 (Oct 31 low). Initial resistance is now at 818.30 (Nov 15 high) followed by 845.80 (Nov 7 trend high)