US share market volatility continues, as Crude oil trades at an all time high

US share market volatility continues, as Crude oil trades at an all time high.  Manufacturing data the theme for the day.

CURRENCY TRADING SUMMARY
U.S. Dollar Trading (USD) was mixed against a basket of currencies, attributed to investor tracking of U.S. stock prices and mixed economic data. Consumer Confidence rose to a near six year high for the month of July, whilst a softer than expected Core PCE and survey indicating slower business activity in the Mid West was shrugged off by the majority of the market. U.S. stock indexes were also mixed in a volatile session, with blue chips recovering from one of Wall Street's worst weeks in five years. Equities pared the morning's strong gains, led by losses in the financial sector. The NASDAQ closed the session down by 37.01 points (-1.43%) whilst the Dow Jones also eased down 146.32 points (-1.10%). Crude oil reached a record high, jumping by US$1.38 a barrel to US$78.21, on expectations that the Weekly US crude report would show a decline in supplies on Monday. Looking ahead the key highlights for Wednesday will include Manufacturing ISM (Forecast: 55.5, Prior: 56) and Pending Home Sales for the month of July and June respectively.

The Euro (EUR) was little changed against the USD further cautiousness remained in the market. In data news, the Euro was supported by a positive inflationary reading and decline in Unemployment on Tuesday. Overall the EURUSD traded with a range of a low 1.3692 and a high of 1.3727 before closing the day at 1.3706 in the New York session. Looking ahead, PMI Manufacturing for the EZ will be released for the month of July with forecasts of 54.8 down from the previous 55.6.

The Japanese Yen (JPY) continued its recent rallies as ongoing worries in the credit markets, prompting traders to unwind risky trades financed with the Japanese currency. The EURJPY fell by 0.4% to 162.55. Overall the USDJPY fell by 0.3% trading with a low of 118.78 and a high of 119.41 before closing the week at 119.04 in the New York session. 

The Sterling (GBP) gained overnight as temporarily aided with an early return to carry trades in the Asian session. In data specific news, the Confederation of British Industry (CBI) reported stronger-than-expected retail sales growth in July while research group GfK said British consumer confidence fell sharply in July to -6, its lowest since April. Overall the GBPUSD traded with a range of a low 2.0245 and a high of 2.0335 before closing the day at 2.0320 in the New York session. Looking ahead key data in the form of PMI manufacturing will generate most interest with forecasts at 54 slightly down on the previous 54.3. 

The Australian Dollar (AUD) returned to its attractive high yielding advantage during the Asian session before pairing its gains in the New York session. Overall the AUDUSD traded with a range of a low 0.8567 and a high of 0.8614 before closing the day at 0.8510 in the New York session. Looking ahead key data in the form of Retail sales and Trade Balance will cause plenty of interest on Wednesday. UPDATE: Retail Sales at  1.4%, Trade Balance at -1751 mill

Gold (XAU) gained US$2.70 an ounce to US$679.30 in response to stronger oil prices.

CURRENCY PAIR IN FOCUS
AUD/JPY High-yielding Australian dollar recovered ground on Tuesday while the yen slipped, as rebounds in equity and credit markets tempted investors back into carry trades during the Asian session of trading. The AUDJPY did pair its gains in the New York session from a day high near 102.70 before closing at 101.60.

Euro 1.3655
Initial support at 1.3608 (July 30 low) followed by 1.3567 (Jul 6 low). Initial resistance is now located at 1.3771 (Jul 26 high) followed by 1.3853 (July 24 trend high).

Yen 118.40
Initial support is located at 118.01 (July 27 low) followed by 117.60 (Apr 19 low). Initial resistance is now at 119.51 (Jul 31 high) followed by 120.36 (38.2% retracement of the 124.17 to 118.01 decline).

Pound  2.0285
Initial support at 2.0235 (Jul 31 low) followed by 2.0180 (July 30 low). Initial resistance is now at 2.0418 (50% retracement of the 2.0656 to 2.0180 decline) followed by 2.0474 (61.8% of the 2.0656 to 2.0180 decline)

Australian Dollar  0.8515
Initial support a 0.8459 (Jul 30 low) followed by 0.8519 (61.8% retracement of the 0.8163 to 0.8875 advance). Initial resistance is now at 0.8616 (Jul 31 trend high) followed by 0.8772 (Jul 27 trend high)

Gold  663.60
Initial support at 657.16 (Jul 27 low) followed by 653.80 (Jul 9 low). Initial resistance is now at 676.77 (Jul 26 high) followed by 687.40 (Jul 24 high)