Steadying Stock prices aids yields

Steadying Stock prices aids yields. Heavy data day ahead as EZ release CPI and Japan Unemployment reaches a 9 year low.

CURRENCY TRADING SUMMARY – 31 JULY 2007

U.S. Dollar Trading (USD) returning to its bearish sentiment on Monday following three previous sessions of rallying prompted by unwinding Japanese one way bets. In U.S. share markets the NASDAQ rebounded 21.04 pts (+0.82%) whilst the Dow Jones followed, up by 92.84 pts (+0.70%). Crude oil fell by US$0.52 a barrel to US$75.74, mainly moving on the back of profit taking. Looking ahead key data is expected out of the U.S. with Core PCE prices, Chicago PMI, and Consumer Confidence.
The Euro (EUR) rebounded against the USD with traders returning to high yielding carry trades. Overall the EURUSD traded with a range of a low 1.3609 and a high of 1.3706 before closing the day at 1.3690 in the New York session. Looking ahead key data out of the EZ will include the CPI which is forecasted to be released at 1.9% same as the previous.
The Japanese Yen (JPY) reached three month lows against the USD before a return to carry trades ensured the JPY pared its gains. Overall the USDJPY traded with a range of a low 118.04 and a high of 119.08 before closing the day near session highs of 119.04 in the New York session. On Tuesday, Japanese Unemployment Rate was shown to have decreased to 3.7% from the 3.8% for the month of June ensuring that the Jobless rate in Japan now sits at a 9 year low. In other data released the manufacturing PMI came in worse than expected at 49 (Forecast: 50.4)
The Sterling (GBP) steadied before rebounding, although well below 26 year highs seen last week. The GBPJPY did reach a seven week low as influenced by the risk aversion. Overall the GBPUSD traded with a range of a low 2.0189 and a high of 2.0288 before closing the day at 2.0247 in the New York session. Looking ahead Gfk consumer confidence for the month of July will be made public on Tuesday with forecasts of -4 down on the previous figure -3.
The Australian Dollar (AUD) rebounded on Monday as investors returned to high yielding carry trades. Overall the AUDUSD traded with a low 0.8460 and a high of 0.8553 before closing the day at 0.8543 in the New York session. Looking ahead second tier data will be released from Australia in the form of Building Permits.
Gold (XAU) rebounded on Monday jumping by US$4.30 an ounce to US$676.60.

CURRENCY PAIR IN FOCUS
AUD/JPY The Australian currency fell 1.9 percent against the yen to 100.67 as a slump in corporate debt markets also threatened financing of mergers and acquisitions.

TECHNICAL COMMENTARY

Euro 1.3630
Initial support at 1.3627 (38.2% retracement of the 1.3262 to 1.3853 advance)) 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 118.55
Initial support is located at 118.01 (July 27 low) followed by 117.60 (Apr 19 low). Initial resistance is now at 119.32 (Jul 27 high) followed by 12.77 (Jul 26 high)
Pound – 2.0225
Initial support at 2.0247 (Jul 27 low) followed by 2.0134 (Former resistance of Apr 18). Initial resistance is now at 2.0495 (July 27 high) followed by 2.0563 (July 26 high)
Australian Dollar – 0.8520
Initial support a 0.8524 (Jul 27 low) followed by 0.8519 (50% retracement of the 0.8163 to 0.8875 advance). Initial resistance is now at 0.8772 (Jul 27 trend high) followed by 0.8875 (Jul 25 trend high)
Gold – 661.00
Initial support at 657.10 (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)