Currency Trading Summary

U.S. Dollar Trading (USD) had its largest rally in two months as risk aversion spiked higher after weak US jobs data put the recovery story in doubt. Oil slipped over 4% as less jobs indicates consumer demand should remain weak. June Non Farm Payrolls at -467k (F.-360k) and Unemployment Rate at 9.5% vs. 9.6% forecast. Crude Oil closes down $2.58 to close the day at $66.73. In US share markets, the Nasdaq was down 49 points or -2.67% and the Dow Jones was down -223 points or -2.63%. Looking ahead, July 4th Holidays.

The Euro (EUR) found support at 1.4000 although heavy selling finally pushed the pair through the major pivot level. ECB held at 1.0% but Trichet stressed they could still go lower if confidence falters. EU Unemployment jumped to 9.5% vs. 9.2% previously. Overall the EUR/USD traded with a low of 1.3926 and a high of 1.4150 before closing at 1.3940. Looking ahead, May retail Sales forecast at -0.1% vs. 0.2% previously.

The Japanese Yen (JPY) was the strongest currency as traders dumped there long AUD/JPY and EUR/JPY and GBP/JPY post US Jobs Data. USD/JPY was dragged down to the 96 Yen level but found support on dips below. Risk sentiment and stocks moves will direct the next move. Overall the USDJPY traded with a low of 95.68 and a high of 96.91 before closing the day around 95.90 in the New York session.

The Sterling (GBP) was pushed under support at 1.6400 to find decent buying ahead of the key 1.6330 support level. EUR/GBP buying and GBP/JPY selling added to the pressure as did weak construction PMI at 44.5 vs. 46.1 forecast. Overall the GBP/USD traded with a low of 1.6321 and a high of 1.6503 before closing the day at 1.6360 in the New York session. Looking ahead, PMI services forecast at 52 vs. 51.7 previously.

The Australian Dollar (AUD) broke through 0.8000 after the US jobs data and tested support at 0.7930. Heavy AUD/JPY selling was offset slight by AUD/NZD support but the risk averse currency will struggle if stocks continue to be sold. Weak Gold and Oil added to the bearish picture but a break of the 0.7800 – 0.8250 range is need to deliver more substantial selling. May’s Trade Balance shocked the market at -0.56B vs. -0.1Bn forecast. Overall the AUD/USD traded with a low of 0.7900 and a high of 0.8097 before closing the US session at 0.7940.

Gold (XAU) fell from the $940 levels as USD strength outpaced safe haven demand for gold. Weaker commodities in general are hurting the outlook. Overall trading with a low of USD$926 and high of USD$941 before ending the New York session at USD$932 an ounce.