Oil Gains hurt Dollar Recovery
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) Traded in tight but volatile manner lead by fluctuations in Oil. EIA US Inventory Data showed a surprise build of 9.4M sending Oil plummeting from pre data highs of $117 to $112.60. Mortgage data showed another decline in applications of -1.5% but the market was more concerned with continued speculation that Fannie Mae and Freddie Mac would be bailed out causing a slide in their respective share prices. In the U.S. share markets, the NASDAQ was up 4 points (0.20%) and the Dow Jones was up 68 points (0.61%). Crude Oil closed up $0.45 ending the New York session at $114.98 per barrel. Looking ahead, Weekly Jobless Claims are forecasted at 443K and the August Philly Fed Index is expected at -14 slightly better than the -16.3.
European Euro
The Euro (EUR) tested the 1.4800 level during the early Asian Session before falling back to 1.4700 early in the European session. With little economic data out the market took its cue from commodities tracking Oils movement into the close. Overall the EUR/USD traded with a low of 1.4673 and a high of 1.4807 before closing the day at 1.4745 in the New York session. Looking ahead, German August Manufacturing PMI is seen at 50.5 down from 50.9 in July along with Services expected 52.2 vs. 53.1 in July. Eurozone August Services PMI is forecasted at 48 down slightly from 48.3 in July and Manufacturing is seen at 47 down from 47.4.
Japanese Yen (JPY)
The Japanese Yen (JPY) kept to a fairly tight range pivoting the 110 level, the Yen has been in demand as equities have been under pressure during the week. The July Trade Balance fell -86.6%Y/Y vs. forecasts of a milder -62.9%Y/Y which were dashed on increasing Oil import costs and weakening export demand. Overall the USDJPY traded with a low of 109.62 and a high of 110.28 before closing the day around 109.80 in the New York session.
Pound Sterling (GBP)
The Sterling (GBP) received a small boost as BoE minutes from the August meeting showed a 7-1-1 split for the second month running with Beazley once again voting for a rate hike to control record inflation. CBI Industrial Trends Orders put the pound under pressure again coming in at -13 worse than the -12 expected and -8 reading in July. Overall the GDP/USD traded with a low of 1.8540 and a high of 1.8688 before closing the day at 1.8620 in the New York session. Looking Ahead, July Retail Sales are forecast at -0.3% in July.
Australian Dollar (AUD)
The Australian Dollar (AUD) tracked the commodities gaining as Oil and gold edged higher but unable to make significant gains as the market is still happy to sell rallies and interest rate speculation weighs. AUD/NZD managed to hit multi-month lows below 1.22 as traders sold out of there long term trades. Overall the AUD/USD traded with a low of 0.8674 and a high of 0.8745 before closing the US session at 0.8730.
Gold
Gold (XAU) Gyrated wildly as Oil went on a rollercoaster ride. US banking concerns continued to underpin and Gold stayed above the key $800 level. Overall trading with a low of USD$801.20 and high of USD$817.80 before ending the New York session at USD$814 an ounce.
Technical Analysis: Oil Gains
Euro (EUR)
Euro – 1.4775 : Initial support at 1.4631 (Aug 19 low) followed by 1.4611 (Feb 18 low). Initial resistance is now located 1.4808 (Aug 15 low) at followed by 1.4963 (23.6% retrace 1.6038 to 1.4631).
Yen (JPY)
Yen – 109.60 : Initial support is located at 109.55 (Aug 19 low) followed by 109.04 (Aug 14 low). Initial resistance is now at 110.67 (Aug 15 high) followed by 112.15 (Jan 2 high).
Pound Sterling (GBP)
Pound – 1.8650 : Initial support at 1.8513 (Aug 15 low) followed by 1.8385 (Jul 25, 2006). Initial resistance is now at 1.8685 (Aug 20 high) followed by 1.8722 (Aug 18 high).
Australian Dollar (AUD)
Australian Dollar – 0.8725 : Initial support at 0.8626 (Aug 19 low) followed by 0.8593 (Aug 13 low). Initial resistance is now at 0.8757 (Aug 18 High) followed by 0.8797 (Aug 12 high).
Gold (XAU)
Gold – 815 : Initial support at 783.35 (Aug 19 low) followed by 773.5 (Aug 15 low). Initial resistance is now at 818.55 (Aug 20 high) followed by 836.8 (Aug 14 high).
