Stocks and Greenback down on Rescue Plans skepticism
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) fell across the board as concerns emerged about the US government’s ability to finance the $700 billion bailout. Also dragging on the Dollar a record rally in the Oct Oil Contract sent the Euro skyrocketing to its largest daily gain this year. US stocks fell sharply on the increase in Oil and ongoing weak fundamentals. The US national activity index fell to -1.59 in August, levels not seen since the last US recession. In the U.S. share markets, the NASDAQ was down 94 points (-4.17%) and the Dow Jones was down 372 points (-3.27%). Crude Oil closed up $16.37 ending the New York session at $120.00 per barrel. Looking ahead, September Richmond Fed Index. Also beginning today, testimonies from Paulson and Bernanke in front of Congress on the ongoing financial crisis.
European Euro
The Euro (EUR) surged to its largest one day gain this year on broad USD weakness and the single currency’s status as the world’s second reserve currency. Reports of central bank diversification out of US dollars and a record rally in Oil combined to support the Euro. Overall the EUR/USD traded with a low of 1.4438 and a high of 1.4867 before closing the day at 1.4800 in the New York session. Looking ahead, July Industrial Orders M/M seen down -0.7% from -0.3% in June.
Japanese Yen (JPY)
The Japanese Yen (JPY) gained on triple digit losses in the Dow but was able to remain relatively buoyant on the crosses as massive gains on their respective majors overtook USD/JPY weakness. Overall the USDJPY traded with a low of 105.15 and a high of 107.25 before closing the day around 105.50 in the New York session.
Pound Sterling (GBP)
The Sterling (GBP) gained in sympathy with the Euro although at a slower pace given some continued weak data. UK Rightmove Index fell -1.0% in September. Cable surged through 1.8500 with stoploss propelling it quickly to 1.8600 before settling back into the US close. Overall the GDP/USD traded with a low of 1.8263 and a high of 1.8630 before closing the day at 1.8580 in the New York session.
Australian Dollar (AUD)
The Australian Dollar (AUD) rallied on the back of huge gains in Commodities. AUD/JPY remained buoyant even as equities slumped in testimony to AUD strength. With the AUD falling more than most currencies in the recent USD rally, the potential upside is greater than most given the grossly bearish USD outlook. Overall the AUD/USD traded with a low of 0.8283 and a high of 0.8520 before closing the US session at 0.8450.
Gold
Gold (XAU) reclaimed the $900 an ounce level as weak stocks, weak USD and surging Oil combined for a near perfect Gold storm. Overall trading with a low of USD$863.60 and high of USD$908 before ending the New York session at USD$898 an ounce.
Technical Analysis: Stocks And Greenback Down
Euro (EUR)
Euro – 1.4795 : Initial support at 1.4437 (Sept 22 low) followed by 1.4153 (Sept 19 low). Initial resistance is now located at 1.4811 (Sept 22 high) at followed by 1.4908 (Aug 22 high).
Yen (JPY)
Yen – 105.60 : Initial support is located at 105.15 (Sept 22 low) followed by 103.54 (Sept 16 low). Initial resistance is now at 107.47 (Sep 22 high) followed by 108.03 (Sept 19 high).
Pound Sterling (GBP)
Pound – 1.8560 : Initial support at 1.8265 (Sept 22 low) followed by 1.7916 (Sept 17 low). Initial resistance is now at 1.8642 (Sep 22 high) followed by 1.8795 (Aug 21 High).
Australian Dollar (AUD)
Australian Dollar – 0.8445 : Initial support at 0.8284 (Sept 22 low) followed by the 0.8011 (Sep 19 low). Initial resistance is now at 0.8519 (Sept 22 high) followed by 0.8534 (Sept 2 high).
Gold (XAU)
Gold – 905 : Initial support at 825 (Sept 19 low) followed by 774.4 (Sept 17 low). Initial resistance is now at 910.30 (Sep 18 high) followed by 925.70 (July 31 high).
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