US FED HOLDS RATES, AIG IN SPOTLIGHT
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) extremely volatile day of trading as the market recovered from the stock crash on Monday. Very skittish markets, news that American Insurance Group (AIG) was close to the brink sent stocks plummeting again before rumors swirled that the FED may intervene and provide loans to the financial giant. US August CPI was as expectation -0.1% M/M. The FOMC held rates at 2.00% citing concerns about downside risks to growth and Inflation. In the U.S. share markets, the NASDAQ was up 27.99 points (1.28%) and the Dow Jones was down 141 points (1.3%). Crude Oil closed down -$4.56 ending the New York session at $91.15 per barrel. Looking Ahead, August Building starts seen at .95M vs. .965M in July.
European Euro
The Euro (EUR) traded in a fairly tight range until the US session where Oil losses and USD buying forced the pair lower. As US held rates at 2.0% the EUR was sold heavily. EUR/JPY was volatile tracking the rollercoaster ride in equities. Stronger Euro-zone Zew Economic sentiment at 40.9 vs. 55 expected. Overall the EUR/USD traded with a low of 1.4073 and a high of 1.4323 before closing the day at 1.4140 in the New York session.
Japanese Yen (JPY)
The Japanese Yen (JPY) extended gains as risk aversion spiked on suggestions the AIG might go bankrupt, support at 104 gave way. When equities rebounded off lows and AIG loan rumors emerged, the USD/JPY traced higher. Overall the USDJPY traded with a low of 103.54 and a high of 106.69 before closing the day around 106.10 in the New York session. Looking ahead, BOJ rate decision today widely expected to remain at 0.50%.
Pound Sterling (GBP)
The Sterling (GBP) tracked the Euro closely losing heavily against the JPY as risk aversion spiked, before staging a recovery on AIG news. UK data confirmed high inflation with a Y/Y figure at 4.7% in August. Overall the GDP/USD traded with a low of 1.7733 and a high of 1.8011 before closing the day at 1.7870 in the New York session. Looking ahead, Claimant Count expected at 22.3K in August. Also released the ILO Unemployment expected at 5.4% in July.
Australian Dollar (AUD)
The Australian Dollar (AUD) fell below 0.8000 early in Asia as risk aversion soared and AUD/JPY plumbed new lows. Oil fell heavily and this left the commodity currency with a slightly offered tone. The rebound in US stocks saw a strong recovery into the days close. Overall the AUD/USD traded with a low of 0.7852 and a high of 0.8045 before closing the US session at 0.8000.
Gold
Gold (XAU fell in line with Oil and investors demand for cash and margin to cover losses in other markets. Overall trading with a low of USD$789 and high of USD$772 before ending the New York session at USD$780 an ounce.
Technical Analysis: US FED Holds Rates
Euro (EUR)
Euro – 1.4190 : Initial support at 1.4074 (Sept 16 low) followed by 1.3973 (Sept 12 low). Initial resistance is now located at 1.4481 (Sept 15 high) at followed by 1.4544 (Sept 4 high).
Yen (JPY)
Yen – 106.40 : Initial support is located at 103.54 (Sept 16 low) followed by 102.74 (May 22 low). Initial resistance is now at 106.91 (Sep 15 high) followed by 107.99 (Sept 12 high).
Pound Sterling (GBP)
Pound – 1.7870 : Initial support at 1.7707 (38.2 of 1.7446-1.8129) followed by 1.7542 (Sept 12 low). Initial resistance is now at 1.8012 (Sept 16 high) followed by 1.8128 (Sep 15 high).
Australian Dollar (AUD)
Australian Dollar – 0.8035 : Initial support at 0.7675 (Aug 20, 2007 low) followed by the 0.7616 ( Nov 13, 2006 low). Initial resistance is now at 0.8164 (76.4% of 0.7850-0.8263) followed by 0.8263 (Sept 15 high).
Gold (XAU)
Gold – 780 : Initial support at 764.69 (Sept 15 low) followed by 746.39 (Sept 12 low). Initial resistance is now at 805.15 (Sep 9 high) trendline resistance followed by 819.3 (Sep 5 high).
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