USD REVERSES EARLY DIRECTION TO GAIN ON BAILOUT NEWS
U.S. Dollar Trading (USD)
U.S. Dollar Trading (USD) after being sold off initially in the Asian session the USD reversed direction in the European and US sessions as the Government Bailout of Fannie Mae and Freddie Mac was digested. Year highs on the Dollar Index were hit as Oil slumped from highs on speculation OPEC will not cut production. In the U.S. share markets, the NASDAQ was up 13 points (0.62%) and the Dow Jones was up 289 points (2.58%). Crude Oil closed up $0.11 ending the New York session at $106.34 per barrel. Looking Ahead, August Pending Home Sales are seen -1% down from the surprising +5.3% in July.
European Euro
The Euro (EUR) Initial Asian gains were reversed brutally in Europe and continued into the US session. Year lows on the Euro were hit below 1.4100 as Oil slumped to $104.70 and EUR/JPY came under heavy selling pressure. Overall the EUR/USD traded with a low of 1.4055 and a high of 1.44429 before closing the day at 1.4130 in the New York session. Looking Ahead, August Trade Balance is forecast at 17.5 Billion slightly weaker than 18.1 Billion.
Japanese Yen (JPY)
The Japanese Yen (JPY) was initially the major loser from the GSE bailout plan but going into the European session heavy cross selling started to pare the YEN losses with most trading back at opening levels and the JPY regaining the initiative. Trading was extremely volatile with the EUR/JPY trading in a 400 pip range. Overall the USDJPY traded with a low of 107.77 and a high of 109.07 before closing the day around 108.30 in the New York session.
Pound Sterling (GBP)
The Sterling (GBP) the reversal in cable was pronounced losing over 400 pips from the day highs as UK data came in weak. August PPI fell more than expected at -2.0% vs. forecasts of -1.2% and showed inflation is moderating opening up the possibility of early rate cuts to prop up the stalling economy. Overall the GDP/USD traded with a low of 1.7473 and a high of 1.7975 before closing the day at 1.7547 in the New York session. Looking ahead, July Industrial Orders are expected to fall -0.1% and the August Manufacturing production is expected to fall -1.1% vs. -1.3% in July.
Australian Dollar (AUD)
The Australian Dollar (AUD) surged on AUD/JPY buying early in Asia but reversed direction as Oil and the Euro fell heavily during the rest of the day and JPY support was removed. RBA Governor Stevens spoke earlier in the day and commentated that the falling AUD will not hamper its efforts to combat inflation. Overall the AUD/USD traded with a low of 0.8077 and a high of 0.8353 before closing the US session at 0.8127. Looking ahead, Australia July Retail Sales are expected to rebound to +0.5% from the -1.0% in June. Also released the July NAB Business Confidence Index.
Gold
Gold (XAU) tracked Oil gaining early before slumping to the $800 support in Late US trade. Overall trading with a low of USD$797.50 and high of USD$818 before ending the New York session at USD$803 an ounce.
Technical Analysis: USD Reverses Early Direction
Euro (EUR)
Euro – 1.4120 : Initial support at 1.4054 (Sep 8 low) followed by 1.4015 (Oct 10 2007 low). Initial resistance is now located at 1.4429 (Sept 8 high) at followed by 1.4545 (Sept 4 high).
Yen (JPY)
Yen – 108.15 : Initial support is located at 107.72 (Sep 8 low) followed by 105.53 (Sep 5 low). Initial resistance is now at 109.48 (Sep 2 high) followed by 109.57 (Aug 29 high).
Pound Sterling (GBP)
Pound – 1.7570 : Initial support at 1.7472 (Sept 8 low) followed by 1.7371 (Apr 5, 2006 low). Initial resistance is now at 1.7976 (Sep 8 high) followed by 1.8003 (Sep 2 high).
Australian Dollar (AUD)
Australian Dollar – 0.8150 : Initial support at 0.8076 (Sept 8 low) followed by 0.8030 (Sep 5 low). Initial resistance is now at 0.8353 (Sept 8 High) followed by 0.8394 (Sept 4 high).
Gold (XAU)
Gold – 802 : Initial support at 789.74 (Sept 3 low) followed by 783.35 (Aug 15 low). Initial resistance is now at 819.65 (Sep 5 high) followed by 836.5 (Sep 1 high).
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