Daily Outlook – Fresh Highs on EURO and Pound

U.S. Dollar Trading (USD) the dollar went to multi-month lows against most majors before market wide aggressive profit taking saw losses turned into gains. Weekly Jobless Claims continued to improve down to 445k vs. 453k previously. Stocks reversed sharply after the US market opened after the Dow Jones tested 11000. In US stocks, DJIA -19 points closing at 10948, S&P -2 points closing at 1157 and NASDAQ +3 points closing at 2383. Looking ahead, September Non Farm Payrolls forecast at +1k vs. -54k. September Unemployment Rate is forecast to rise to 9.7% vs. 9.6% previously.

The Euro (EUR) the Euro Broke above 1.4000 on strong US data but the market took profit aggressively back over 150 pips. The ECB held rates at 1.0% as expected and Trichet stated he expected slow growth in the 2^nd half and he supported the US strong Dollar policy. EUR/USD traded with a low of 1.3857 and a high of 1.4028 before closing at 1.3920. Looking ahead, August German Trade Balance is forecast at 12.3bn vs.12.7bn previously.

The Japanese Yen (JPY) Dollar weakness in Europe sent the USD/JPY back through year lows at Y82.80 to fall quickly Y82.10. The BOJ was noticeably absent and the market is now looking to test the central bank intervention policies. Overall the USDJPY traded with a low of 82.11 and a high of 83.03 before closing the day around 82.40 in the New York session.

The Sterling (GBP) broke above the key 1.6000 level but came under pressure quickly as sentiment in the market turned in the US session. The BoE held at 0.5% and no statement was released as expected. US FED officials stating that further QE was not certain and FED’s Hoenig calling for rate hikes added to the USD buybacks. Overall the GBP/USD traded with a low of 1.5826 and a high of 1.6017 before closing the day at 1.5880 in the New York session. Looking ahead, September PPI Output is forecast at 0.2% vs. 0.0% previously m/m.

The Australian Dollar (AUD) the Aussie was the strongest currency once again after extremely strong employment data helped lift the commodity currency. September Employment change was +49k vs. 20k forecast. Parity is on the cards now as the market still prices in further rate hikes this year. Overall the AUD/USD traded with a low of 0.9756 and a high of 0.9917 before closing the US session at 0.9820.

Oil & Gold (XAU) rallied to all time highs before crashing over $30 an ounce on USD demand and profit taking. Overall trading with a low of USD$1325 and high of USD $1364 before ending the New York session at USD$1334 an ounce. Fell under profit taking after significant gains in recent sessions. WTI Oil Closed -$1.79 at $81.44 a barrel.

TECHNICAL COMMENTARY

Euro – 1.3920

Initial support at 1.3799 (Oct 6 low) followed by 1.3637 (Oct 5 low). Initial resistance is now located at 1.4029 (Oct 7 High) followed by 1.4194 (Feb 3 high)

Yen – 82.40

Initial support is located at 79.75 (April 1995 low) followed by 75 (Round number). Initial resistance is now at 84.50 (Sep 27 high) followed by 85.93 (Sept 16 high).

Pound – 1.5875

Initial support at 1.5670 (Sept 30 low) followed by 1.5503 (Sept 21 low). Initial resistance is now at 1.6018 (Oct 7 high) followed by 1.6253 (76.4% retrace of 1.6878-1.4231).

Australian Dollar – 0.9820

Initial support at 0.9757 (Oct 7 low) followed by the 0.9542 (Oct 5 low). Initial resistance is now at 0.9918 (Oct 7 high) followed by 1.0000 (Parity).

Gold – 1334

Initial support at 1312 (Oct 5 low) followed by 1283 (Sept 28 low). Initial resistance is now at 1364 (Oct 7 High) followed by 1400 (Round Number).

Oil – 81.70

Initial support at 81.00 (Intraday Support) followed by 80.00 (Intraday Support). Initial resistance is now at 82.50 (Intraday Resistance) followed by 84.00 (Intraday Resistance).

Written by Anthony Darvall

Written by Easy-Forex

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