Daily Outlook – Stocks Take Break from Rally
Wednesday, October 27th, 2010U.S. Dollar Trading (USD) the market is readjusting its expectations of FED easing to a lower amount and this is helped the Dollar to rally and inducing stocks markets to pull back. September Durable Goods Orders gained 3.3% vs. 2% excepted. In US stocks, DJIA -43 points closing at 11126, S&P -3 points closing at 1182 and NASDAQ +5 points closing at 2503. Looking ahead, Weekly Jobless Claims are forecast at 453k vs. 452k previously.
The Euro (EUR) suffered from the resurgent USD falling steadily all day hitting lows in Europe on French Terrorism fears and residual Greece/Portuguese Debt Concerns. EUR/USD traded with a low of 1.3733 and a high of 1.3880 before closing at 1.3775. Looking ahead, October German Unemployment is forecast at 7.4% vs. 7.5% previously.
The Japanese Yen (JPY) was weaker against the USD but gained against risk currencies as stock markets turned red. Y82 capped in New York but a second test could happen in Asia if the market feels the downside is over for the time being with the market positioned heavily short. Overall the USDJPY traded with a low of 81.36 and a high of 82.01 before closing the day around 81.70 in the New York session. Looking ahead, September Retail Sales is forecast at 3% vs.4.3% previously.
The Sterling (GBP) fell against the Dollar but held up better than most as the residual effects of a strong GDP print echoed throughout the UK media today. Talk that the economy was not going into a double dip help limit expectations of the BOE expanding its asset purchase program next month. Overall the GBP/USD traded with a low of 1.5728 and a high of 1.5869 before closing the day at 1.5785 in the New York session. Looking ahead, October CBI Distributive Trades is forecast at 35 vs. 49 previously.
The Australian Dollar (AUD) the big mover on the day as Q3 CPI came in weaker than expected at 07% Q/Q. vs. 0.9% forecast. The weakness was compounded by US stock market weakness which sent the Aussie for a test of 0.9650. Overall the AUD/USD traded with a low of 0.9651 and a high of 0.9865 before closing the US session at 0.9720. UPDATE RBNZ HOLD AT 3.0%
Oil & Gold (XAU) fell back on lower US QE2 expectations. Overall trading with a low of USD$1318 and high of USD $1344 before ending the New York session at USD$1327 an ounce. Oil fell back slightly but bounced off lows. WTI Oil Closed -$0.30 at $82.00 a barrel.
TECHNICAL COMMENTARY
| Currency | Sup 2 | Sup 1 | Spot | Res 1 | Res 2 |
| EUR/USD | 1.3560 | 1.3637 | 1.3775 | 1.4159 | 1.4373 |
| USD/JPY | 79.75 | 80.41 | 81.70 | 82.01 | 83.03 |
| GBP/USD | 1.5503 | 1.5606 | 1.5780 | 1.5899 | 1.6107 |
| AUD/USD | 0.9542 | 0.9652 | 0.9725 | 1.0004 | 1.0166 |
| XAU/USD | 1283.00 | 1312 | 1327 | 1349 | 1387 |
| OIL/USD | 80.00 | 81.00 | 82.00 | 82.50 | 84.00 |
Euro – 1.3775
Initial support at 1.3637 (Oct 5 low) followed by 1.3560 (Sept 30 low). Initial resistance is now located at 1.4159 (Oct 15 High) followed by 1.4373 (76.4% retrace of 1.5144-1.1877)
Yen – 81.70
Initial support is located at 80.41 (Oct 25 low) followed by 79.75 (Apr 1995 low). Initial resistance is now at 82.01 (Oct 13 high) followed by 83.03 (Oct 7 high).
Pound – 1.5780
Initial support at 1.5606 (61.8% retrace of 1.5297-1.6107) followed by 1.5503 (Sept 21 low). Initial resistance is now at 1.5899 (Oct 20 high) followed by 1.6107 (Oct 15 high).
Australian Dollar – 0.9725
Initial support at 0.9652 (Oct 27 low) followed by the 0.9542 (Oct 5 low). Initial resistance is now at 1.0004 (Oct 15 high) followed by 1.0166 (0.8067 plus 0.618 of 0.6009-0.9406).
Gold – 1327
Initial support at 1312 (Oct 5 low) followed by 1283 (Sept 28 low). Initial resistance is now at 1349 (Oct 21 High) followed by 1387 (Oct 14 high).
Oil – 82.00
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
