U.S. Dollar Trading (USD) we saw the Dollar enjoy another day of gains after strong July Industrial Output underpinned the growing belief that the US recovery was stabilizing. The USD/JPY broke above Y79 as the US Bond yields increased with the improving US data. July CPI was flat at 0.0% vs. 0.2% expected and leaves the door open for the FED to do more easing if requires later in the year. Looking ahead, Weekly US claims forecast at 365k vs. 361k previously. July House Permits forecast at 0.757mn vs. 0.76mn previously. Also July Building Permits forecast at 0.77mn vs. 0.76mn previously.
The Euro (EUR) the EUR/USD suffered at the hands of the stronger USD falling back below 1.2300 in a gentle move lower. EUR/JPY buying is supporting the major and if US stocks continue to rally it is hard to see the EUR/USD continued to be sold on strong the US data alone. The EUR/USD is not the preferred risk currency however so EUR/AUD and EUR/GBP both fell on the day. The Sterling (GBP) the GBP/USD was very quiet for a third day in very rare trade remaining close to the 1.5700 level. GBP/JPY buying and EUR/GBP selling is helping the major remain supported but traders will grow impatient and a breakout either way should happen before the weekend. July Claimant figures improved to -5.9k vs. 6k forecast and the Unemployment Rate dropped to 8.0% vs. 8.1% previously. Looking ahead, July Retail Sales forecast at -0.1% vs. 0.1% previously.
The Japanese Yen (JPY) is getting a lot of attention as the sleeping major of the FX market wakes up and begins to move. USD/JPY is grinding higher as the USD strength gives traders a reason to buy the major. The market has been very quiet for months and still structurally short so a large rally is on the cards if we can break above Y80 in the coming sessions. The Yen crosses are all severely deflated in historic terms and could also easily enjoy a move higher of 5-10 big figures if a new trend emerges. Australian Dollar (AUD) the AUD/USD fell to new week lows near 1.0460 overnight but was supported by strong US stocks and finished back at 1.0500 in mixed day of trade. The outlook is not clear but major downside will be hard without some US stock losses or a major downturn in the China economy. AUD/JPY is sitting just under Y83 and could break higher on the USD/JPY moves with Y85 and Y88 big targets over the last 12 months.
Oil & Gold (XAU) XAU/USD was volatile falling to $1590 before surging in the US session to $1606 after weak US CPI (Inflation) left the door open for possible FED Action. Recent strong US data however is creating downside pressure on the XAU/USD with the date of further expected US monetary Policy being pushed back later and later. OIL/USD returned to strength pushing up towards $95 in a strong day of trade.
US Data Improving, USD Gaining
U.S. Dollar Trading (USD) we saw
the Dollar enjoy another day of gains after strong July Industrial Output underpinned
the growing belief that the US recovery was stabilizing. The USD/JPY broke
above Y79 as the US Bond yields increased with the improving US data. July CPI was flat
at 0.0% vs. 0.2% expected and leaves the door open for the FED to do more
easing if requires later in the year. Looking ahead, Weekly US claims
forecast at 365k vs. 361k previously. July House Permits forecast at 0.757mn
vs. 0.76mn previously. Also July Building Permits forecast at 0.77mn vs. 0.76mn
previously.
The Euro (EUR) the EUR/USD
suffered at the hands of the stronger USD falling back below 1.2300 in a gentle
move lower. EUR/JPY buying is supporting the major and if US stocks continue to
rally it is hard to see the EUR/USD continued to be sold on strong the US data
alone. The EUR/USD is not the preferred risk currency however so EUR/AUD and
EUR/GBP both fell on the day. The Sterling (GBP) the GBP/USD was
very quiet for a third day in very rare trade remaining close to the 1.5700
level.
GBP/JPY buying and EUR/GBP selling is helping the major remain supported but
traders will grow impatient and a breakout either way should happen before the
weekend. July Claimant figures improved to -5.9k vs. 6k forecast and the
Unemployment Rate dropped to 8.0% vs. 8.1% previously. Looking ahead, July
Retail Sales forecast at -0.1% vs. 0.1% previously.
The Japanese Yen (JPY) is getting a lot of
attention as the sleeping major of the FX market wakes up and begins to move.
USD/JPY is grinding higher as the USD strength gives traders a reason to buy
the major. The market has been very quiet for months and still structurally short
so a large rally is on the cards if we can break above Y80 in the coming sessions.
The Yen crosses are all severely deflated in historic terms and could also
easily enjoy a move higher of 5-10 big figures if a new trend emerges. Australian Dollar (AUD) the
AUD/USD fell to new week lows near 1.0460 overnight but was supported by strong
US stocks and finished back at 1.0500 in mixed day of trade. The outlook is not
clear but major downside will be hard without some US stock losses or a major
downturn in the China economy. AUD/JPY is sitting just under Y83 and could
break higher on the USD/JPY moves with Y85 and Y88 big targets over the last 12
months.
Oil & Gold (XAU) XAU/USD was
volatile falling to $1590 before surging in the US session to $1606 after weak
US CPI (Inflation) left the door open for possible FED Action. Recent strong US
data however is creating downside pressure on the XAU/USD with the date of
further expected US monetary Policy being pushed back later and later. OIL/USD returned to strength
pushing up towards $95 in a strong day of trade.
Pairs to watch
USD/JPY new uptrend starting?
AUD/JPY the carry trade to return?
TECHNICAL COMMENTARY
Currency
Sup 2
Sup 1
Spot
Res 1
Res 2
EUR/USD
1.2220
1.2250
1.2285
1.2315
1.2350
USD/JPY
78.65
78.85
79.20
79.30
79.50
GBP/USD
1.5600
1.5645
1.5670
1.5700
1.5725
AUD/USD
1.0415
1.0450
1.0485
1.0510
1.0540
XAU/USD
1584.00
1590
1605
1618
1625
OIL/USD
92.50
93.00
94.40
95.00
96.00
By Anthony Darvall (TonyD)
Forex trading involves substantial risk of loss, and may not be suitable for everyone.
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