Stocks Rally, USD Sold after US FED Meeting
U.S. Dollar Trading (USD) the US FED stole back the limelight from the Europeans overnight with the FOMC statement suggesting rates will be kept on hold at exceptionally low levels until 2014. The effect was immediate with stocks rallying back from losses to solid gains and the USD being sold across the board. In US stocks, DJIA +81 points closing at 12757, S&P +11 points closing at 1326 and NASDAQ +31points closing at 2818. Looking ahead, Weekly Jobless Claims forecast at 370k vs. 352k previously. Also, December New Home Sales forecast at 0.32mn vs. 0.315mn previously.
The Euro (EUR) with the debt standoff continuing overnight between private debt holders and the EU finance ministers the Euro slumped to day lows under 1.2950. The mood was reversed though with the FOMC sinking the Dollar and the EUR/USD breaking above 1.3100. UPDATE GERMAN February Consumer Sentiment forecast at 5.9 vs. 5.6 previously.
The Japanese Yen (JPY) the USD/JPY continued to push higher breaking above Y78 and looked very strong until the support was pulled by the FOMC statement. The crosses continued to rally however and the drop in the major was not significant. Further rallies in risk would hurt the Yen and could see more pressure to the topside on EUR/JPY and GBP/JPY.
The Sterling (GBP) the GBP/USD was able to reverse some losses in Europe to gain against the USD to fresh month highs above 1.5650. The EUR/GBP however continued to rally as the Euro recovery outpaced the Pound. Some are concerned the BOE could expand the Asset purchase program in the UK which is similar to the US QE. The Q4 GBP drop to -0.2% vs. -0.1% forecast added to this speculation. Looking ahead, January CBI Distributive Trade forecast at -6 vs. 9 previously.
Australian Dollar (AUD) the Aussie had an eventful day able to shake off a drop in inflation pressures to rally in Asia before dipping in Europe. The US session saw a massive rally to new month and 2012 highs above 1.0600 and is opening up more significant gains to the topside. The relentless rise of the Aussie this year has been on the back of strong stock market gains and heavy real money investment in the Asian commodity powerhouse. Q4 CPI at 3.1% vs. 3.5% previously. Looking ahead, Australian Day Holiday Thursday.
Oil & Gold (XAU) Gold surged on the FOMC statement breaking above $1700 in dramatic fashion late in the day. Oil tested $100 once again but was not in the mood to break above the key psychological level.
Pairs to watch
EUR/USD
USD/JPY Broken higher to test Y78?
TECHNICAL COMMENTARY
|
Currency |
Sup 2 |
Sup 1 |
Spot |
Res 1 |
Res 2 |
|
EUR/USD |
1.2734 |
1.2931 |
1.3170 |
1.3197 |
1.3386 |
|
USD/JPY |
76.00 |
76.58 |
77.45 |
78.29 |
78.98 |
|
GBP/USD |
1.5416 |
1.5517 |
1.5705 |
1.5728 |
1.5800 |
|
AUD/USD |
1.0428 |
1.0573 |
1.0680 |
1.0700 |
1.0753 |
|
XAU/USD |
1681.00 |
1700 |
1715 |
1724 |
1750 |
|
OIL/USD |
98.50
|
100.00 |
100.15 |
101.50 |
103.00 |
Euro 1.3170
Initial support at 1.2931 (Jan 25 low) followed by 1.2734 (Jan 18 low). Initial resistance is now located at 1.3197 (Dec 21 high) followed by 1.3386 (Dec 12 high)
Yen 77.45
Initial support is located at 76.58 (Nov 18 low) followed by 76.00 (Big Figure). Initial resistance is now at 78.29 (Nov 29 high) followed by 78.98 (Nov 1 high).
Pound 1.5705
Initial support at 1.5517 (Jan 23 low) followed by 1.5416 (Jan 19). Initial resistance is now at 1.5728 (Dec 22 high) followed by 1.5800 (Big Figure Resistance).
Australian Dollar 1.0680
Initial support at 1.0573 (Jan 23 high) followed by the 1.0428 (Jan 4 low). Initial resistance is now at 1.0700 (Big figure resistance) followed by 1.0753 (Sept 1 high).
Gold 1715
Initial support at 1700 (Big figure resistance) followed by 1681 (Jan 23 high). Initial resistance is now at 1624 (Dec 9 high) followed by 1750 (Big level resistance).
Oil 100.15
Initial support at 100.00 (Intraday Support) followed by 98.50 (Intraday Support). Initial resistance is now at 101.50 (Intraday resistance) followed by 103.00 (Intraday Resistance).
Written by Anthony Darvall
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