Currency Trading Summary August 27th

By: Hillel Fuld

U.S. Dollar Trading (USD)

had yet another day of varied trading with a positive trend in Asia balanced by a negative one in Europe then followed by strength in New York. Chinese stocks plummeted over 5% at one point in Asia before paring losses going into Europe. US house prices showed extremely strong numbers (+1.4%) and Consumer Confidence (54 vs. 47 previously) led to new lows for the Dollar before a crash in Oil brought on a rally toward the end of the US session. Crude Oil closed down $2.32 at $72.05. In US share markets, S&P ended +2.3 points (0.24%) at 1028, NASDAQ ended +6.25 points (0.31%) at 2024 and DOW JONES ended +30 points (+0.32%) at 9539. Looking to the future, the July Durable Goods forecast is at 3% vs. -2.2% previously. Also released New Home Sales forecast at 0.39m vs. 3.84M previously and Crude Oil inventories forecast at -2.1mn vs. -8.4mn previously.

The Euro (EUR)

hit a support line at 1.4260 before rallying to 1.4360 in Europe maxing out and falling to the 1.4300 level it has been touching for the last 3 days. German GDP was confirmed at +0.3% in Q2. ECB Stark mentioned no sign of deflation and lack of mandate on unemployment. Overall the EUR/USD traded at a low of 1.4253 and a high of 1.4363 before closing at 1.4290. Looking ahead, August German IFO Business climate forecast at 88.9 vs. 87.3 previously.

The Japanese Yen (JPY)

continued its trend and strengthened on fresh China fears testing 94 in Asia before bouncing back with improved sentiment in Europe and trading at day lows following US data. AUD/JPY and EUR/JPY tracked US stocks but came under pressure with the crash of oil. Overall the USDJPY traded with a low of 93.79 and a high of 94.64 before closing the day around 94.00 in the New York session.

The Sterling (GBP)

was surprisingly weak with the latest rallys being smaller than dips enabling the pound test new lows. A brief rally in Europe served as better levels to sell and the pair touched 1.6330 supports later in the day. EUR/GBP continued into the 0.8700's as the Pound weakened across the board. Overall the GBP/USD traded with a low of 1.6309 and a high of 1.6445 before closing the day at 1.6330 in the New York session.

The Australian Dollar (AUD)

broke the 0.8400 line to test Monday's highs before slumping on Oil moves to 0.8350 supports. The outlookvaries and the currency is respecting ranges quite well. Further gains might come as a result of more substantial USD weakness and specifically against the Euro. Overall the AUD/USD traded with a low of 0.8332 and a high of 0.8428 before closing the US session at 0.8365.

Gold (XAU)

continued its recovery from Monday's sharp drop and went for above $950 an ounce as Oil tested $75 a barrel before tracking the subsequent crash falling over $10 an ounce. Overall trading with a low of USD$942 and high of USD$954 before ending the New York session at USD$947 an ounce.