$70 Oil sparks hope for US Consumers spending

gave up some of the impressive gains seen during the crash yesterday as the sky didn’t fall in and traders pared back their positions. US stocks mounted a late rally on the back of Oil at $70 per barrel. Data was mixed with the weekly jobless claims falling -16K to 461K but Industrial Production plunging -2.8% in September.  In the U.S. share markets, the NASDAQ was up 89 points (5.49%) and the Dow Jones was up 401 points (4.68%). Crude Oil closed down -$4.69 ending the New York session at $69.85 per barrel. Looking ahead, September Building Permits are expected at 8.5 vs. 8.57 previously. October Michigan Sentiment is expected at 65.5 vs. 70.3.

The Euro (EUR) helped off lows as stocks headed higher but was unable to make substantial gains as Oil continued its sell off. Weak US data helped to provide a floor. Overall the EUR/USD traded with a low of 1.3348 and a high of 1.3538 before closing the day at 1.3450 in the New York session. Looking ahead EU trade Balance seen at -6 Billion in August.

The Japanese Yen (JPY) gave back a lot of yesterday’s stock crash inspired gains as market fear mellowed and some bargain hunting on the crosses emerged. NZD/JPY and AUD/JPY were significant gainers. Overall the USDJPY traded with a low of 99.32 and a high of 101.73 before closing the day around 101.60 in the New York session.

The Sterling (GBP) bounced of session lows with the Dow and managed to stage a decent recovery as GBP/JPY buying underpinned the rise. Some decent selling on the EUR/GBP pushed the pair below 78 and also helped to underpin the cable. Overall the GDP/USD traded with a low of 1.7161 and a high of 1.7355 before closing the day at 1.7340 in the New York session.  

The Australian Dollar (AUD) staged a short squeeze recovery during Asia surprising many analysts as the lead from Wall St. was terrible and many were expecting extreme weakness. The recovery turned into a rally and the US stock surge allowed the AUD to shrug off the continued slump in commodities. Overall the AUD/USD traded with a low of 0.6560 and a high of 0.6944 before closing the US session at 0.6900. looking ahead, Q3 Import prices expected at 0.5%.

Gold (XAU) tracked Oil lower targeting the $800 support and key level as safe haven buying was suspended on the US stock rally. Overall trading with a low of USD$785 and high of USD$848 before ending the New York session at USD$806 an ounce.

TECHNICAL COMMENTARY

 

Initial support at 1.3347 (Oct 16 low) followed by 1.3260 (Oct 13 trend low). Initial resistance is now located at 1.3538 (Oct 16 high) at followed by 1.3690 (Oct 9 high).

Yen – 101.65

Initial support is located at 99.27 (Oct 16 low) followed by 97.91 (Oct 10 trend low). Initial resistance is now at 102.16 (Oct 15 high) followed by 103.07 (Oct 14 high).

Pound – 1.7320

Initial support at 1.7136 (Oct 16 low) followed by 1.7106 (61.8% retrace 1.6781-1.7631). Initial resistance is now at 1.7656 (Oct 8 high) followed by 1.7725 (Oct 9 high).

Australian Dollar – 0.6910

Initial support at 0.6496 (Oct 16 low) followed by the 0.6331 (Oct 10 low). Initial resistance is now at 0.7076 (Oct 15 high) followed by 0.7239 (Oct 14 high).

Gold – 805

Initial support at 774.40 (Sept 17 low) followed by 764.6 (Sept 15 low). Initial resistance is now at 856 (Oct 15 high) followed by 972 (Oct 13 high).