FOMC, Australian rate decisions in Focus.

U.S. Dollar Trading (USD) better than expected data and a large sell off in Oil allowed the Dollar to gain the upper hand leading into the FOMC announcement. June Core PCE which measures consumer inflation climbed faster than expected to 0.3% vs. 0.2% forecasted. Personal income also rose 0.1% vs. expectations of a -0.2% slide. Factory Orders for June beat forecasts at 1.7% its fastest rate since December as rising food and energy prices surged. In the U.S. share markets, the NASDAQ was down 25 points (-1.10%) and the Dow Jones was down -42 points (-0.37%). Crude Oil closed down $3.69 ending the New York session at $121.41 per barrel. Looking ahead, July Non-manufacturing ISM Composite is expected at 48.5. The US FED meets tonight to discuss interest rates, widely expected to remain at 2.0%.

The Euro (EUR) traded in a tight range as markets wait for the interest rate decision during the week with the US on Tuesday and ECB on Thursday. Small gains on the back of higher than expected Eurozone PPI in June of 0.9% m/m, 8% y/y were relinquished by large falls in Crude Oil.  Overall the EUR/USD traded with a low of 1.5565 and a high of 1.5631 before closing the day at 1.5565 in the New York session. Looking ahead, July Eurozone PMI service’s is forecast 48.3. Also released June Retail Sales expected at -0.6% m/m and -1.2% y/y.

The Japanese Yen (JPY) lost ground against most currencies as strong buying of the EUR/JPY supported the crosses. AUD/JPY and NZD/JPY recovered off the lows from last week as markets saw the sell off a little overdone. Overall the USDJPY traded with a low of 107.47 and a high of 108.29 before closing the day around 108.25 in the New York session.

The Sterling (GBP) was the big loser of the day as economic concerns mounted and expectations of rates cuts intensified. Construction PMI in July dropped again to 36.7 from 38.8 in June. Overall the GBP/USD traded with a low of 1.9601 and a high of 1.9761 before closing the day at 1.9625 in the New York session.  Looking ahead, July PMI services forecast at 46.7 and June Manufacturing Production expected flat 0.0%.

The Australian Dollar (AUD) an initial bounce throughout the Asian and European session was unable to be maintained as Gold and Oil fell considerable and the USD strengthened during the US session. Home prices fell -0.3% in June better than -1.1% expected. Overall the AUD/USD traded with a low 0.9285 and a high of 0.9347 before closing the US session at 0.9295. Looking ahead, RBA meets today to discuss interest rates, widely believed to hold at 7.25% but with a risk of cut or dovish statement given recent economic data.

Gold (XAU) fell through $900 an ounce as Oil plunges lower in New York. Speculation of a peak in commodities prices has kept Gold under Pressure. Overall trading with a low of USD$895.70 and high of USD$915.20 ending the New York session at USD$896 an ounce.

TECHNICAL COMMENTARY
 

Euro – 1.5570

Initial support at 1.5515 (Aug 1 low) followed by 1.5493 (June 30 low). Initial resistance is now located 1.5632 (Aug 4 high) at followed by 1.5710 (76.4% retracement of the 1.5303 to 1.6038 advance).

Yen – 108.20

Initial support is located at 107.29 (Aug 1 low) followed by 106.58 (July 25 low). Initial resistance is now at 108.38 (July 31 high) followed by 108.59 (June 16 high).

Pound – 1.9620

Initial support at 1.9555 (76.4% retracement of 1.9363 to 2.0157) Initial resistance is now at 1.9762 (Aug 4 high) followed by 1.9843 (Aug 1 high).

Australian Dollar – 0.9295

Initial support at 0.9286 (Aug 4 low) followed by 0.9276 (May 2 low). Initial resistance is now at 0.9419 (Aug 1 high) followed by 0.9476 (July 31 High).

Gold – 895

Initial support at 894.25 (Jul 31 low) followed by 888.68 (76.4% retracement of the 858.00 to 988.00 advance). Initial resistance is now at 925.2 (July 31 high) followed by 935.30 (July 25 high).