Market Insights

Headlines

25 July 2011

Markets shocked lower in early trading after US debt negotiations break down over weekend US dollar weakens significantly, especially against safe havens like JPY and CHF Gold surges to all-time of 1623 this morning on US debt fears AUD sharply lower as risk currencies sold in early trading US equity futures open Monday with 200-point fall Looking forward, debt talks crucial as White House warns of stressful times for markets

AUD/USD
Resistance 1.1000 Support 1.0800 Market Sentiment

Bullish

Its going to be a tricky start to the week with market action likely to be driven by the ongoing US debt negotiations. Markets have started the week on the back foot with the Aussie falling about 30 pips on the open before stabilising around 1.0820. Traders will be looking to take new long positions while we hold above 1.0800, but a fall below this level is clearly bearish.

XAU/USD
Resistance 1625 Support 1610 Market Sentiment

Bullish Golds had an unbelievable start to the week as it surged above the all-time highs at 1610 and is now bumping up against 1625. Golds move is being driven by worries about the US dollar as investors seek a safer alternative to the struggling greenback. Any pullback to 1610 will be seen as a buying opportunity, while traders are also likely to take long positions on any new breaks to record highs.

EUR/USD
Resistance 1.4450 Support 1.4280 Market Sentiment

Bearish The Euro is having trouble pushing above resistance at 1.4450, while the US dollars woes are hitting the risk currencies like the EUR. This is resulting in selling pressure on the EUR/USD and traders are looking to take new shorts around 1.4400/50 in expectation of a move back to 1.4280. A clear break of 1.4450 changes the view to bullish.

GBP/USD
Resistance 1.6350 Support 1.6200 Market Sentiment

Bullish No real change on the GBP/USD with the pair still seeing resistance at 1.6350 and support at 1.6200. Like most other currencies this morning, the GBPs fate will be determined by the US dollar. The best strategy is to focus on the important technical levels and potentially wait for a break above 1.6350.

USD/JPY
Resistance 78.80/79.00 Support 78.20 Market Sentiment

Bearish The dollar-yen should be one of the better pairs to play as the US debt negotiations drag on as the USD/JPY traditionally behaves in a rational manner in these situations: that is, the USD/JPY will usually fall on the back of US dollar negative news. At the moment, the line in the sand is 78.20 and a break below this level will be bearish.

SILVER
Resistance 40.80 Support 38.20 Market Sentiment

Bullish Silver should benefit in much the same way as gold as traders look for safe haven alternatives to the US dollar. In the near term, the market will be waiting for a break of 40.80 to trigger new long positions. Dont forget that any good news of the USs debt situation is likely to see selling across both silver and gold.

USD/CHF
Resistance 82.80 Support 80.80 Market Sentiment

Bearish The USD/CHF remains one of the most closely watched pairs as traders use this pair to take advantage of the US debt woes. The pair was sent sharply lower this morning and this sets up a potential break below 80.80. Any break below 80.80 is likely to see further selling.

GBP/JPY
Resistance 128.20 Support 127.00 Market Sentiment

Rangebound

The GBP/JPY remains trapped under resistance at 128.20, but the pair is increasingly looking as if it is trying to break higher. In the near term, traders are likely to continue and work the short side, but a clear break higher above 128.20 could generate some buying interest.

AUD/JPY
Resistance 85.20 Support 83.20/50 Market Sentiment

Bearish The AUD/JPY continues to trade within the broader consolidation pattern with support at 83.20/50 and resistance at 85.20. If further bad news develops from the US, the market will expect to see the AUD/JPY see further selling pressure and this could set up a move back to the lower end of the range.

OIL
Resistance 100 Support 98.00 Market Sentiment

Rangebound

Crude remains unable to push above 100 and the market will be looking to sell crude on any move back toward this level of resistance. Support is seen at 98.00. A falling US dollar should be supportive of oil, but markets might place greater focus n the overall impact a US default might have on global economic growth.

Economic Calendar
F/Cast
AUD: PPI q/q JPY: BoJ Shirakawa speaks AUD: RBA Edey speaks 0.6%

Last
1.2% GBP: BBA Mortgage Approvals EUR: Belgium Business Climate

F/Cast
31.3k -2.2

Last
30.5k -1.1

Forex Capital Trading Ph 1800 ForexCT

The information contained in this communication is intended for informational purposes only and is not by any means to be considered "research". Forex Capital Trading Ltd and all of its subsidiaries and affiliates (the Company) endeavour to ensure that the information provided in this communication is complete and correct but do not guarantee its accuracy or reliability. Information, data and opinions may change without notice so readers must check any material item(s) with an advisor before making any trading decisions. The Company is not obliged to update you if the information or data changes. The Company does not provide investment advice or make any recommendations to investors or traders. The information and analysis in this communication is derived from a variety of sources and using methods that a reasonable person would deem to be reliable. However, the Company cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis or information. We will not be held liable for the consequence of reliance upon any opinion, statement or omission contained herein. Investors should consult with a certified financial advisor before engaging in any trading activities. AFSL306400