Profit Taking Stalls Rally

U.S. Dollar Trading (USD) weak economic data and a further pull back in Oil led the stock markets lower overnight but the selling was subdued and the sentiment remains positive. The USD continued to range trade against most majors with small gains against commodity currencies. In US stocks, DJIA -39 points closing at 10497, S&P -7 points closing at 1107 and NASDAQ -23 points closing at 2264. Looking ahead, Weekly Jobless Claims are forecast at 459k vs. 464k previously.

The Euro (EUR) the market orbited the 1.3000 level after failing to break resistance forming at 1.3050. German CPI remained low at 1.1% y/y in July but support was seen from a successful 13yr Portuguese Bond Auction. EUR/USD traded with a low of 1.2951 and a high of 1.3047 before closing at 1.2990. Looking ahead, July German Unemployment Rate forecast at 7.6% vs. 7.7%.

The Japanese Yen (JPY) USD/JPY found resistance above Y88 before easing back to mid Y87 on profit taking in the crosses. The Outlook remains murky with today US Unemployment data a possible catalyst for fresh direction. Overall the USDJPY traded with a low of 87.24 and a high of 88.14 before closing the day around 87.35 in the New York session.

The Sterling (GBP) broke above 1.5600 in Asia and but was quite range bound from then on in with GBP/JPY weakness stopped further gains and the market lacked little news to work with. Overall the GBP/USD traded with a low of 1.5544 and a high of 1.5641 before closing the day at 1.5595 in the New York session. Looking ahead, July Nationwide July House Prices forecast at -0.2% vs. 0.1% previously.

The Australian Dollar (AUD) came under heavy selling pressure after the Q2 CPI figures were unexpectedly weak at 0.6% vs. 1.1% Q/Q forecast. The AUD found support at 0.8930 but the bounce was limited and sluggish stocks and AUD/JPY weakness led a pullback in New York to day lows just above 0.8900. Overall the AUD/USD traded with a low of 0.8904 and a high of 0.9027 before closing the US session at 0.8955.

Oil & Gold (XAU) Gold consolidated recent losses sticking to a $10 range. Overall trading with a low of USD$1156 and high of USD $1166 before ending the New York session at USD$1163 an ounce. Oil struggled with weekly inventory data showing a 7.3m barrel surged. WTI Oil Closed -$0.30 at $78.80 a barrel.