Dollar Surges After ECB Pulls Future Rate Hikes Off The Table

U.S. Dollar Trading (USD) experienced an extremely volatile day hitting multi-month lows against Euro before gaining heavily as the large sell off in the Euro dragged the USD up against all the Majors. US data was weak but not disastrous with the highly anticipated Nonfarm Payrolls (NFP) coming in at -62K in June only slightly weaker median forecast of -60K. More concerning for the US economy was the ISM Non-Manufacturing index falling to 48.2 in June from 51.7 in May. The lowest forecast in a Reuter's poll of economists was 48.5 so the markets were surprised initially sending shares sharply lower. In U.S. share markets, the NASDAQ was down 6 points (-0.27%) and the Dow Jones was up 73 points (0.65%). Crude Oil closed up $1.72 ending the New York session at $145.29 per barrel. Looking ahead, today is a public holiday in the US for July 4th Independence Day.

The Euro (EUR) experienced the largest loss against the dollar in two months on ECB President Trichet's neutral Interest rate comments. After raising the Interest Rate to 4.25% from 4.00% the markets were pricing in the possibility of further rate rise. Trichet stated the ECB had 'no bias' on future interest rates. In other economic news Eurozone Retail Sales gained to 1.2% in May from -0.6% in April. Overall the EUR/USD traded with a low of 1.5682 and a high of 1.5910 before closing the day at 1.5700 in the New York session. Looking ahead, May Industrial Orders expected to gain to 0.7% y/y from -1.8% in April.

The Japanese Yen (JPY) had a mixed day with gains in the USD/JPY been countered by heavy EUR/JPY sales and fairly flat crosses. A mild recovery in equities helped to cap recent risk aversion flows. Overall the USDJPY traded with a low of 105.77 and a high of 106.93 before closing the day around 106.72 in the New York session.

The Sterling (GBP) was under pressure during the European session as the June Services PMI came in at 6 ½ years lows of 47.1 much lower then forecast's of 49.5. EUR/GBP briefly broke above the key .8000 before Trichet's comments sent the Euro lower. Overall the GBP/USD traded with a low of 1.9800 and a high of 1.9937 before closing the day at 1.9941 in the New York session.

The Australian Dollar (AUD) came under pressure from the broadly stronger USD and heavy Gold sales but was supported by strong cross buying especially against the JPY and EUR. May's Trade Balance at -957 Million deficit while April's Trade Balance was revised up to a 12 Million surplus. Overall the AUD/USD traded with a low of 0.9583 and a high 0.9633 before closing the day at 0.9600.

Gold (XAU) came under heavy selling pressure falling over $18 in 15 minutes as large stops fuelled downside momentum during the ECB press conference. Overall trading with a low of USD$927 and high of USD$947 ending the New York session at USD$934 an ounce

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