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The DXY index (75.425) is down again overnight

TJ Marta from The Overnight Express at 10/15/09


The key themes overnight were USD down (dovish FOMC), JPY up (the Fujii “Flip-Flop”), GBP up (potential pause in BoE asset purchases), AUD (hawkish RBA), and NZD (strong data).

DXY – Falling out of bed – The DXY index (75.425) is down again overnight, breaking decisively to a new low since Aug ’08 after hesitating around 76 since mid-Sep. Support lies at 75.211 (Oct 15 low), 75.165 (76.4% retracement of Mar ’08 to Mar ’09 rally, and 75.00 (psychological). Resistance lies at 76.668 (Oct 12 high), 77.475 (Oct 2 high), 77.688 (Dec ’08 low) and 78.00 (psychological). Currently, DXY correlates most strongly with gold, crude oil, and the CRB index (all negative). The S&P 500 is less significant (negative).

EUR/USD – Slipping, but another new high. EUR/USD (1.4922) is down overnight, but only after reaching a new high since Aug ’08. Resistance lies at 1.4968 (Oct 15 high), 1.50 (psychological) and 1.5083 (Aug 11, ’08 high).
Support lies at 1.4742 (uptrend off Oct low), 1.4481 (Oct 2 low) and 1.4447 (Aug high). The short-term correlates for EUR/USD are crude oil (positive) and, to a less extent, the S&P 500 (positive).

GBP/USD – Spike! Cable (1.6233) bounced sharply overnight. Technical resistance lies at 1.6239 (Oct 15 high), 1.6468 (Sep 23 high), 1.6742 (Sep 11 high), 1.6743 (Jun high) and then 1.7043 (Aug high). Support lies at 1.5708 (Oct13 low) and then 1.55 (psychological). The strongest correlates over the past two months for GBP/USD have been the DXY (negative), EUR/USD (positive). Crude oil (positive) and the S&P 500 (positive) are still significantly correlated, but the relationships have waned.

USD/JPY – Back above 90. USD/JPY (90.02) is up strongly overnight on the Fin Min’s “flip-flop”. Resistance now lies at 90.46 (Oct 12 high), 92.53 (Sep 21 high) and 93.30 (Sep 7 high). Support lies at 88.01 (Oct 7 low) and then 87.13 (Jan ’09 low). The correlations of USD/JPY with the U.S. 10yr yield and U.S.-JP 10yr spread remain strongly significant but are slipping.

USD/CAD – Rebounds after new low since Jul ’08. USD/CAD (1.0262) rebounded overnight, but only after trading down to a new low since Jul ’08. Support lies at 1.0207 (Oct 15 low) and then parity. Resistance lies at 1.0592 (Sep low), 1.10 (psychological) and then 1.1125 (Aug high). In terms of other assets correlating with USD/CAD, watch the CRB, and crude oil (both negative). The USD index (positive) and SPX (negative) are also strongly significant.

AUD/USD – New high since Aug ’08. AUD/USD (0.9200) is up overnight and traded another new high since Aug ’08. Technical resistance for AUD/USD exists at 0.9228 (Oct 15 high) and 0.9275 (May ’08 low). Support lies at 0.8859 (Oct 1 high), 0.8570 (Oct 2 low), 0.8545 (Sep 14 low) and 0.8478 (Aug high). AUD/USD has correlated most strongly with equities (S&P 500, positive) and commodities (CRB, positive). The correlation with gold (positive) is slipping.

NZD/USD – New high since Jul ’08. NZD/USD (0.7460) is up overnight and has traded a new high since Jul ’08.
Resistance lies at 0.7487 (Oct 15 high) and 0.7500 (psychological). Support lies at 0.7255 (Oct 12 low), 0.7079 (Oct2 low), 0.7000 (psychological) and 0.6897 (Aug high). The strongest correlates for NZD/USD during the past two months have been AUD/USD (positive), stocks (S&P 500, positive), the USD index (negative), and commodities (CRB index, positive).

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