Closed in NY at 1 6320 with initial sales into early Asia taking rate back to 1 6316

GBP/USD

Range: 1.6318 – 1.6408

Support: 1.6300

Resistance: 1.6420

Closed in NY at $1.6320, with initial sales into early Asia taking rate back to $1.6316. Strong cross yen demand post Tokyo fix provided the reversal momentum, cable trading off lows and trading through resistance at $1.6450, which triggered stops above here and above $1.6364 taking the rate on to a high of $1.6394. However, rally lagged euro-dollar’s stronger move and allowed euro-sterling to push up from early lows of stg0.8760 to stg0.8788, with the cross pressing on highs into early Europe. Cable was seen meeting decent resistance on approach to recent highs at $1.6403, though pullbacks so far have remained supported above $1.6370. Rate currently trades around $1.6380. Offers seen placed between $1.6400/10, a break to open a move toward $1.6430 ahead of stronger interest between $1.6450/60. UK input/output prices due for release at 0830GMT while US calendar looking light.

EUR/USD

Range: 1.4292 – 1.4405

Support: 1.4200

Resistance: 1.4430

Concern over a possible US government shutdown, due to ongoing failure to agree the Budget, was seen weighing heavily on the dollar and added to euro-dollar’s rapid rise, the break of $1.4350 triggering stops to take rate on to $1.4375 where it initially stalled. The dip under $1.4350 was greeted by Asian sovereign demand with the second attempt higher taking out a suggested barrier at $1.4375 and taking rate on to an eventual high of $1.4405 (note a German name was a heavy buyer of overnight strikes at $1.4400 Thursday). Rate backed off highs, as spec traders pared back longs ahead of the European open, but underlying buoyant tone remains in place into early Europe with traders noting Asian central bank interventions to buy dollars overnight which should lead to euro-dollar demand for reserve balancing into Europe.

Gold

Range: 1457 – 1466.90

Support: 1447

Resistance: 1470

Spot gold opened yesterday at $1459.70 and closed lower on the day at $1458.20 despite recording a new all time high of $1465.25 after comments from ECB Trichet, kept the euro-dollar buoyed and the dollar on the back foot. Further gains were seen in Asia this morning with a new all time high of $1467.20 as euro-dollar rallied strongly. Silver had a more sideways trading day opening at $39.55 but failed to break through the previous 31 yr high set on Wednesday stalling at $39.70 and closing the day out at $39.63. Asia however has seen the metal break higher through the psychological $40 level to a new 31 year high of $40.12. Both metal shrugged off the ECB rate hike and news of a further large earthquake in Japan, siding more with a rally in crude oil prices which is continuing to support prices in the bullion market along with concerns over a possible shutdown of the US Federal Government.

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