AUDUSD traded back above 1.07 but started to trail back shortly after as it ran into some resistance just above 1.07

Overnight markets rallied as it followed the bullish lead out of China strong industrial output and CPI. SP500 index and Dow both had the biggest gain in over a month of 1.48% and 1.03% respectively, just before a small pulled back but still ended on high note. Strength were also aided by some decent numbers came out of US, in particularly retail sales came in at -0.2% which was higher than expected of -0.5%. The combination of both these results signifies that one, China can switch growth momentum quite rapidly and not only it is a key player for Asia Pacific region but also now more than ever a key player at global level and two, US consumers are now accustomed to high utility costs (for instance, gasoline).

Commodity front was also bullish as both Gold and Oil made some respectful gain of 0.14% and 0.17% respectively. The strength in Gold was fueled by the weakness of USD (does not seem to be stopping anytime soon) and strong commodity switch as inflation fear is coming out of Asia, especially the yesterday’s releases from China.

AUDUSD traded back above 1.07 but started to trail back shortly after as it ran into some resistance just above 1.07, a technical resistance level that has been formed over the last two months, which was also a support in the latter part of April.

Both EUR and GBP had strong gains against the USD in the early part of US session. However, this bullish tone was short lived and superseded by the concern of Greek’s debt as the release package is now on hold. The process is stalling as EU officials could not decide on investors’ role in this second package, especially when default potential is becoming more realistic. The poor sentiment led both EURUSD and GBPUSD to have lost some grounds of 0.3% and 0.4%.

USDJPY attempted to jump on the bull’s wagon gaining a touch under 40 points but came back to stay on yesterday Asian highs. As mentioned in couple of previous report, this pair will continue to face downside pressure and will find it difficult to participate in any upside moves.