By Michael Boutros, Currency Strategist The greenback is stronger at the close of NorthAmerican trade with the Dow Jones FXCM Dollar Index (Ticker: USDOLLAR ) advancing 0.37% on the session after movingnearly 99% of its daily average true range. The advance comesdespite broad gains in the equity markets with socks making theirhighs early in the session before paring gains to close well offsession highs. Stronger than expected ISM manufacturing data aheadof the open topped estimates with a print of 54.8, versusexpectations for a read of 53.0. The data helped support a rally instocks that saw the Dow test levels not seen since December of2007. The rally faded just an hour ahead of the close however withthe Dow, the S&P, and NASDAQ closing higher by 0.50%, 0.57%,and 0.13% respectively. The dollar continues to trade within the confines of a descending channel formation dating back to the March highs with the index breaking back above the 50% Fibonacci extension taken from the August 1st and October 27th troughs at 9850 before closing jus higher at 9863. Daily topside resistance stands at 9900 backed by the 61.8% extension at 9945 and channel resistance. Key daily support continues to rest with the 200-day moving average at 9813 backed by the confluence of channel support and the 9800 support level. An hourly chart shows the index holding within theconfines of a newly adjusted descending channel formation with thegreenback closing just below soft resistance at 9880. Subsequenttopside intra-day targets are eyed at 9900 with a breach abovechannel resistance eyeing the 61.8% extension at 9945. Interimsupport rests at 9850 backed by 9825 and 9800. Note that hourly RSIhas now moved into overbought territory for the first time sinceApril 16th and suggests further gains for the greenback in the daysto come. While today’s advance marks the first day of themonth and bodes well for the greenback, we look to tomorrow whenEuropean markets come back online. We remain neutral in themeantime pending a topside break of this descending channelformation.
The greenback advanced against all fourcomponent currencies highlighted by a 0.92% advance against theAustralian dollar. The aussie remains under pressure after the RBAsurprised markets with a 50 basis point interest rate cut lastnight with further losses expected so long as the 1.0475-level isrespected. For complete AUDUSD targets refer to thistoday’s
|5/2||12:15||MEDIUM||ADP Employment Change (APR)||170K||209K|
|5/2||13:45||LOW||ISM New York Manufacturing||-||67.4|