The dollar traded mixed Monday as US stocks plunged 2%, led by losses in AIG, as investors worried over the financial sector and credit market. US July existing home sales rose more than forecast but homes available for sales rose to a new record, indicating further price declines. The euro fell following a report the International Monetary Fund cut its 2008 and 2009 growth estimates for the eurozone. After touching a 2-year low in thin trading as London was closed for a bank holiday, the pound later recovered to above the 1.85 support. The Australian and Canadian dollars declined as metal prices fell and oil prices increased only modestly.
The USD/JPY fell on increased risk aversion as US stocks led by financial stocks dropped despite a successful Freddie Mac debt auction. The pair was also pressured by Bank of Japan Governor Masaaki Shirakawa's comments that Japan is likely to avoid a serious economic downturn. The pair is in an uptrend but unable to penetrate the 110-area resistance. If it is penetrated, the USD/JPY will move significantly higher. Support exists in the 107-area.
The USD/JPY fell on increased risk aversion as US stocks led by financial stocks dropped despite a successful Freddie Mac debt auction. The pair was also pressured by Bank of Japan Governor Masaaki Shirakawa's comments that Japan is likely to avoid a serious economic downturn. The pair is in an uptrend but unable to penetrate the 110-area resistance. If it is penetrated, the USD/JPY will move significantly higher. Support exists in the 107-area.
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