Australian FOREX Daily Outlook 09/12/2009

Greece Downgrade Rekindles Fear

CURRENCY TRADING SUMMARY – 9th December (00:30GMT)

U.S. Dollar Trading (USD) enjoyed the fruits of bad news with the Greece rating downgrade putting pressure on the Euro and fresh Dubai fears hurting the GBP. US stocks fell along with most global stocks as risk aversion increased. DJIA -104 points closing at 10285, S& P -11 points closing at 1091 and NASDAQ -16 points closing at 2172. Looking ahead, US Crude Oil Inventories forecast at 0.7M vs. 2.1M previously.

The Euro (EUR) the single currency was already under pressure from falls in Asian stocks before the rating downgrade of Greece to BBB+ from AAA- gave the market a reason to test lower. Support was found below 1.4700 but the pair is on a fragile footing with EUR/JPY dipping below the key Y130 level. Overall the EUR/USD traded with a low of 1.4667 and a high of 1.4869 before closing at 1.4715. Looking ahead, German Trade Balance forecast at 10.4b vs. 9.9b previously.

The Japanese Yen (JPY) continued falls in the USD/JPY and risk aversion are helping put pressure on the crosses leading to widespread Yen buying. Markets are slightly cautious about the provoking further government verbal intervention should we approach the Y85 level again. Overall the USDJPY traded with a low of 88.16 and a high of 89.47 before closing the day around 88.40 in the New York session. UPDATE Q3 GDP at 0.3% vs. 0.7% previously.

The Sterling (GBP) was hurt more than the Euro as UK banking stocks slumped on fresh concerns about there exposure to the middle east debt market. Rumors of RBS board resigning and a break below 1.6300 support added to the downside momentum. Overall the GBP/USD traded with a low of 1.6222 and a high of 1.6480 before closing the day at 1.64 in the New York session. Looking ahead, October Trade Balance forecast at -6.85bn vs. -7.19bn previously.

The Australian Dollar (AUD) was under fairly constant pressure with rallies being sold and the market tracking stocks and gold lower. AUD/JPY selling in Asia was aggressive and the pair ended the day below the Key 80 Yen level. Overall the AUD/USD traded with a low of 0.90 and a high of 0.9167 before closing the US session at 0.9040. UPDATE OCTOBER TRADE BALANCE -2379mn vs. -1700mn forecast.

Oil & Gold (XAU) the liquidation of longs continued with the market testing the downside support below $1130. Overall trading with a low of USD$1124 and high of USD$1169 before ending the New York session at USD$1130 an ounce. Continued with the recent downtrend but found solid support at $72.50. Crude Oil was down -$1.30 ending the New York session at $72.70.

TECHNICAL COMMENTARY

Euro – 1.4710

Initial support at 1.4702 (November 4 low) followed by 1.4626 (Nov 3 low). Initial resistance is now located at 1.5091 (Dec 4 high) followed by 1.5144 (Nov 25 high)

Yen – 88.40

Initial support is located at 88.00 (Dec 4 low) followed by 87.32 (Dec 3 low). Initial resistance is now at 90.77 (Dec 4 high) followed by 91.32 (Nov 4 High).

Pound – 1.6270

Initial support at 1.6273 (Nov 27 low) followed by 1.6241 (Oct 19 low). Initial resistance is now at 1.6516 (Dec 7 high ) followed by 1.6722 (Dec 3 high).

Australian Dollar – 0.9040

Initial support at 0.9021 (Dec 8 low) followed by the 0.8947 (Nov 27 low). Initial resistance is now at 0.9189 (Dec 7 high) followed by 0.9322 (Dec 3 high).

Gold – 1130

Initial support at 1124 (Dec 8 low) followed by 1118 (Nov 16 low). Initial resistance is now at 1179 (0.236 of 1026.60 - 1226.56) followed by 1212.5 (Dec 4 high).

Oil – 73.00

Initial support at 72.50 (Dec 7 low) followed by 70.00 (Intraday support). Initial resistance is now at 75 (intraday resistance) followed by 77 (intraday resistance).

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