Australian FOREX Daily Oulook 12/09/2005

12/09/05 (02:00 GMT)

• Dollar remained directionless as pre weekend position squaring kept most majors within their ranges on Friday as traders brace themselves for a stream of key U.S. data releases this week which could lead to some decisive movements. Oil prices have eased back last week but at the same time are also well supported as the damage to the actual output is evaluated. Jobless claims this week should increase as some affected by the hurricane get their chance to file claims with more to follow in the coming weeks. Inflation should keep inching higher while capital inflow is expected to remain above the trade deficit which is expected to widen as well.     
   
• Euro’s price action has been stiffened ahead of key U.S. data releases this week with the better than expected data seen in Germany, is being offset by sluggish conditions in most other Euro nations. French industrial production declined sharply against expectations of an increase which was the biggest drop in nearly a year. It also goes to show the fragility of the recent recovery in France which mainly stood on a weaker Euro and easing of oil prices, both factors have dissipated now. While Consumer spending and confidence remain captive to such price fluctuations. Lack of any key releases from the European side as well as its recent quick gains puts attention squarely on the U.S. data.

• Yen remains well supported with further gains in the offing as Koizumi has been reelected by a landslide margin and this sets up the easy acceptance of the postal reform bill which could also trigger more reform bills which are very bullish for the economy. This morning’s data has been very positive as well, with Q2 GDP revised much higher than expected thanks to a surge in capital spending and higher domestic demand instead of traditionally exports leading growth. This is very significant in the current environment where any slowdown in the U.S. economy will affect exports while on a yearly level Trade surplus has reduced with high import costs of oil threatening to shrink the surplus further.   
                                                                                                                                                                                                                   
• Pound remained within its range seen since the start of this month with bid interest continuing on dips towards 1.83. Data has been weak and the economy is subjected to downside risks with consumer spending not expected to pick up till further rate cuts are witnessed. Earlier, Trade deficit widened much more than expected with the decline in exports the main factor behind it. With high oil prices curbing global spending, a decline in exports is natural across the globe and U.K. deficit is expected to widen further. This would make the pick up in domestic demand more crucial which is showing mixed signs at present.

• Australian Dollar was the start performer of the last week and has closed strongly around 0.7750 with strong growth and employment figures coupled with its high yield has bolstered support for it. Commodity prices have inched higher and further gains are expected while the demand from Asia should stay steady as well. These strong factors should keep downside well protected but further upside is now directed by U.S. data with 0.78 the key mark to beat.   

FOREX Related Upcoming Economic Release

by Rory Kennedy (Sydney Dealing Desk)

CHART:  AUD/USD            

The break above .7700 was confirmed with the weekly close above that level. Minor resistance at .7810 will be its first hurdle followed by .7850. With very little in the way of Australian data this week &   given the strong GDP & Unemployment data last week, pullbacks looks limited to .7700. 

• Sup 1                            First support level.
                                                A price level at which buying takes place.
• Sup 2                            Second support level.
• Spot                                Current Price.
• Res 1                              First resistance level
                                                  A price level at which the selling  takes place.
• Res 2                              Second Resistance level.

FOREX (Foreign Exchange) Key Intra-Day Pivot Levels

EUR/USD – Friday’s low was 1.2375 and high was 1.2459.
The pair closed at 1.2411.

The pair’s movements are stiffened by mixed interest between at current levels with immediate support coming up in the 1.2315-25 region with a decisive break below likely to accelerate its losses with very strong support coming up around 1.2245 and decent bid interest just below 1.2250. Only a break below this mark would shift the pair in neutral territory with mild Dollar bias. On the upside mixed interest lies within the 1.24 region with immediate resistance around the 1.2475 mark and decent offers lying above 1.25 and strong resistance in the 1.2525-40 region.

Key resistance is seen at 1.2475 followed by 1.2525 while support starts at 1.2315 followed by 1.2245.

USD/JPY – Friday’s low was 109.48 and high was 110.75.
The pair closed at 109.71.

The pair is back in its familiar 109-111 range which holds heavy mixed interest thus leading to patchy directionless moves which could be broken this week. Immediate support with decent bid interest continues to lie within the 108.90-109.05 region. Bids continue to lie below this region with very strong support maintaining around 108.50. This mark is crucial which has held well for nearly 3 months and a clear break below will accelerate the pair’s losses and shift the Dollar into negative territory. On the upside, immediate mild resistance lies around 110.55 with mixed interest continuing up till the strong resistance region of 111.05-20, which if breaks could shift the bias to the Dollar.

Key Resistance is seen at 110.55 followed by 111.15 while support starts at 108.90 followed by 108.45.

GBP/USD – Friday’s low was 1.8321 and high was 1.8425.
The pair closed at 1.8391.

The pair is locked for now in a narrow range since the start of the month with immediate support continuing around 1.8315 and decent bottom picking bid interest just below 1.83. A break below is likely to accelerate losses towards the very strong support mark of 1.8240 with decent bids around it while below this mark mixed interest lies with next distant support around 1.81 with the pair to go back in neutral territory if so happens. On the upside, immediate resistance has moved down to 1.8440-55 region with a break above to bring the strong resistance mark of 1.8515 into focus with decent selling interest above 1.85.

Key Resistance is seen at 1.8455 followed by 1.8515 while support starts at 1.8315 followed by 1.8240.

AUD/USD – Friday’s low was 0.7705 and high was 0.7756.
The pair closed at 0.7749.

The Australian Dollar  remains at a pivotal stage having broken immediate resistance around 0.7720 but not decisively and strong offers remain within the 0.77 region laced all the way up to 0.78 with only a clear break above it raises hopes to reclaim the coveted 80 cent mark. Immediate resistance lies around 0.7755 followed by very strong resistance in the 0.7790-0.7805 region which is expected to hold well. Aussie’s high yield factor has led to the support inching higher to 0.7640-55 region followed by decent bottom picking bid interest around 0.76.

Key Resistance is seen at 0.7755 followed by 0.7810 while support starts at 0.7700 followed by 0.7645.

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