Australian FOREX Daily Outlook 14/05/2008

GBP surge short lived on the back of CPI figures, Oil sets new record highs

CURRENCY TRADING SUMMARY – 14 MAY 2008 (00:30GMT)

·                U.S. Dollar Trading (USD) was extremely volatile against all majors on Tuesday as Fed officials, notably Cleveland member Pianalto cited inflationary risks. However Chairman Bernanke did note that the ongoing demand of financial institutions in borrowing from the reserve bank signaled markets were “still far from normal”, and that the rebound would be gradual. On the data front, Retail Sales figures for the month of April were released slightly worse then the forecasted -0.1%, coming in at -0.2%, whilst import prices climbed to 1.8% in April and 15.4% on an annual scope, the largest 12 month gain in 25 years. In U.S. share markets the NASDAQ was up a small 6.63 points (+0.27%) whilst the Dow Jones fell -44.13 points (-0.34%). Crude oil was surged to record highs OPEC member Iran reported it was reviewing a proposal to cut output, pushing the commodity up to US$126.98. Crude ended the session up US$1.57 a barrel to US$125.80. CPI figures are released for the month of April with forecasts at 0.3%/4.0% same as previous. Ongoing speeches from fed officials are also scheduled today.          

·                The Euro (EURO) lost ground against a resurgent dollar buoyed by economic data and central bank rhetoric, in what was an otherwise quiet session in the Euro-zone. Overall the EURUSD traded with a low of 1.5430 and a high of 1.5565 before closing the session at 1.5476 in the New York session. ECB members Almunia and Papademos will be speaking at an economic forum whilst Industrial Production is also made public out of the Euro zone.  

·                The Japanese Yen (JPY) edged higher throughout the day on the back of a buoyant dollar and reports that the Chinese Yuan would appreciate by 7% throughout the year. Overall the USDJPY traded with a low of 103.40 and a high of 104.92 before closing the day at 104.80 in the New York session.

·                The Sterling (GBP) was most active on Tuesday with CPI figures touching 3% (2.6% expected) on the back of food and energy prices adding further pressure on the BoE to sustain rates in their next meeting. The Sterling Pound surged on the back of the data release although was very short lived. Overall the GBPUSD traded with a low of 1.9421 and a high 1.9587 before closing the day at 1.9456 in the New York session. Unemployment figures are made available as well as the BoE quarterly inflation report.        

·                The Australian Dollar (AUD) was pressured on Tuesday, as the Greenback rebounded on positive Retail Sales figures. Overall the AUDUSD traded with a low of 0.9386 and a high 0.9485 before closing the day at 0.9408 in the New York session. UPDATE: Wage Price Index for the first quarter were released below expectations at 0.9% (Forecast: 1.1%)      

·                Gold (XAU) fell sharply for the as the dollar rebounded, with XAU trading at a low of 861.90 and a high of 884.95

TECHNICAL COMMENTARY                                                   

·                Euro – 1.5455

Initial support at 1.5367 (May 12 low) followed by 1.5284 (May 8 low). Initial resistance is now located at 1.5571 (May 12 high) followed by 1.5595 (May 6 high).

·                Yen – 104.75

Initial support is located at 103.39 (May 13 low) followed by 102.58 (May 12 low). Initial resistance is now at 104.96 (May 8 high) followed by 105.59 (May 7 low).

·                Pound – 1.9445

Initial support at 1.9420 (May 13 low) followed by 1.9410 (Feb 21 low). Initial resistance is now at 1.9586 (May 13 high) followed by 1.9633 (May 12 high).

·                Australian Dollar – 0.9460

Initial support a 0.9350 (May 8 low) followed by 0.9342 (May 5 low). Initial resistance is now at 0.9483 (May 12 high) followed by 0.9510 (May 6 high).

·                Gold – 883.00

Initial support at 846.00 (May 2 low) followed by 845.80 (May 2 low). Initial resistance is now at 889.80 (May 12 high) followed by 896.50 (Apr 25 high).