Australian FOREX Daily Outlook 15/05/2008

US CPI fails to amuse, Euro-zone CPI figures released on Thursday  

CURRENCY TRADING SUMMARY – 15 MAY 2008 (00:30GMT)

·                U.S. Dollar Trading (USD) was mixed versus a number of majors as inflation reports for the month of April were below expectations, coming in at 0.2%/3.9% (Forecast: 0.3%/4.0%). Furthermore the Chicago Board of Trade are pricing in a 94% chance that the Federal Reserve will hold rates at its June 25^th meeting. In U.S. share markets the NASDAQ was up by 1.58 points (+0.06%) whilst the Dow Jones was also higher by 66.20 points (+0.52%). Crude Oil rose fell by US$1.58 a barrel to US$124.22 following reassurance from Iran in regards to supplies. A heavy data day is scheduled out of the US today with TIC flows, Philly Fed, whilst Fed Chairman Bernanke is scheduled to speak on Credit Market Turmoil in Chicago at 1330 GMT        

·                The Euro (EURO) recovered from early day lows as inflationary measures out of the U.S. failed to surprise. In Euro-zone specific data, Industrial Production for March softened by -0.2%, feeling the repercussions of an overvalued Euro. Overall the EURUSD traded with a low of 1.5397 and a high of 1.5486 before closing the day at 1.5457 in the New York session.  Key figures out of the Euro zone will be made public in the form of CPI and GDP on Thursday, forecasted to come in at 0.3% and 0.5% respectively.        

·                The Japanese Yen (JPY) rose to a week lows against the Dollar, as equity markets once again were key to governing moves. Overall the USDJPY traded with a low of 104.58 and a high of 105.44 before closing the day at 105.26 in the New York session.  

·                The Sterling (GBP) continued its spiral, touching a three week low as the BoE quarterly inflation report showed a downward revision of growth although Inflation will remain above the comfort band for the following two years. Overall the GBPUSD traded with a low of 1.9366 and a high of 1.9473 before closing the day at .9439 in the New York session.

·                The Australian Dollar (AUD) eased further throughout the day, failing to gain support from a poor Wage Price Index coming in well below expectations. Overall the AUDUSD traded with a low of 0.9304 and a high of 0.9426 before closing the day at 0.9346 in the New York session. Looking ahead, RBA Gov Stevens is scheduled to speak at 1030 GMT, where he is widely expected to discuss the State of the Australian Economy in its current climate, and its history in recent decades.    

·                Gold (XAU) eased in fell by US$3.10 an ounce to US$866.50, having traded as low as 860 earlier in the session.  

TECHNICAL COMMENTARY                                                   

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.5284	1.5367	1.5460	1.5487	1.5570
USD/JPY	103.39	104.58	105.15	105.59	106.50
GBP/USD	1.9338	1.9363	1.9450	1.9475	1.9586
AUD/USD	0.9249	0.9272	0.9310	0.9428	0.9483
XAU/USD	845.80	846.00	864.60	889.80	896.50

·                Euro – 1.5460

Initial support at 1.5367 (May 12 low) followed by 1.5284 (May 8 low). Initial resistance is now located at 1.5487 (May 14 high) followed by 1.5571 (May 12 high).

·                Yen – 105.15

Initial support is located at 104.58 (May 14 low) followed by 103.39 (May 13 low). Initial resistance is now at 105.59 (May 7 high) followed by 106.65 (Feb 28 low).

·                Pound – 1.9450

Initial support at 1.9363 (May 14 low) followed by 1.9338 (Jan 22 reaction low). Initial resistance is now at 1.9475 (May 14 high) followed by 1.9586 (May 13 high).

·                Australian Dollar – 0.9310

Initial support a 0.9272 (Apr 18 low) followed by 0.9249 (50% retracement 0.8953 to 0.9544 advance low). Initial resistance is now at 0.9428 (May 14 high) followed by 0.9483 (May 12 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).