Australian FOREX Daily Outlook 20/06/2008

Strong Aussie as gold rally and carry trade underpin.

CURRENCY TRADING SUMMARY – 20th June 2008 (00:30GMT)

·                U.S. Dollar Trading (USD) had mixed day with multiple factors pulling and pushing the world’s largest currency. News of a large increase in the price of Oil in china sent Crude Oil future down over $5 in anticipation of weakening demand from the emerging powerhouse. Poor economic data had little effect with weekly jobless claims coming in a slightly higher than expected at 381K vs. the 375K forecast.  The Philadelphia Fed Manufacturing Index was also weaker at -17.1 vs. economists call for -10. In the US share markets, the NASDAQ was up 32 points (1.33%) and the Dow Jones was up 34 points (0.28%). Crude Oil closed down $5.03 ending the New York session at $131.65 per barrel.

·                The Euro (EUR) came under pressure yesterday falling against all the majors as Oil fell and a large sell off in Swiss francs weighed. Once again the single currency gravitated towards the 1.5500 level. Overall the EUR/USD traded with a low of 1.5467 and a high of 1.5586 before closing the day at 1.5495 in the New York session. Looking ahead, German PPI m/m is expected to come in at 0.9% for May and ECB President Trichet speaks.

·                The Japanese Yen (JPY) sharp falls in the Nikkei (-2.33%) yesterday helped the yen gain as risk aversion crept into the market. EUR/JPY broke below 167 and USDJPY fell of the 108 handle. High yielder’s bounced as Wall St. recovered led by the GBP/JPY dragging AUS/JPY and NZD/JPY higher.   Overall the USDJPY traded with a low of 107.42 and a high of 108.07 before closing the day around 107.86 in the New York session.

·                The Sterling (GBP) received a massive boost with the May Retail sales seen at it’s   strongest on record at 3.5% month on month. After last months fall of -0.3% May was expected to come in a little better at -0.1%. Strong clothing numbers caused by large one day sales have been put forward as an explanation. Overall the GBP/USD traded with a low of 1.9580 and a high of 1.9744 before closing the day at 1.9738 in the New York session.

·                The Australian Dollar (AUD) had a strong day taking advantage a rise in demand for high yielding currencies and a strong rally in Gold. AUD/JPY made new multi month highs consolidating above 102 and shrugging off early stock market weakness. Overall the AUD/USD traded with a low of 0.9448 and a high 0.9518 before closing the day at 0.9517.

·                Gold (XAU) had a strong rally breaking up through $900 and quickly moving higher to $907.9 before a stabilizing stock market and large fall in Oil retraced most of the gains. Overall trading with a low of USD$884 and high of USD$907.9 ending the New York session at USD$898 an ounce.

TECHNICAL COMMENTARY

·                Euro – 1.5495

Initial support at 1.5461 (June 17 low) followed by 1.5303 (June 13 low). Initial resistance is now located 1.5587 (Jun 19 High) at followed by 1.5657 (Jun 10 high).

·                Yen – 107.95

Initial support is located at 106.8 (June 12 low) followed by 106.24 (Jun 10 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).

·                Pound – 1.9705

Initial support at 1.9580 (June 19 low) followed by 1.9470 (Jun 17 low). Initial resistance is now at 1.9745 (Jun 19 high) followed by 1.9755 (June 10 high)

·                Australian Dollar – 0.9500

Initial support at 0.9304 (50% retracement of the .8953 to 0.9655 advance) followed by 0.9291 (May 15 low). Initial resistance is now at 0.9521 (Jun 19 high) followed by 0.9527 (Jun 10 high).

·                Gold – 894

Initial support at 858 (Jun 12 low) followed by 850 (Psychological Number). Initial resistance is now at 908.65 (June 19 high) followed by 909 (Jun 9 high). 

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