Australian FOREX Weekly Outlook 09/02/2009

US Unemployment hits 16 year High

09/02/09                                                                                                                                             

last week’s currency trading review

The Dollar came under pressure this week as investor sentiment improved on speculation that the Second Stimulus package would be passed quickly through the Senate. Also helping stocks off lows was rumors that the Financial Rescue Plan being developed by new Treasury Secretary Geithner would create a bad bank to hold toxic assets. These developments overshadowed a record drop in employment of -600k in January brining the Unemployment rate to 7.6%. The Euro took advantage of the weakness in the USD to claw back some of its recent losses but underperformed most currencies with concerns about the deteriorating Eurozone Economy still remaining. The ECB held rates at 2.0% widely as expected but President Trichet noted he was still willing to consider rate cuts if the situation warranted.   The EUR/USD gained 0.97% closing at 1.2937, after opening the week at 1.2811. The Japanese Yen lost ground against all currencies as the USD/JPY cleared the major technical level of 90 Yen and high yielding pairs surged higher. AUD/JPY gained 7.64% while the NZD/JPY gained 6.39%. The USD/JPY gained 2.05% closing at 91.85 after opening at 89.97. The GBP stretched gains for a third week after the BOE cut rates by 0.5% to 1.0% and heavy cross buying supported. January Manufacturing PMI increased to 35.8 vs. 34.4 and Services PMI also rose to 42.5 vs. 40.2 previously.   The GBP/USD gained 1.65% closing at 1.4781 after opening at 1.4537. The AUD experienced major a boost against all currencies after the Reserve Bank of Australia Cut rates by 1.0% and stocks around the world bounced off lows. Also helping the Aussie was the record bounce in retail sales for December to 3.8% vs. 0.4% previously. The AUD/USD closed up 5.73% at 0.6752 after opening at 0.6365.

The forex trading week preview

In the States On Tuesday we have the keenly awaited Treasury Secretary Geithner speech outlining the new Banking Bailout plan. Also on Tuesday Fed Chief Bernanke Tesitifies on the TARP before the senate. On Wednesday we have December Trade Balance seen at -36.7bn vs. -40.4bn previously. On Thursday, January Retail sales are expected -0.3% vs. -2.7% previously. Finally on Friday we have the University of Michigan Consumer Sentiment forecast to rise slightly to 61.5 vs. 61.2 previously. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Tuesday we have the January German CPI is forecast to be confirmed at 0.9%. On Thursday, Eurozone Industrial Production expected to weaken -2.2%. On Friday Q4 German GDP is forecast at -1.8% vs. -0.5%. After this the Eurozone GDP is forecast at -1.2% vs -0.2% previously.   In the UK On Tuesday the RICS House Price Balance is forecast to fall to -71% vs. -73%. On Wednesday we have ILO Unemployment Rate forecast at 6.3% vs. 6.1% previously. Finally on Wednesday we have the BOE Quarterly Inflation Report.     We will provide our previews and reviews of these data releases in the daily summary.

In Japan On Monday we have Machinery Orders forecast to fall -8.6% in December. Thursday sees the CGPI released forecast at -0.6% in January vs. -1.2% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Australia light data week with RBA Governor Stevens speaking on Tuesday and Unemployment data on Thursday the Highlight. January Employment Change is seen -18K vs. -1.2K previously. The Unemployment rate is forecast to rise to 4.7% vs. 4.5% previously. We will provide our previews and reviews of these data releases in the daily summary.

·                Euro – 1.2950

Initial support at 1.2748 (Feb 6 low) followed by 1.2707 (Feb 2 low). Initial resistance is now located at 1.3070 (Feb 4 high) at followed by 1.3179 (Jan 29 high)

·                Yen – 91.80

Initial support is located at 90.74 (Feb 6 low) followed by 89.21 (Feb 5 low). Initial resistance is now at 92.25 (Feb 5 high) followed by 92.87 (0.764 of 94.64-87.13).

·                Pound – 1.4780

Initial support at 1.4590 (Feb 6 low) followed by 1.4324 (Feb 4 low). Initial resistance is now at 1.4844 (Feb 6 high) followed by 1.4908 (Jan 19 high).

·                Australian Dollar – 0.6740

Initial support at 0.6476 (Feb 6 low) followed by the 0.6403 (Feb 5 low). Initial resistance is now at 0.6803 (Feb 6 high) followed by 0.6844 (Jan 19 high).

·                Gold – 911

Initial support at 889 (Feb 3 low) followed by 874 (Jan 29 low). Initial resistance is now at 930 (Oct 10 reaction high) followed by 949 (July 23 low).

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