Australian FOREX Weekly Outlook 02/03/2009

Stocks Under pressure on Global Recession fears

02/03/09                                                                                                                                             

last week’s currency trading review

The Dollar continued to strengthen across the board as stocks approached 7000 on the Dow Jones index. US data was weak with CB Consumer Confidence falling to its lowest level on record in February at 25. US Q4 GDP was revised to -6.2% vs. -3.85 initially recorded. Also very weak was housing data with January New Home Sales falling to 309K vs. 344K previously. The Euro ended lower although kept to familiar ranges as EUR/JPY buying was countered by USD strength. German IFO slipped slightly to 82.6 vs. 83 previously in February. Also released, German GDP was confirmed at -2.1% in Q4. The EUR/USD fell -1.04% closing at 1.2665, after opening the week at 1.2798. The Japanese Yen was the major mover in currency markets this week with the severing of the relationship with the Equity markets. USD/JPY broke above 95 and surged to 98 as player became to focus on the key 100 level. Preliminary Industrial Production in January slumped the most on record down 10% m/m.   The USD/JPY gained 4.37% closing at 97.60 after opening at 93.33. The GBP kept to the recent range with 1.41 supporting and 1.46 capping rallies. Some data showed improvement with CBI Sales improving to -25 vs. -52 forecast. Also GFK consumer Confidence improved slightly to -35 vs. -37 previously. The GBP/USD fell 0.82% closing at 1.4313 after opening at 1.4431. The AUD was pressured to the downside after failing to break above resistance at 0.6550 and following stockmarkets for sentiment and direction. Helping support was the surprise improvement in CAPEX to +6.0% vs. -3.1% forecast. The AUD/USD closed down -1.01% at 0.6385 after opening at 0.6450.

The forex trading week preview

In the States big data week with Feb Manufacturing ISM forecast at 33.8 vs. 35.6. Also on Monday, January Personal Income forecast at -0.2% vs. -0.2% previously m/m. On Tuesday, Pending Home Sales are forecast to drop -3% in January. On Wednesday, the February ADP Employment report is forecast to show a decline of -620K vs. -522K previously. Also released, Non-manufacturing ISM forecast at 41.3 vs. 42.9 previously. On Thursday, January Factory Orders are seen -3.1% vs. -3.9% previously. On Friday the market awaits January Nonfarm Payrolls forecast at -625K vs. -598K previously whilst the Unemployment Rate is seen jumping to 7.9% vs. 7.6% previously.   We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone   On Monday PMI Manufacturing seen confirmed at 33.6 in Feb whilst CPI is forecast to rise 1.0% y/y in the same month. On Wedensday, PMI services are forecast to be confirmed at 38.9 in February. On Thursday the main event risk for the week is the ECB interest Rate announcement forecast to cut 0.5% from 2.0% to 1.5%. Also released, Provisional GDP Q4 is forecast at -1.5%.   In the UK On Monday the February PMI services are forecast at 35 vs. 35.8 previously. Also released, Mortgage Approvals in January forecast at 33K vs. 31K previously. On Wednesday the February PMI services are forecast at 41.0 vs. 42.5 previously. On Thursday the MPC/BOE meet to discuss interest rates and are expected to cut 0.5% from 1.0% to bring the Official Bank Rate to 0.5%. On Friday February PPI is forecast at 0.1% vs. 1.5% previously.  We will provide our previews and reviews of these data releases in the daily summary.

In Japan light data week with Capital Spending on Thursday expecting at -16.3% vs. -13.0% in previously. We will provide our previews and reviews of these data releases in the daily summary.

In Australia On Tuesday the RBA meets to discuss rate and are expected to cut by 0.5% to 2.75% from 3.25%. Also on Tuesday Retail Trade for January forecast at -0.6% vs. 3.8% previously. On Wednesday GDP is forecast to remain at 0.1% in Q4 but the risks are to the downside. On Thursday January Trade Balance is forecast to increase 1.1Bn to 0.59Bn.       We will provide our previews and reviews of these data releases in the daily summary.

·                Euro – 1.2630

Initial support at 1.2558 (Feb 24 low) followed by 1.2500 (Key Level). Initial resistance is now located at 1.2899 (Feb 25 low) at followed by 1.2977 (Feb 11 high)

·                Yen – 97.66

Initial support is located at 96.36 (Feb 25 low) followed by 94.63 (Former Resistance). Initial resistance is now at 99.47 (Nov 10 reaction high) followed by 99.92 (Nov 5 high).

·                Pound – 1.4280

Initial support at 1.4052 (Feb 2 low) followed by 1.3929 (Jan 27 low). Initial resistance is now at 1.4607 (Feb 25 high) followed by 1.4662 (Feb 23 high).

·                Australian Dollar – 0.6390

Initial support at 0.6333 (Feb 18 low) followed by the 0.6249 (Feb 2 low). Initial resistance is now at 0.6577 (Feb 16 high) followed by 0.6643 (Feb 13 high).

·                Gold – 943

Initial support at 932 (Feb 13 low) followed by 911 (Feb 11 low). Initial resistance is now at 978 (Feb 25 high) followed by 995 (Feb 24 high).

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