Australian FOREX Daily Oulook 01/08/2005

01/08/05 (00:00 GMT)

• Dollar declined after the Q2 GDP came in slightly below expectations but it pared back half its losses following a robust Chicago PMI outcome. Also weighing in against the Greenback was the decline in personal consumption and below than expected result in employment costs while concerns emanating from the U.S. refinery fires sent oil prices back above $60 pb. But In spite of the slight decline, GDP is still at healthy levels with Q3 likely to reflect the surge in growth seen in the economy since than. And things look positive fundamentally for the Greenback with the manufacturing sector back on track and this week’s Payrolls outcome likely to come on the strong side.
  

• Euro remained above 1.21 and even though it failed to make much headway its downside seems reasonably supported for now as data from the Euro-Zone continues to reflect improved conditions. Business Climate indicator beat expectations while France followed Germany and recorded an improvement in the labour market with the unemployment rate inching lower, this is a major boost for the zone since low employment was stiffening consumer confidence and spending. Also with inflation inching higher and improved data, it has dispelled fears of a rate cut and increased assertion that the next move, whenever that might be, could be a rate hike.
  

• Yen remained within the 112 region as mixed data outcomes coupled with another spike in oil prices stiffened the Yen’s movements. Positives emanated from the Japanese unemployment rate falling to a 7 year low while Industrial Production rebounded due to the increase in global demand for exports led by the U.S. however inflation remained tame while household spending declined against expectations of an increase. But this is in keeping with the cautious nature of the Japanese spender and continuous recovery in the economy will eventually lead to an improvement in this regard. For now dollar continues to have decent bid interest around 111.45.
  

• Pound ended the day around the same levels as it started with its brief foray above 1.76 met with strong offers. It was supported by much better than expected consumer confidence result with the London attacks having a minimal effect and expectations of a rate cut next week giving some hope to consumers embattled with high debt. Consumer credit declined accordingly as the attention shifts to BoE’s crucial rate setting meeting on Thursday with expectations of a rate cut. Irrespective of Dollar’s general direction the Pound should stay on the back foot till then.

• Australian Dollar remained a bit directionless with its brief foray above 0.76 encountering strong offers and it stabilized within familiar territory of 0.75. The market was looking to take profits and adopt a neutral position ahead of tomorrow’s important Australian trade balance and retail sales data. Focus will also be on building approvals as the housing market is seen slowing while RBA would leave rates on hold in its meeting this week and are likely to keep that stance for the rest of the year.

EUR/USD – Friday’s low was 1.2075 and high was 1.2158.
The pair closed at 1.2119.

The pair has stabilized within the technically mixed interest region of 1.2040-1.2155 with immediate resistance seen in the 1.2155-70 zone with a break above to bring the 1.2240 strong resistance around this mark. Selling orders are laced up to 1.23 pivot mark with only a decisive break into this region would shift the momentum in the Euro’s favour. On the downside strong support as moved up to 1.20 with decent bottom picking bid interest around that mark. A clear break below brings the 1.1930-45 support level and any moves lower could accelerate the pair’s losses. Manufacturing data is eyed from both sides for intra day direction.

Key resistance is seen at 1.2175 followed by 1.2295 while support starts at 1.2020 followed by 1.1945.

USD/JPY – Friday’s low was 111.94 and high was 112.51.
The pair closed at 112.47.

The Yen is still within the 112 region with the pair in neutral territory, and the Dollar has mild bid interest on any foray below 112. Support is strong in the 111.40-55 zone with decent Dollar bid interest while a break below that region brings into focus the strong support in the 110.80-95 region and only a break below will shift the momentum in the Yen’s favour. On the upside resistance lies in the 112.80-95 region with decent selling orders in the 113 region with only a break above 113.55 would make it hard for the Yen to reverse its losses.

Key Resistance is seen at 112.85 followed by 113.45 while support starts at 111.55 followed by 110.90.

GBP/USD – Yesterday’s low was 1.7515 and high was 1.7611.
The pair closed at 1.7573.

The pair is now the upper end of its recent range but selling orders remain strong above 1.7625 with offers laced up to the 1.77 mark, this is a pivot mark and only a break above it reinforces hopes of a rally by the Pound otherwise it remains vulnerable for losses. On the downside support has moved up to previous resistance mark of 1.7475 with decent bottom picking bid interest on dips below 1.74. A clear break above 1.77 brings distant resistance in the 1.7805-20 with intra day direction sought from manufacturing data.

Key Resistance is seen at 1.7625 followed by 1.7695 while support starts at 1.7475 followed by 1.7395.

AUD/USD – Yesterday’s low was 0.7563 and high was 0.7622.
The pair closed at 0.7563.

The Australian Dollar was confined within its narrow range and its brief break above 0.7620 encountering strong offers with resistance continuing around that mark and selling orders intensifying above it and lined all the way up to the pivot mark of 0.77. Only a break above this mark raises hopes of a fresh uptrend otherwise it should remain range bound. On the downside support has moved up to the 0.7510-25 region with a break below this region brings the 0.7475 support mark into focus with a clear break below risks the acceleration of losses.

Key Resistance is seen at 0.7615 followed by 0.7655 while support starts at 0.7515 followed by 0.7475.

Kunal Sharma

Easy Forex Pty Ltd. (Australia)
E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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