Australian FOREX Daily Oulook 15/08/2005

15/08/05 (00:00 GMT)

• Dollar’s losses stabilized with the Deficit outcome staying below $60 bn which could have triggered another bout of broad based losses. The market was geared up for a ballooned deficit figure given recent high import costs but eventual outcome saw some degree of pre weekend profit taking on Dollar shorts. However these gains were short lived as Consumer sentiment came in much lower than expected as these sky high gasoline prices are taking a heavy toll. The focus shifts to today’s TIC’s data with capital inflow caught between improved conditions increasing interest for U.S. Assets but central banks from across the globe looking to reduce their Dollar holdings.
  

• Euro has stabilized within 1.24 after profit taking led to it failing yet again to break past the pivot resistance mark of 1.25. Below par data from France also stiffened its gains with Q2 GDP coming in lower than expected as Consumer spending was on the sluggish side then and has only now shown signs of pickup. While Q3 should reflect a better outcome familiar problems of high oil prices and stronger Euro stiffening exports have come back to fore. French consumer inflation was tame as well, as producers are reluctant to pass on their high costs to beleaguered consumers.

• Yen remains well bid with the slightly lower than expected GDP outcome shrugged off by the market as current improved conditions warrant more attention. While the imminent benefits emanating from Yuan revaluation and China to acquire a sizeable amount of Yen holdings is also lending solid support coupled with strong performance on the Nikkei and improved domestic demand. Prime Minister Koizumi’s support is growing by the day with his approval rating increasing after he called for elections but the effect of record high oil prices on the second largest importer of oil, remains to be seen.
  

• Pound was locked between recent assertion that rates wont be cut in the short term after statements from Bank of England Gov. King while the inflation report also indicated optimism on the growth outlook for the economy after an initial soft patch. However key sectors remain sluggish with the FT House price survey coming in below expectations and the outlook doesn’t look promising either while profit taking stiffened further gains. 1.8200-25 remains the stiff resistance zone to beat with key U.K. data eyed early this week.

• Australian Dollar should continue to find it hard to break past the 0.7755-0.78 region which holds strong offers which have has proven hard to crack in recent times. The pick up in global demand is lending good support for commodity prices which have spiked higher as the outlook remains promising for Aussie exports. However key sectors of the economy and domestic demand remain a bit mixed with direction on other majors eyed for a break higher.

EUR/USD – Friday’s low was 1.2384 and high was 1.2485.
The pair closed at 1.2438.

The pair needs to decisively break the wall at 1.25 which could start a fresh uptrend but it has to clear the strong offers around that mark. Attention shifts to U.S. TIC’s data with a bad result likely to help the Euro break the strong barrier at 1.25. Support levels have moved up significantly with immediate level coming at 1.2360-75 zone with a break below to bring into focus very strong support around 1.2310 and bottom picking bid interest below 1.23. Only moves towards the 1.2240 pivot mark would shift the sentiment back in neutral territory otherwise it remains in the Euro’s favour. On the upside a break above 1.25 brings distant resistance around 1.2575 with data outcomes eyed for direction.

Key resistance is seen at 1.2515 followed by 1.2575 while support starts at 1.2360 followed by 1.2310.

USD/JPY – Friday’s low was 109.30 and high was 109.93.
The pair closed at 109.36

The Yen continues to pare back its recent losses with sentiment back in its favour. Immediate support comes up in the 108.70-85 region with a clear break below to accelerate losses for this pair which could only provide distant support around the 108 mark with bottom picking bid interest around that mark. This would also shift the Dollar in deep negative territory and reduce chances of its comeback. On the upside immediate resistance has moved down another level around 110.15 with a break above to bring into focus very strong resistance around the 110.65 mark which is expected to cap any Dollar rally with only a break above 111 to shift the pair back in neutral territory.

Key Resistance is seen at 110.15 followed by 110.65 while support starts at 108.70 followed by 108.05.

GBP/USD – Friday’s low was 1.8073 and high was 1.8177.
The pair closed at 1.8143.

The pair is buoyed after breaking key resistance barriers and for now lies within the technically mixed interest region of 1.8075-1.8190 which has no clear bias. Some profit taking could ensue on a break above 1.82 which could stiffen gains with strong resistance around 1.8225. On the downside support comes up at 1.8045 with a break below likely to accelerate losses below 1.80 before strong support should come up in the 1.7970-85 with bottom picking bid interest around that region. A clear break above 1.8225-40 zone should lead to very strong resistance around 1.83 which should cap any Pound gains.

Key Resistance is seen at 1.8225 followed by 1.8295 while support starts at 1.8075 followed by 1.7995.

AUD/USD – Friday’s low was 0.7706 and high was 0.7754.
The pair closed at 0.7715.

The Australian Dollar remains well supported breaking back above 0.77 but strong offers lie above 0.7755 which are laced up to 0.78. Thus any gains would be stiffened but at same time strong support has moved up to the 0.7650 level with any break lower to bring very strong bid interest around the 0.76 mark. 0.76-0.78 is the likely range with slow range bound movements within it is likely however a break above would make it very difficult for the Dollar to reverse its losses.

Key Resistance is seen at 0.7755 followed by 0.7805 while support starts at 0.7655 followed by 0.7605.

Kunal Sharma

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

Australian Financial Services License 246566

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