Australian FOREX Daily Oulook 22/08/2005

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22/08/05 (00:00 GMT)

• Dollar kept firm as it remains buoyed by the shift in sentiment back in its favour as the market, given the current environment of mixed data from across the globe which brings up no clear winners data wise, has instead shifted its attention to a clear positive in the form of the high yield advantage for the Greenback. Lack of any data releases led to directionless movements with pre weekend patchy trading. But Oil prices remain a high concern as it has pushed further up on geo-political concerns.

• Euro remained on the back foot with data releases continuing to point towards a recovery in the economy but not enough to outmatch American fundamentals as the momentum has shifted away from the Euro. The Trade surplus from the zone came in higher than expected with the previous month’s figure revised up as exports have increased while mixed consumer demand is keeping imports in check, however oil prices have spiked since, which would significantly reduce this surplus. French GDP came in line with expectations while focus shifts to key economic sentiment surveys this week which are expected to show an improvement.
  
  

• Yen kept within its range with resistance around 111 against the Greenback holding well for now as direction on the main pair remains a bit mixed but it continues to rally on its crosses as fundamentals have improved and outlook seems even more positive. Tertiary Industry index is expected to add to this optimistic tone however any positives emanating from this could be negated by the increasing realization that Oil prices above or near $60 pb are here to stay and repercussions of this, would be felt all around in the second largest importer of oil.

• Pound managed to stabilize after losing throughout the week as lack on any key data releases from both sides of the Atlantic led to a mild bout of profit taking on its shorts, also a break below 1.79 brought up decent bottom picking bid interest. Key sectors of the economy continue to project mixed signals but it is hoped that the recent rate cut would help bring consumer confidence back to healthy spending levels. GDP data is the main focus for this week with an increase expected while rising inflationary pressures should keep rates on hold here on in the foreseeable future.

• Australian Dollar is seeing sentiment shift away from it quickly and risk further acceleration of losses with lack of any local data releases to focus attention on dollar’s general movements for direction. While healthy demand for its exports and reasonably strong local fundamentals are lending its fair share of support, but its strong appreciation of the last 3 years built on the back of its high yield advantage is now withering away with U.S. Fed looking for more rate increases.

FOREX Related Upcoming Economic Releases

EUR/USD – Yesterday’s low was 1.2126 and high was 1.2193.
The pair closed at 1.2145.

The pair’s momentum has shifted back in the Dollar’s favour after key support levels were breached. Immediate support is now seen in the 1.2075-90 zone with mixed interest seen within the 1.21 region which could lead to patchy directionless trading. A clear and decisive break below could accelerate losses with strong support seen around the 1.2030 mark with decent bottom picking bid interest seen around and just below 1.20. On the upside resistance levels have moved down with immediate resistance seen around 1.2240 as upside looks increasingly difficult. In case of a break above stronger resistance exists around 1.2310 with selling orders intensifying above this mark.

Key resistance is seen at 1.2240 followed by 1.2310 while support starts at 1.2075 followed by 1.2030.

USD/JPY – Yesterday’s low was 110.30 and high was 110.82.
The pair closed at 110.43.

The pair finally gave in to Dollar’s momentum but the Yen’s continuing rally on its crosses has stiffened its losses on the main pair. But direction is a bit mixed with resistance seen in the 110.95-111.10 zone with a break above to shift the momentum back in the Dollar’s favour and the Yen risks acceleration of losses. 111 region has mixed technical interest with no clear bias before strong resistance crops up around 112.15. On the downside mild support has now moved up to 109.65 followed by strong support in the 108.90-109.10 region which has held well so far. Any breaks below 109 have strong bottom picking bid interest for the Dollar and the pair could stay range bound if it can stay below 111.

Key Resistance is seen at 111.25 followed by 112.05 while support starts at 109.65 followed by 109.05.

GBP/USD – Yesterday’s low was 1.7889 and high was 1.7977.
The pair closed at 1.7945.

The pair is prone to exaggeratory movements and break of key support levels has accelerated its losses as it slips back into neutral territory with bias towards the Dollar. Immediate support lies around the 1.7865 mark which is a mild one with mixed technical interest down to 1.7755, as this mark holds very strong support and decent bid interest lies around it. On the upside resistance has now moved down to 1.8025 with a break above bringing mixed technical interest up to the 1.81 mark above which strong selling orders lie.

Key Resistance is seen at 1.8025 followed by 1.8105 while support starts at 1.7865 followed by 1.7755.

AUD/USD – Yesterday’s low was 0.7496 and high was 0.7539.
The pair closed at 0.7511.

The Australian Dollar remains vulnerable for further losses with immediate support seen around 0.7475 with decent bid interest around this mark. A break below risks further acceleration of losses till strong support is encountered around 0.7425 and sentiment would shift in deep negative territory. On the upside immediate resistance is seen around 0.7590 with any foray above 0.76 leading to strong selling interest. Very strong resistance exists around 0.7645 with only a break above to shift the pair back into neutral territory.

Key Resistance is seen at 0.7590 followed by 0.7645 while support starts at 0.7475 followed by 0.7425.

Kunal Sharma

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

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