FOREX Trading Australia Daily Outlook 20/04/2005

FOREX Outlook 20/04/05 (02:00 GMT)

FOREX Trading Australia – Foreign Exchange Market Summary

Dollar

· Dollar continued its freefall with core PPI coming in lower than expected reducing hopes of an aggressive rate hike stance from the Fed while housing starts fell to its lowest level in more than 10 years. Oil prices jumped higher on the back off refinery problems in the U.S. The focus shifts to Consumer inflation figures with an unexpected decline in the core inflation likely to sink the Dollar.

Euro

· The Euro was helped towards 1.3075 on poor U.S. data but kept under pressure on its crosses as data from the Euro zone keeps getting worse. ZEW surveys from the Zone as well as Germany declined with investor confidence falling sharply. Problems of high unemployment, high oil prices & weak export orders refuse to abate keeping the economy in a stagnant state while industrial output fell to its lowest in more than a year. Market continues to look to buy on dips with strong resistance in the 1.3175-1.32 zone.

Yen

· The Yen finally broke below 107 as speculators unwound their overhang of shorts amid general Dollar weakness. But Japanese data continues to disappoint with Biz sentiment among small firms declining while oil prices inched higher. U.S. officials are getting more vocal on the Chinese Yuan revaluation with Tsy. Sect. Snow stating it was a top priority for Bush administration. For now decent Dollar bid interest lies around 106.50 with a break likely to accelerate losses.

Pound

· The Pound has stood out and seized the initiative as growth concerns plague the economic powerhouses U.S., Japan and the Euro-Zone while U.K. data remains solid. It went back above 1.92 against the Greenback while rallying to its yearly high against the Yen and a six month high against the Euro. Consumer inflation rose to its highest rate in 7 years while retail prices rose higher than expected. Minutes of BoE last meeting are released today with clues sought for future stance.

Australian Dollar

· The Australian dollar broke above 0.77 taking cue from other majors and rising on the back of a spike in commodity prices. However the Aussie’s struggle to gain past 0.7750 compared to other majors strong rally against the Greenback emanates from a mixed outlook for commodity prices and mixed data results. This morning’s Leading Economic index has come in lower than expected. For now resistance exists in the 0.7755-70 zone but 0.7650 is a good base.

Gold

· Gold prices have rallied to a one month high breaking above $430 benefiting from the Greenback’s broad fall while uncertain economic direction in Japan and Euro-Zone is adding to the allure of Gold as an alternate investment. Key resistance lies around 434.30-435 with pullback below 430 likely.

Economic Data Released

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*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.

FOREX Technical Analysis

EUR/USD – Yesterday’s low was 1.2980 and high was 1.3076.
The pair closed at 1.3060.

The pair has broken above 1.30 on growth concerns for the U.S. with the market looking to buy on dips till the release of the CPI data. First line of resistance is seen around 1.3075-90 with a break above leading to the mild resistance mark of 1.3125 with very strong resistance in the 1.3175-1.32 zone. On the downside the Euro has good buying interest on any dips around 1.3015 with stronger one around 1.2955.

Key resistance is seen at 1.3115 followed by 1.3225 while support starts at 1.3005 followed by 1.2925.

USD/JPY – Yesterday’s low was 106.70 and high was 107.51.
The pair closed at 106.91.

The pair finally broke below 107 but decent Dollar bids remain in the 106.50-75 region and is likely to push back into the 107 region with resistance having moved down to 107.50. U.S. inflation figures are eyed for further direction with a break below 106.30-50 likely to accelerate gains for the Yen.

Key Resistance is seen at 107.75 followed by 108.45 while support starts at 106.55 followed by 105.85.

GBP/USD – Yesterday’s low was 1.8999 and high was 1.9201.
The pair closed at 1.9170.

The Pound continues to rally as it benefits from poor data from other regions, key resistance levels were broken before profit taking ensured further gains beyond 1.92. U.S. data is eyed for further direction with very strong resistance in the 1.9280-1.93 zone for this pair while pullbacks towards 1.91 are likely.

Key Resistance is seen at 1.9255 followed by 1.9325 while support starts at 1.9075 followed by 1.9005.

Australian Dollar

AUD/USD – Yesterday’s low was 0.7645 and high was 0.7718.
The pair closed at 0.7713.

Dollar’s weakness helped it break back above 0.77 but resistance lies around 0.7755 with a decisive break needed to rally towards 0.78, Strong resistance exists in the 0.7810-25 zone. On the downside it has found a good base around 0.7625-50 with the market looking to buy on any dips below 0.7675.

Key Resistance is seen at 0.7755 followed by 0.7795 while support starts at 0.7665 followed by 0.7625.

Kunal ‘Kris’ Sharma
Forex Analyst

Australian Financial Services License 246566

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