FOREX Trading Australia Daily Outlook 10/05/2005

FOREX Outlook 10/05/05 (02:00 GMT)

FOREX Trading Australia – Foreign Exchange Market Summary

Dollar

· Dollar drifted along directionless and is not having a positive effect post payrolls as the market awaits the Trade Balance data on Wednesday. Poor data from other regions continues to support the Dollar and it should remain well bid barring a much higher than expected deficit outcome. Meanwhile, Oil prices continue to rise despite swelling inventories and OPEC operating at full capacity, this could lead to another spike towards $60 pb if any sign, be it refinery or geo-political problems, lead to supply concerns.

Euro

· The Euro as in the last 3 months has found good buying interest on dips below 1.28 as the market looks to adopt a semi- neutral position ahead of U.S. trade balance figures, thus it had a minimal effect on yet another set of poor data releases. Retail sales declined as consumer spending fails to pick up while German Industrial Production fell more than expected. It should stay range bound ahead of tomorrow’s data.

Yen

· The Yen lost ground and went towards 105.80 as Dollar broke through strong offers around 105.40. Strong U.S. data, high yield advantage and sluggish Japanese economic conditions have come back into focus as the Yuan revaluation issue hasn’t seen any progress, as was expected during the last week. It has lost a fair bit of ground on its crosses as well, as overbought conditions loomed large for the Yen. The meeting between U.S. and Chinese officials has concluded with the Americans believing that we are a step closer to revaluation while silence continues from the Chinese side.

Pound

· The Pound slipped further before bottom pickers prevented a break below 1.88 and for now has stabilized above it. The BRC Retail sales monitor has came in at its worst level in 10 years while Industrial and Manufacturing Production came in much lower than expected thus it is no surprise given the current conditions, BoE kept rates on hold. But the rate scenario remains mixed with the NIESR in its GDP forecast stated inflation was still a risk and rates might have to increase with PPI and House price data coming above expectations.

Australian Dollar

· The Australian dollar slipped taking a cue from other majors but the decent buying interest on dips towards 0.77 has helped it stay within the range. The Business Confidence index came in lower than expected fueled largely by the drop in consumer spending and it remains to be seen if this weakness is translated to the employment sector. It remains under pressure with resistance seen in the 0.7775-90 zone.

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 1.2788 and high was 1.2875.
The pair closed at 1.2844.

Strong U.S. data has send it back towards it’s bottom picking mark around 1.28, mild support and buying interest exists around 1.2790-1.2805 followed by strong support around 1.2750 which targets the yearly lows for this pair. A decisive break below that mark could accelerate losses for this pair. On the upside, mild resistance exists around 1.2895 followed by a strong one around 1.2955-70 with any break above likely to bring strong selling interest. U.S. trade balance data is eyed.

Key resistance is seen at 1.2895 followed by 1.2975 while support starts at 1.2785 followed by 1.2725.

USD/JPY – Yesterday’s low was 105.13 and high was 105.78.
The pair closed at 105.73.

The lack of any concrete news on the Yuan revaluation front has led the Dollar to break above strong offers around 105.40. But the Yuan story is still alive and selling pressure should intensify on the approach of the 106 levels with strong resistance in the 106.30-45 zone. On the downside mild Dollar bids lie around 105 with very strong support around the 104.55 mark.

Key Resistance is seen at 105.85 followed by 106.45 while support starts at 104.95 followed by 104.45.

GBP/USD – Yesterday’s low was 1.8804 and high was 1.8909.
The pair closed at 1.8815.

Data outcomes were weak and the Pound retains a downward bias as the U.S. data results are eyed. Mild support and buying interest persists in the 1.8790-1.8810 with a break below targeting the support at 1.8755-70. On the upside mild resistance exists around 1.8875-90 followed by resistance in the pivot region of 1.8940-55.

Key Resistance is seen at 1.8925 followed by 1.9005 while support starts at 1.8805 followed by 1.8755.

Australian Dollar

AUD/USD – Yesterday’s low was 0.7709 and high was 0.7751.
The pair closed at 0.7723.

RBA’s monetary policy statement had mixed connotations while the strong U.S. data has seen it stabilize in the 0.7720-40 zone. A break below 0.77 should bring in decent buying interest while on the upside mild resistance exists around 0.7795 while very strong resistance should continue in the 0.7825-40 zone.

Key Resistance is seen at 0.7775 followed by 0.7825 while support starts at 0.7705. followed by 0.7655.

Kunal ‘Kris’ Sharma
Forex Analyst
E-mail: kris@easy-forex.com

Australian Financial Services License 246566

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