FOREX Trading Australia – Market Summary
- Dollar’s gains have accelerated at start of the Australasian session as other currencies headed by the Euro have no factors to drive it higher. The rejection of the EU constitution has been the main focus of the markets but the attention shifts to a heavy 4 day data calendar this week. The only negative for the Dollar has been the recent slowness in the manufacturing sector, thus any signs of improvement should provide a boost to the Dollar as other regions fundamentals are not expected to improve much.
- Euro has broken below 1.24 on its expected sell off post French referendum and its losses accelerated after the crucial support mark at 1.2460 was broken. The verdict is out there on the actual impact of this result on the Euro, while it should be limited on the economic front in a short to mid term horizon, this rejection could have broader repercussions on the future polices of the EU including the decisions to induct new members.
- Yen is hovering in the 108.25-40 resistance zone due to general Dollar strength but Japanese data has again surprised to the upside confirming the economy’s direction on a steady recovering path. Unemployment rate fell to its lowest level in 6 years and this is leading to an increase in consumer confidence which has translated into higher spending. The improvement in the
- Pound has followed the Euro and crashed towards 1.81 in early Asian trading after a subdued holiday thin trading day yesterday. The focus shifts to the normally EU skeptic British and if they too will hold a referendum but for now Prime Minister Blair has said it is too early to make a decision. Mild support exists around 1.81 but it remains vulnerable for further losses.
- Aussie has slipped back towards 0.7550 as data results have disappointed with Retail Sales have fell against expectations of a rise while the Current Account deficit has widened further. Tomorrow’s GDP results are eyed and are expected to be on the strong side however Q2 is likely to be a different story and the Greenback’s broad strength is likely to push the Aussie lower. The New Zealand Dollar is likely to fall more with Business Confidence slumping to a 7 year low.
Economic Data Released
|
GMT |
Release |
Region |
Previous |
Actual |
Comment |
|
|
April PPI m/m |
|
0.7% |
0.1% |
Lower than expected as oil as well as common item prices have eased. |
|
|
Q1 Current Account q/q |
|
$C6.3Bn |
$C4Bn |
Surplus has shrunk to its lowest since 2003 |
Upcoming Economic Releases
|
GMT |
Release |
Region |
Previous |
Forecast |
Comment |
|
|
May Consumer Confidence Indicator |
|
-24 |
-25 |
Should continue to decline as employment remains low. |
|
|
May Unemployment Rate |
|
11.8% |
11.8% |
Rate should continue to hover around record high levels as hiring fails to pick up. |
|
|
May CPI y/y |
|
2.1% |
2.0% |
It should stay within the ECB’s inflation target |
|
|
May GFK Consumer Confidence survey |
|
0 |
-1 |
Consumer Confidence should decline on recent sluggish economic conditions. |
|
|
May |
|
65.6 |
62.0 |
Expected to pull back as orders have declined with employment sub index eyed. |
*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.
Technical Analysis
EUR/USD – Yesterday’s low was 1.2463 and high was 1.2545.
The pair closed at 1.2489.
The French have rejected the EU constitution and the Euro has subsequently crashed below 1.24 and has stabilized around the 1.2375 support zone for now. It remains vulnerable for further losses with next strong support around 1.2285-1.2310. On the upside, short term oversold conditions might help it inch higher towards 1.2475 where mild resistance exists and strong offers on any break above 1.2540.
Key resistance is seen at 1.2475 followed by 1.2540 while support starts at 1.2375 followed by 1.2295.
USD/JPY – Yesterday’s low was 107.74 and high was 108.14.
The pair closed at 107.88.
The Yen remains within its recent range and continues to yo-yo on the Yuan story but data results are starting to pick up. Resistance continues in the 108.25-40 zone followed by strong offers on any move above 108.75. On the downside, mild Dollar bids lie around 107.75 followed by strong buying interest on any break below 107.
Key Resistance is seen at 108.45 followed by 108.75 while support starts at 107.75 followed by 107.05.
GBP/USD – Yesterday’s low was 1.8193 and high was 1.8254.
The pair closed at 1.8228.
The Pound’s fundamentals remain on the weak side and the pair is driven by Dollar’s strong momentum. It is hovering around the mild support mark of 1.8125 but remains vulnerable for further losses. A break below 1.81 targets the support mark at 1.8045 while on the upside 1.82 now becomes resistance with strong offers on a break aback above 1.8255.
Key Resistance is seen at 1.8200 followed by 1.8255 while support starts at 1.8105 followed by 1.8045.
AUD/USD – Yesterday’s low was 0.7600 and high was 0.7636.
The pair closed at 0.7602.
The pair has followed other majors and has slipped back as well but for now has remained above the 0.7525-40 support zone for now. A break below 0.75 will lead to the acceleration of losses while on the upside mild resistance lies around 0.76 followed by very strong resistance in the 0.7640-55 zone.
Key Resistance is seen at 0.7605 followed by 0.7655 while support starts at 0.7525. followed by 0.7455.
Kunal Sharma
Forex Analyst
E-mail: kunal@easy-forex.com
Australian Financial Services License 246566
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