Australian FOREX Daily Oulook 30/08/2005

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30/08/05 (04:00 GMT)

• Dollar rallied across the board with its movements taking cue from Hurricane Katrina which after causing immense damage has calmed down and its risk level has been downgraded this subsequently led to easing of oil prices with the market happy to take profits at such high levels. But it was more of a relief rally and with the London market closed, relatively thin trading conditions led to profit taking which also helped the dollar. The focus shifts to next 4 days of packed data starting with Factory orders and Consumer Confidence which due to high oil prices is likely to inch lower but the positives emanating from the release of the Fed’s meeting minutes should help offset any intra day losses.

• Euro has eased back but still within its range with the market looking to adopt a neutral position ahead of key data releases this week. Earlier German Consumer Confidence survey showed an upside surprise with the July result revised up and the August one coming even higher. However like the U.S., the market now expects stable data outcomes from the Euro-zone as well with a fair degree of good news already priced in and it remains to be seen which region can handle the burden of high oil costs better.
  
  

• Yen is under deep pressure after this morning’s data has added to the negatives emanating from record high oil prices and with China yet again denying any revaluation move in the near future, the yen quickly lost support. Household spending has declined unexpectedly while jobless rate has inched higher. Retail sales also fell and these results are a bigger negative considering the current environment of low global demand and greater dependence on the domestic demand to keep the economy on its steady recovery path.
  

• Pound has eased back as upside, in spite of its numerous attempts, was hard to achieve with mixed data outcomes and solid selling orders lying above 1.81, also thin conditions due to London market being closed added to the exaggeratory moves. . Thus position squaring ensued but still remains within its broad range with key data outcomes eyed from both sides of the Atlantic. Meanwhile a survey of U.K. retailers by the Confederation of British Industry has shown sales dropping more than estimated as consumers are cutting back to pay for the high oil costs.
  

• Australian Dollar has slipped back taking cue from other majors decline against the Greenback and the easing of commodity prices. It is now under deep pressure after this morning’s data outcomes have gone against it with Trade deficit increasing and Retail Sales coming in lower than expected. High import costs of oil compared to mixed global demand for exports has widened the deficit while high borrowing costs coupled with high oil prices is curbing spending. Also weighing against the Aussie was a report showing that new house sales have fell back.

EUR/USD – Yesterday’s low was 1.2216 and high was 1.2345.
The pair closed at 1.2221.

The pair has lipped back on profit taking ahead of key data releases with first line of support broken with mixed technical interest down to the strong support region of 1.2155-70. A clear break below this region would accelerate losses for the Euro before mild bid interest lies around 1.21. Strong support exists around 1.2060and it is expected to hold with data to provide direction but a break lower would shift the Euro in deep negative territory. On the upside mild resistance now exists at 1.2310-25 region followed by very strong resistance around 1.2355. Any foray above this mark should continue to attract strong selling interest.

Key resistance is seen at 1.2315 followed by 1.2355 while support starts at 1.2160 followed by 1.2100.

USD/JPY – Yesterday’s low was 109.86 and high was 110.77.
The pair closed at 110.61.

The pair is close to breaking its range by breaking above 111, this should bring into focus resistance around 111.55 but generally the 111 region holds mixed technical interest. Strong resistance lies around 112.15 with decent selling orders lined all the way up to 113. A break above this would shift the Yen in deep negative territory and make it hard to reverse its losses. On the downside, mild support has now moved up to 110.25 with mixed interest and no clear bias seen down to the 109.45 mark where very strong support exists. Down till 109 mark strong bids lie for the Dollar.

Key Resistance is seen at 111.55 followed by 112.15 while support starts at 110.25 followed by 109.45.

GBP/USD – Yesterday’s low was 1.7925 and high was 1.8084.
The pair closed at 1.7955.

The pair finally eased back as offers were too strong above 1.8055 and it continues to be within its broad range with decent bid interest around 1.79 followed by good support at 1.7875. A break below has the potential to accelerate its losses with next distant support seen at 1.7790 with strong bottom picking bid interest seen around that mark. On the upside, resistance has moved down to the 1.8020 mark with selling orders lined above it all the way up to 1.81 and very strong resistance around 1.8105. Data from both sides will provide further direction.

Key Resistance is seen at 1.8020 followed by 1.8105 while support starts at 1.7875 followed by 1.7795.

AUD/USD – Yesterday’s low was 0.7488 and high was 0.7574.
The pair closed at 0.7504.

The Australian Dollarremains vulnerable for further losses with key support levels broken next support region lies around 0.7425-40. Decent bottom picking bid interest lies around 0.74 but a clear break below this region would shift the Aussie in negative territory and make it hard for it to reverse its losses and would send it to its lowest levels in 9 months. On the upside mild resistance ha snow moved down to 0.7555 pivot mark while any break above could lead to moves towards very strong resistance mark of 0.7610 with strong selling orders around it.

Key Resistance is seen at 0.7555 followed by 0.7610 while support starts at 0.7435 followed by 0.7395.

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