Australian FOREX Daily Oulook 06/09/2005

06/09/05 (03:00 GMT)

• Dollar pared back some of its losses with U.S. markets closed, thin trading conditions led to profit taking after it had fallen further in early Asian trading. Sentiment has shifted in negative territory for the Greenback with the current estimated costs of the damage caused by the Hurricane reaching around $130 billion. Oil prices eased back a bit thanks to the release of emergency stocks by some key nations but the main focus of the market remains the Fed’s action on interest rates this month with even chances of them staying on hold as they are likely to give themselves some time to evaluate the repercussions of the costliest disaster to have ever hit the U.S. Dollar could also be helped by the fact that other currencies might have rallied by too much in too quick a time frame and pullbacks are likely.
  

• Euro has slipped back below 1.25 in Asian trading with recent gains being more of a result of the initial shock of the hurricane damage to the U.S. economy rather than on the strength of the Euro-Zone fundamentals, thus a slight pullback is the natural course of action. With this week devoid of any major American data release, the focus shifts to data from the zone which is expected to be on the weak side. Earlier the PMI Manufacturing data came in line with expectations and remained within the expansion territory with employment index gaining slightly. New Business index has however slipped down and with high oil prices and rising Euro, exports might start declining again.

• Yen did manage to break below the pivot 109 mark but it wasn’t decisive enough and it continues to hover around that mark waiting for a clearer direction. But it has managed to pare back a fair bit of its recent losses on its crosses especially against the Euro with the current sky high oil prices not just affecting Japan but the world in general. The positive continues to be the strong likelihood of Koizumi getting reelected with an increased majority but like the U.S. consumer spending and the manufacturing sector have been the first ones to take a hit on high oil prices which will be reflected in the data this week.
  

• Pound has eased back towards 1.84 as another confirmation of low consumer spending came to the fore with British Retail Consortium reporting sales remain in negative territory for the sixth time in the last eight months. Recent data has shown that one rate cut is not enough to spur consumer spending and more cuts are definitely required and more stronger this assertion becomes the Pound will start losing its new found support which is based on rates staying on hold in the foreseeable future. Earlier, Services PMI came slightly lower than expected with low domestic demand and high oil prices leading to a decline in business expectations index. Focus shifts to Industrial Production which has downside risks.

• Australian Dollar faces a wall around 0.77 with offers increasing in size above it lined all the way up to 0.78. Good demand for Aussie exports from Asia is keeping it well supported for now but this is threatened by slowing global economy with high oil prices likely to lead to decline in exports around the globe. This would make the dependence on domestic economy even greater which at the moment is projecting mixed signals with the latest Industrial trends survey falling more than expected.

FOREX Related Upcoming Economic Release

FOREX (Foreign Exchange) Key Price Levels

EUR/USD – Yesterday’s low was 1.2505 and high was 1.2584.
The pair closed at 1.2505.

The pair was confined to a narrow range with the U.S. markets closed leading to narrow range trading and mild profit taking but it is staying well supported for further gains by hovering around 1.25. Immediate resistance continues in the 1.2610-25 region with decent offers lying on any break above 1.26. A clear break above brings into focus very strong resistance around 1.2675-90, this region is crucial and a decisive break higher raises hopes of a fresh uptrend to 1.30. On the downside, bid interest is coming up on dips towards 1.25 with a clear break to accelerate losses which should bring the strong support mark of 1.2380-95 into focus but a break below 1.23 is needed to shift the pair back in neutral territory.

Key resistance is seen at 1.2620 followed by 1.2680 while support starts at 1.2485 followed by 1.2395.

USD/JPY – Yesterday’s low was 108.76 and high was 109.79.
The pair closed at 109.43.

The Yen couldn’t quite break through the strong pivot support region of 108.80-109.00 and is hovering around the 109 mark which holds mixed interest thus leading to stiffened movements. Yen remains well supported on fundamental factors and is likely to rally further. However bids for the Dollar are lined down till 108.50 which could provide a fair degree of support but a clear decisive break below would accelerate the Yen’s gains and could start a fresh down move for the pair with distant support seen at 107.25-40 with mild Dollar bid interest lying just below 108. On the upside, resistance continues at 110.05 with mixed interest and no clear bias seen up till 111. Resistance is strong in the 110.90-111.05 zone with strong selling interest for the pair on any break above 111. Only a break above this mark would shift the pair in neutral territory otherwise the Yen remains poised for further gains.

Key Resistance is seen at 110.05 followed by 111.15 while support starts at 108.80 followed by 108.50.

GBP/USD – Yesterday’s low was 1.8381 and high was 1.8498.
The pair closed at 1.8405.

The pair remains buoyed by breaking resistance barriers but remains prone to volatile moves with immediate resistance seen around 1.8515 followed by decent offers lying on any break above 1.85.However, a decisive break above 1.86 raises hopes of a fresh uptrend towards 1.90 before which strong resistance lies in the 1.8585 mark. On the downside immediate support now comes up at 1.8355 with decent bottom picking bid interest just below 1.83. A clear break brings support around the 1.8240 pivot mark and the pair will go back in negative territory on abreak below.

Key Resistance is seen at 1.8515 followed by 1.8585 while support starts at 1.8355 followed by 1.8240.

AUD/USD – Yesterday’s low was 0.7655 and high was 0.7695.
The pair closed at 0.7663.

The Australian Dollaris at a pivotal stage hovering around 0.77 with decent sized offers lying just above it and these offers increase in size above 0.7750 lined all the way up to 0.78. Mild resistance lies around 0.7720 with a clear break above bringing strong resistance around the 0.7775 mark with gains beyond it to face strong opposition and only a break above 0.78 raising hopes to reclaim the coveted 80 cent mark. Aussie’s high yield factor has now bumped up immediate support to the 0.7610 pivot mark with strong bottom picking bid interest to continue around 0.7555.

Key Resistance is seen at 0.7720 followed by 0.7775 while support starts at 0.7610 followed by 0.7555.

Australian Financial Services License 246566

Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products