Australian FOREX Daily Oulook 13/10/2005

13/10/05 (04:00 GMT)

• Dollar pared back some of its gains but the market’s assertion to play the range on all majors has made the Dollar rally at the start of the Asian session. Nonetheless if the Dollar continues to fail in seizing the initiative and breaking key technical barriers in its favour, this would weigh in against its sentiment, as further position squaring could ensue. Key data is released in the next two days starting with today’s Trade Balance report with the risk of Deficit going towards a record high judging by the high import costs of oil while the consumer’s appetite for imported products remains steady and with China showing a record trade surplus, a $60 Bn plus deficit result would not be a surprise.
  

• Euro rallied strongly into the 1.20 region as the market took profits on Dollar longs ahead of the deficit data but lack of any significant factors to push the Euro higher has led to range trading. Earlier, German Consumer inflation came in higher than expected with the annualized figure well above the ECB’s target thus giving credence to ECB President Trichet’s comments on considering a rate hike given the rising inflationary pressures. The focus is also on the eventual make up of the German cabinet and which party is likely to have an upper hand.

• Yen has slipped across the board after a day of poor data results, firstly the Consumer Confidence index came in lower than expected, declining for the second consecutive month and remaining in below the expansion mark. In spite of recent improvement in the employment sector, most respondents remained pessimistic about wage growth and the spike in oil prices is also causing concern. While this morning’s Current Account data has seen the surplus shrink largely due to the high import costs of oil and uncertain global demand keeps the direction for exports mixed. Thus emphasis is on domestic demand to keep growth on track but this is threatened by high oil and energy prices.

• Pound in keeping with its habit of exaggerated moves rallied strongly back above 1.75 after dipping below 1.74 before slipping back down as takes it cue from Dollar’s general direction. Keeping it a bit supported is the strong stance taken by Bank of England Governor King that rates will be kept on hold in spite of slow growth signs as inflationary pressures are a bigger concern. Earlier data showed that wage growth remained subdued while the number of people seeking unemployment benefits rose. If this trend continues BoE member swill have to change their stance when they meet in November and bow in to popular demand for a rate cut.

• Australian Dollar slipped across the board this morning as the employment data was very weak to say the least, with the eventual outcome of a loss of 42K jobs instead of the expected increase of 5K while jobless rate inched higher. This result has made any chances there might have been, in the face of rising inflation of a rate hike, reduce significantly. With consumer confidence declining as well, we could see the Aussie’s high correlation with Gold prices diminish as the latter could keep inching higher but the Aussie may not follow it higher, as it has done over the last few years.

FOREX (Foreign Exchange) Key Intra-Day Pivot levels

EUR/USD –Yesterday’s low was 1.1954 and high was 1.2054.
The pair closed at 1.2021.

The pair continues to range trade and for now has mild bottom picking bid interest just bellow 1.1950 with support lying in the 1.1890-1.1910 region. A clear break below this region brings very strong support around the 1.1850 mark with equally strong bid interest. However any moves lower will send it towards its lowest levels in the last two years will shift it into deep negative region. On the upside immediate resistance has now moved down to 1.2060 and any moves above 1.21 to lead to strong selling orders with very strong resistance around 1.2140.

Key resistance is seen at 1.2060 followed by 1.2140 while support starts at 1.1910 followed by 1.1850.

USD/JPY – Yesterday’s low was 114.20 and high was 114.76.

The pair closed at 114.44.

Yen has slipped further on Dollar’s strength and now risks slipping into the 115 region with immediate resistance around 115.10, a strong break above will make gains tougher as we move into the 115 region with very strong resistance lying at 115.40-55 zone with selling orders around it. On the downside, immediate support has now moved up to around 114.10 which is followed by strong support around the 113.45 mark and decent bid interest just below it. Only moves back into the 112 region will bring the pair back in neutral territory otherwise the Yen risks further losses.

Key Resistance is seen at 115.15 followed by 115.55 while support starts at 114.10 followed by 113.45.

GBP/USD – Yesterday’s low was 1.7391 and high was 1.7548.
The pair closed at 1.7524.

The pair continues to slip on weak fundamentals but we are approaching key support levels which are expected to remain firm and provide strong support before caving in. Immediate strong support lies in the 1.7370-85 region which has previously been the base of a few massive uptrends but a clear break below risks acceleration of losses before very strong support crops up at 1.7290-1.7310 region but a break below will send it to its lowest levels in more than two years and shift it in deep negative region. On the upside, broad range trading is possible with immediate resistance at 1.7550 followed by selling orders lined above the 1.76 mark with very strong resistance around 1.7615. The Pound is likely to remain under pressure on its crosses.

Key Resistance is seen at 1.7550 followed by 1.7610 while support starts at 1.7370 followed by 1.7310.

AUD/USD – Yesterday’s low was 0.7504 and high was 0.7564.
The pair closed at 0.7554.

The Australian Dollarhas eased back further breaking strong support around 0.7550 but immediate support comes up in the 0.7490-0.7505 region with decent bid interest around it. A break below risks acceleration of losses before finding decent support around 0.7430 which should hold in the near term. On the upside, immediate resistance has moved down to 0.7575 with selling orders lying above 0.76 with strong resistance around 0.7620.

Key Resistance is seen at 0.7575 followed by 0.7620 while support starts at 0.7490 followed by 0.7435.

Start Trading Forex Online with Easy Forex!

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