Australian FOREX Daily Oulook 24/11/2005

MARKET SUMMARY – 24/11/05(03.00GMT)

• The Dollar finished the New York session relatively flat against the major currencies. Us sharemarkets rose on Wednesday following better than expected consumer sentiment data. US consumer sentiment was 81.6 in November, recovering from 74.2 in October and higher than the market expectation of 80.6. US jobless claims rose larger than expected 30,000 last week, taking claims to their highest point since mid-October. Looking ahead and the US celebrate Thanksgiving holiday so it is unlikely that there will be much additional information relevant for the dollar.

• The Euro initially traded higher in London towards 1.1865 before trading back down to a low of 1.1765. The New York session saw the Euro trade in a narrow range of 1.1812 to 1.1839, before closing at 1.1810. Later today see the release of the German IFO business climate index with expectations centered around 89.4.
  

• The Japanese yen traded in a 118.90 to 118.23 range in the London session. The New York session saw a range of 118.61 to 118.80. Japan’s trade surplus for October was released this morning and was weaker than consensus of JPY0.822 tln. The Japanese has been independently weakening due to loose monetary conditions, and at some stage, the advantage of a weak yen should start to boost Japanese exports. Later today see the release of the BOJ minutes and will be interesting given increased tensions between the government and the BOJ recently.
  

• The Pound was steady against the dollar and the Euro after minutes of the Bank of England’s November meeting showed unanimous vote for steady rates as expected. The Pound was steady trading at 1.7195 to 1.7255 before closing at 1.7210 in the New York session.
  

• The Aussie backed off early morning highs (down from 0.7390 to 0.7360 level) as metal prices cooled, but found solid support afternoon as the margin between Australian and US bond yields widened further off four-year lows, making Aussie-denominated securities more attractive to investors (rise back to around 0.7380 level).
  

TECHNICAL COMMENTARY

• Euro – 1.1820
  
  Euro trapped in a volatile 1.1836 to 1.1644 range. A break above 1.1836 would expose immediate resistance at 1.1845, the 38.2% retracement of the 1.2170 – 1.1644 decline. Above that level would open the door for a test of 1.1907 and 1.1969, the 50% and 61.8% retracement levels. On the downside, key support as mentioned is located at 1.1644 where a break would confirm a resumption of the downtrend exposing the 1.1588 ongoing target.
  

• Yen – 118.70

The uptrend remains intact while support at 118.39 remains intact. Below Nov 9’s 116.86 low would be necessary for confirmation that an interim top may be in place. The broad up-trend remains intact, with fresh upside beyond 119.57 seen as the catalyst for an extension towards 119.83, the high from Aug 19, 2003, then 120.73, the peak from Aug 1, 2003

• Pound – 1.7225

The ongoing short-term bear trend from the 1.7901 Oct 27 remains intact with a move below 1.7091. The recovery from 1.7071 to 1.7243 reaction high, gives some respite for bulls. However, major resistance in the 1.7332 (Nov 8 previous low) to 1.7388 area would need to be breached to signal a interim bottom in place.

• Aussie – 0.7380

This correction in Aussie from 0.7264 is testing resistance in the 0.7379 (Nov 09 reaction high) to 0.7393 (38.2% retracement of the leg down from 0.7601 to 0.7264) area. A break of this level would open up the possibility for a test of 0.7472 (61.8% of the 0.7601 to 0.7264 decline). Short-term support is located 0.7313 (61.8% of the recovery from 0.7264 thus far) to 0.7302 (Friday’s reaction low). Major support is located at 0.7265.