Australian FOREX Daily Outlook 17/06/2008

Oil rocking and rolling, US data disappoints as May PPI looms

CURRENCY TRADING SUMMARY – 17th June 2008 (00:30GMT)

·U.S. Dollar Trading (USD) lost some ground yesterday as Crude Oil surged on more Israel/Iran sabre rattling. Oil spiked briefly to a new record high of $139.89 before easing to end the day slightly lower on hopes of increased supply. Signs of a bottoming out in US data were complicated by the Empire State Business Conditions Index weakening this month to -8.7 vs. an expected fall of -1.5. In the US share markets, the NASDAQ was up 20 points (0.8%) and the Dow Jones was down 38 points (0.3%). Crude Oil closed down $0.98 ending the New York session at $133.88 per barrel. Looking ahead in an important day of data we have May Housing Starts expected at 0.96 Million and PPI forecasted to rise to 1.0% for May.

·The Euro (EUR) was helped off lows of the day on higher than forecasted CPI for May revised up to 3.7% vs. the 3.6 expected. The rebound turned into a rally as Oil surged and US data missed targets. Overall the EUR/USD traded with a low of 1.5346 and a high of 1.5518 before closing the day at 1.5476 in the New York session. Looking ahead, June’s German ZEW index is expected to weaken this month to -42 from previous -41.4.

·The Japanese Yen (JPY) took another leg down as high commodities and slowing Japanese economic outlook continued to weigh. The USD, EURO and GBP all traded at multi month highs versus the Yen. Overall the USDJPY traded with a low of 107.93 and a high of 108.59 before closing the day around 108.11 in the New York session. Looking ahead, April’s Tertiary Industry output is expected to fall 0.5% from 0.8% in March. UPDATE April Tertiary Industry output at 1.8%.

·The Sterling (GBP) staged an impressive rally as fears that inflation in May’s CPI numbers will force the Bank of England into a more hawkish stance. Overall the GBP/USD traded with a low of 1.9461 and a high of 1.9687 before closing the day at 1.9629 in the New York session. Looking ahead, the market is forecasting May CPI at 0.5% and Retail Price Index at 0.4% month on month.

·The Australian Dollar (AUD) stay in a tight range as a cloudy economic outlook tempered any gains on USD weakness. The broad rally in commodities underpinned the Aussie limiting any further downside for the time being. Overall the AUD/USD traded with a low of .9362 and a high .9425 before closing the day at .9405. Market will be focused on RBA minutes from the June 3^rd meeting where rates were held at 7.25%.

·Gold (XAU) rallied as oil jumped higher and was able to maintain gains as oil drifted lower late in the US session. Overall trading with a low of $866 and high of $895 ending the New York session at $882 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.5465

Initial support at 1.5303 (June 13 low) followed by 1.5284 (May 8 low). Initial resistance is now located 1.5517 (Jun 16 High) at followed by 1.5587 (Jun 12 high).

·Yen – 108.20

Initial support is located at 106.8 (June 12 low) followed by 106.24 (Jun 10 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).

·Pound – 1.9630

Initial support at 1.9410 (June 13 low) followed by 1.9363 (May 14 low). Initial resistance is now at 1.9688 (Jun 16 high) followed by 1.9755 (June 10 high)

·Australian Dollar – 0.9410

Initial support at 0.9304 (50% retracement of the .8953 to 0.9655 advance) followed by 0.9291 (May 15 low). Initial resistance is now at 0.9527 (Jun 10 high) followed by 0.9648 (Jun 9 high).

·Gold – 882

Initial support at 857.65 (Jun 12 low) followed by 850 (Psychological Number). Initial resistance is now at 894.9 (June 16 high) followed by 895 (Jun 10 high).