Australian FOREX Daily Outlook 24/06/2008

Weak EUROZONE data helps USD rally, GOLD plunges

CURRENCY TRADING SUMMARY – 24th June 2008 (00:30GMT)

·U.S. Dollar Trading (USD) a massive rally against the Euro allowed the greenback to make gains against all the majors yesterday. With little data out from the US focus on Euro data moved the market. Despite sluggish stocks and a continued rally in Oil the USD performed well as markets readjusted themselves for the FOMC interest rate decision on Wednesday. In the US share markets, the NASDAQ was down 20 points (-0.85%) and the Dow Jones was flat (0%). Crude Oil closed up $1.38 ending the New York session at $136.74 per barrel. Looking ahead, June US Consumer confidence is expected to fall to 56.4 from May’s 57.2. Also out is home Price index expected to continue to be negative in April at -15.9% year on year.

·The Euro (EUR) was sold heavily last night as a host of data pointed to a slowing Eurozone economy putting a dampener on multiple interest rate rise speculation. Eurozone Manufacturing PMI for June fell below 50 to 49.1 indicating the sector is contracting. Also below 50 was the June service’s PMI coming in at 49.5. German IFO Business climate Index also disappointed at 101.3 well below economists prediction of 102.3. Overall the EUR/USD traded with a low of 1.5468 and a high of 1.5624 before closing the day at 1.5521 in the New York session. Looking ahead, German Consumer Confidence for July expected at 4.6 along with French Consumer Spending forecasted at 0.6% month on month.

·The Japanese Yen (JPY) traded in a fairly tight range as USD/JPY made good gains but EUR/JPY and GBP/JPY were weighed by their falling majors. Overall the USDJPY traded with a low of 107.12 and a high of 108.07 before closing the day around 107.78 in the New York session.

·The Sterling (GBP) fell in sympathy with the Euro on strong USD gains. Was unable to take out stops below 1.9580 though and this led to profit taking late into the US session. Overall the GBP/USD traded with a low of 1.9588 and a high of 1.9757 before closing the day at 1.9651 in the New York session.

·The Australian Dollar (AUD) started the week strong but was under pressure as the USD strengthened and gold was sold off. Losses were mediated though with reports that Rio Tinto obtained a 80%+ rise in its iron ore prices from Chinese steel mills. Overall the AUD/USD traded with a low of 0.9492 and a high 0.9561 before closing the day at 0.9512.

·Gold (XAU) was sold off heavily last night falling quickly through $900 to $876 as stops were hit. Rumors of a troubled hedge fund having to liquidate were floating around but more substantive was a Financial Time’s report that Vietnam was banning the import of gold. Vietnam is the world’s largest market for gold bullion as investors use it extensively as an inflation hedge.Overall, XAU traded with a low of USD$876 and high of USD$907.80 ending the New York session at USD$884 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.5520

Initial support at 1.5461 (June 17 low) followed by 1.5303 (June 13 low). Initial resistance is now located 1.5636 (Jun 20 High) at followed by 1.5844 (Jun 9 high).

·Yen – 107.90

Initial support is located at 107.12 (June 23 low) followed by 106.8 (Jun 12 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).

·Pound – 1.9640

Initial support at 1.9580 (June 20 low) followed by 1.9471 (Jun 17 low). Initial resistance is now at 1.9791 (Jun 20 high) followed by 1.9852 (May 23 high)

·Australian Dollar – 0.9520

Initial support at 0.9491 (June 20 low) followed by 0.9448 (June 19 low). Initial resistance is now at 0.9578 (76.4% retracement of the 0.9655 to .9328 decline) followed by 0.9648 (Jun 9 high).

·Gold – 885

Initial support at 858 (Jun 12 low) followed by 850 (Psychological Number). Initial resistance is now at 908 (June 20 high) followed by 909 (June 9 high).