Australian FOREX Daily Outlook 09/07/2008

Bernanke helps out Wall St, plunging Oil helps out the USD

CURRENCY TRADING SUMMARY – 9th July 2008 (00:30GMT)

·U.S. Dollar Trading (USD) received a boost from falling Oil which posted its largest one day drop since March over $5 per barrel. May Pending Home Sales were weaker than expectations at -4.7% vs. -2.8% forecast and 7.1% in April. Fed Chairman Bernanke helped to boost the stock market and Dollar sentiment by stating the Federal Reserve Bank may extend security dealers access to direct loans into 2009. In the U.S. share markets, the NASDAQ was up 51 points (2.28%%) and the Dow Jones was up 152.25 points (1.36%). Crude Oil closed down $5.30 ending the New York session at $135.91 per barrel. Looking ahead, MBA Purchase index expected at 2.8% this week.

·The Euro (EUR) reached day highs early the European session as equities were severely negative along with US stock futures. Plunging Crude Oil allowed equities and the dollar to rally seeing the Euro give up gains and searched for support in the mid 1.56 levels. Overall the EUR/USD traded with a low of 1.5635 and a high of 1.5740 before closing the day at 1.5670 in the New York session. Looking ahead, 1^st quarter Eurozone GDP is expected to be confirmed at 0.8% and the May German Trade Balance is forecasted at 17.4B.

·The Japanese Yen (JPY) gained as risk aversion spiked given the equity sell off during the Asian and European sessions but fell off as Oil dropped and US stocks rose. Most of the crosses traded at day highs at the US session close. Overall the USDJPY traded with a low of 106.25 and a high of 107.71 before closing the day around 107.50 in the New York session. Looking ahead, Core machinery Orders for May expected at 1.1%. UPDATE May Core Machinery Orders strong at 10.4% m/m.

·The Sterling (GBP) was unable to hold early gains as the USD strengthened and UK economic sentiment waned as continued press coverage talked of recession and poor retail sales. Government data showed house price growth slowing to its slowest pace in two years coming in at 3.7% in May from 4.9% in April. Overall the GBP/USD traded with a low of 1.9666 and a high of 1.9797 before closing the day at 1.9690 in the New York session. Looking ahead, May Trade Balance seen at -4 Billion down from in -3.7 Billion in April.

·The Australian Dollar (AUD) continued to be under pressure as oil lead commodities down for the second day. The equity rally offered some support as AUD/JPY bounced. Overall the AUD/USD traded with a low of 0.9503 and a high 0.9564 before closing the day at 0.9535. UPDATE July Consumer Sentiment at 16 year lows of -6.7% down from -5.6% in June.

·Gold (XAU) was sold heavily as oil came off $5 per barrel decreasing the inflation hedging allure of Gold. Overall trading with a low of USD$913 and high of USD$933 ending the New York session at USD$920 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.5660

Initial support at 1.5606 (50% retracement 1.5303 to 1.5910) followed by 1.5535 (61.8% retracement 1.5303 to 1.5910). Initial resistance is now located 1.5754 (July 7 high) at followed by 1.5910 (July 3 high).

·Yen – 107.45

Initial support is located at 106.25 (July 8 low) followed by 105.78 (Jul 3 low). Initial resistance is now at 107.76 (July 7 high) followed by 108.19 (Jun 26 high).

·Pound – 1.9960

Initial support at 1.9637 (61.8% retracement of 1.9410 to 2.008 rally) followed by 1.9586 (Jun 23 low). Initial resistance is now at 1.9829 (July 7 high) followed by 1.9849 (July 4 high)

·Australian Dollar – 0.9510

Initial support at 0.9503 (July 8 low) followed by 0.9459 (61.8% retracement of the 0.9328 to 0.9670 advance). Initial resistance is now at 0.9642 (July 7 high) followed by 0.9670 (Jun 30 trend high).

·Gold – 917

Initial support at 912.9 (Jun 8 low) followed by 885.1 (Jun 26 low). Initial resistance is now at 936.5 (July 4 high) followed by 946.5 (July 3 high).