Australian FOREX Daily Outlook 10/09/2008

Lehman Brothers lead US stocks down, Dollar Mixed

CURRENCY TRADING SUMMARY – 10th September 2008 (00:30GMT)

·U.S. Dollar Trading (USD) had a very volatile day as weak US data was countered by a continued slide in commodity prices. US July Pending Home Sales came in weaker than expected at -3.2% vs. forecasts of -1%. Oil fell over $4 a barrel as OPEC signaled it wouldn’t cut production and Hurricane Ike looked likely to miss the Gulf. Equities were under severe pressure as Lehman Brothers fell by 30% on suggestions that South Korean regulators would scuttle its investment in the Banking firm. In the U.S. share markets, the NASDAQ was down 59 points (-2.64%) and the Dow Jones was down 280 points (-2.43%). Crude Oil closed down $0.11 ending the New York session at $106.34 per barrel. Looking Ahead, Crude Oil Inventories are expected at -4.6 Million.

·The Euro (EUR) tested lows during the Asian session weak, US data and Stocks allowed the single currency to rally above 1.4200 before large losses in Oil pulled the pair lower. Heavy selling in the EUR/JPY also helped to cap gains. Overall the EUR/USD traded with a low of 1.4046 and a high of 1.4227 before closing the day at 1.4130 in the New York session.

·The Japanese Yen (JPY) traded inline with equity movements as a recovery in Europe allowed a bounce off lows. Rumors swirled around Lehman Brothers in the US session causing heaving selling again as risk aversion spiked. AUD/JPY was hit especially hard heading towards the key 85 level. Overall the USDJPY traded with a low of 106.84 and a high of 108.45 before closing the day around 107 in the New York session. Looking ahead, August Leading Indicators and Current Account released today.

·The Sterling (GBP) was able to recover from heavy selling on Monday, tracking the Euro higher and shrugging off poor data. July Manufacturing Production fell -0.2% vs. -0.1% expected and July Industrial Production fell -0.4% vs. -0.1% forecast. Overall the GDP/USD traded with a low of 1.7505 and a high of 1.7708 before closing the day at 1.7615 in the New York session. Looking ahead, July Trade Balance is expected at -7.5 Billion.

·The Australian Dollar (AUD) initially bounced with the Euro but took the brunt of the Commodity sell off heading back towards the key .8000 level. July Retail Sales were mixed as a change in reporting made the number harder to digest and more volatile. The seasonally adjusted figure showed a jump of 1.4% much more than the 0.5% expected but was largely ignored. Overall the AUD/USD traded with a low of 0.8005 and a high of 0.8178 before closing the US session at 0.8010. Update AUD/USD breaks below .8000

·Gold (XAU) was unable to gain on safe haven flows and USD weakness as Oil fell heavily dragging the precious metal to year lows early Wednesday. Overall trading with a low of USD$777.10 and high of USD$804 before ending the New York session at USD$778 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.4110

Initial support at 1.4047 (Sept 9 low) followed by 1.4015 (Oct 10 2007 low). Initial resistance is now located at 1.4201 (Sept 9 high) at followed by 1.4429 (Sept 8 high).

·Yen – 107.15

Initial support is located at 106.68 (Sep 9 low) followed by 105.53 (Sep 5 low). Initial resistance is now at 108.43 (Sep 9 high) followed by 109.08 (Sept 8 high).

·Pound – 1.7590

Initial support at 1.7472 (Sept 8 low) followed by 1.7371 (Apr 5, 2006 low). Initial resistance is now at 1.7669 (Sep 9 high) followed by 1.7976 (Sep 8 high).

·Australian Dollar – 0.8030

Initial support at 0.7993 (Sept 10 low) followed by 0.7893 (Aug 20, 2007 low). Initial resistance is now at 0.8178 (Sept 9 High) followed by 0.8353 (Sept 8 high).

·Gold – 770

Initial support at 768.60 (Oct 26, 2007 low) followed by 745.83 (Oct 22, 2007 low). Initial resistance is now at 804.98 (Sep 9 high) followed by 819 (Sep 5 high).