Australian FOREX Daily Outlook 15/09/2008

Lehman takeover talks help stocks to recover.

CURRENCY TRADING SUMMARY – 15th September 2008 (00:30GMT)

·U.S. Dollar Trading (USD) weak US data sent the USD lower even as equities recovered from lows and risk appetite cautiously reentered the market. US Retail Sales were very weak though at -0.3% vs. 0.2% expected and the PPI fell by -0.9% as cheaper Oil filtered through the economy. Both data sets suggest that the US FED’s ability to increase rates will be severely hampered in the short term. In the U.S. share markets, the NASDAQ was up 3 points (0.14%) and the Dow Jones was down 11 points (-0.10%). Crude Oil closed up $0.31 ending the New York session at $101.18 per barrel. Looking Ahead, August Industrial Output is seen -0.3% vs. +0.2% previously. UPDATE Lehman Brothers takeover looks Doubtful, Bank of America and Merrill Lynch in Merger talks and Oil drops Below $100 a barrel.

·The Euro (EUR) Jumped higher as the USD came under broad pressure into the weekend. News that China may diversify its FX reserves also helped to buoy the Euro. July Industrial Production was confirmed weak at -0.3% from -0.2% expected. Overall the EUR/USD traded with a low of 1.3973 and a high of 1.4233 before closing the day at 1.3990 in the New York session. Looking ahead, Q2 Labor Costs released. UPDATE EUR/USD surges higher on Asian open

·The Japanese Yen (JPY) was sold as risk appetite returned and the markets continued to recover from Thursdays lows. The crosses were especially bid as EUR/JPY and AUD/JPY made significant gains. Overall the USDJPY traded with a low of 106.72 and a high of 107.99 before closing the day around 107.90 in the New York session. UPDATE USD/JPY breaks below 106 of Lehman News.

·The Sterling (GBP) rebounded inline with the Euro as the USD was weakened. GBP/JPY gains supported. Overall the GDP/USD traded with a low of 1.7542 and a high of 1.7960 before closing the day at 1.7950 in the New York session. UPDATE GBP/USD Breaks Above 1.80 Early Asia

·The Australian Dollar (AUD) AUD reclaimed the .8100 level and continued to climb into the US session as risk appetite returned and gold made good gains. AUD/JPY surged higher. Overall the AUD/USD traded with a low of 0.8007 and a high of 0.8234 before closing the US session at 0.8230.

·Gold (XAU) made good gains as the USD was sold and investors took advantage of the recent plunge in commodities. Oil continued to be offered though and weighed on gains. Overall trading with a low of USD$747 and high of USD$767 before ending the New York session at USD$765 an ounce. UPDATE XAU/USD gains 2% in Asian trade on safe haven flows.

TECHNICAL COMMENTARY

·Euro – 1.4420

Initial support at 1.4194 (Sept 15 low) followed by 1.3973 (Sept 12 low). Initial resistance is now located at 1.4481 (Sept 15 high) at followed by 1.4544 (Sept 4 high).

·Yen – 105.55

Initial support is located at 105.27 (Sept 15 low) followed by 104.76 (Jul 17 low). Initial resistance is now at 107.99 (Sep 12 high) followed by 108.22 (Sept 9 high).

·Pound – 1.8040

Initial support at 1.7550 (Sept 12 low) followed by 1.7447 (Sept 11 low). Initial resistance is now at 1.8124 (Sept 15 high) followed by 1.8206 (Sep 1 high).

·Australian Dollar – 0.8215

Initial support at 0.7901 (Sept 11 low) followed by 0.7893 (Aug 20, 2007 low). Initial resistance is now at 0.8254 (Sept 15 High) followed by 0.8300 (Big Figure).

·Gold – 783

Initial support at 736.7 (Sept 11 low) followed by 727.11 (Oct 9, 2007 low). Initial resistance is now at 790.6 trendline resistance followed by 805.15 (Sep 9 high).