Australian FOREX Daily Outlook 13/11/2008

Paulson changes Bailout Plan, Market Crashes

CURRENCY TRADING SUMMARY – 13th November 2008 (00:30GMT)

·U.S. Dollar Trading (USD) gained heavily against the higher yielding currencies as US stocks spiraled lower for the third day as the Treasury announced changes to the $700 Billion Bailout plan. The modifications were to buy less troubled assets and instead invest in consumer credit availability. Auto-makers were also ignored in this plans new direction. In the U.S. share markets, the NASDAQ was down -81 points (-5.17%) and the Dow Jones was down -411 points (-4.73%). Crude Oil closed down $3.17 ending the New York session at $56.16 per barrel. Looking ahead, weekly jobless claims are expected 484K vs. 481K previously. Also released September Trade Balance expected at -57Bn vs. -59Bn previously.

·The Euro (EUR) held up remarkable well considering the USD strength and massive losses seen in other currencies around the world. The 1.2500 proved a strong and stable support with looks below being repelled on multiple occasions throughout the day. With US stocks ending very weak and Oil falling over $3 a barrel the Euro is on weak footing heading into Asia. September Industrial output weakened to -1.6% vs. -1.3% expected. Overall the EUR/USD traded with a low of 1.2439 and a high of 1.2631 before closing the day at 1.2510 in the New York session. Looking ahead, German Q3 GDP is expected -0.2% vs. -0.5% previously.

·The Japanese Yen (JPY) was the strongest currency yesterday as investors rushed out of carry trades. USD/JPY finally gave up ground when support at .9700 was broken. As US stocks extended losses the Yen continued to strengthen especially against the GBP and AUD. Overall the USDJPY traded with a low of 94.50 and a high of 98.06 before closing the day around 95.40 in the New York session. Update October Corporate Goods Price at -1.6%.

·The Sterling (GBP) was the weakest currency yesterday as Claimant Count Change remained at high levels of 36.5K in October and Governor King talked of Recession and possible deflation in the UK. Slowing Inflation has opened up the door for more aggressive rate cuts going forward. EUR/GBP reach new record levels above .83 as GBP losses outpaced the Euro. Overall the GDP/USD traded with a low of 1.4835 and a high of 1.5482 before closing the day at 1.4920 in the New York session.

·The Australian Dollar (AUD) broke below support at .6500 as equity and Oil losses mounted. RBA buying at the lows of .6350 was confirmed by the bank and this helped to cap losses. AUD/JPY was under severe pressure as risk aversion soared. Overall the AUD/USD traded with a low of 0.6350 and a high of 0.6662 before closing the US session at 0.6380.

·Gold (XAU) fell inline with Oil for a second day head as traders liquidated all commodities. Overall trading with a low of USD$709.9 and high of USD$738.75 before ending the New York session at USD$712 an ounce.

·Euro – 1.2465

Initial support at 1.2330 (Oct 28 low) followed by 1.2134 (50% retracement of 0.8229-1.6038 major rally). Initial resistance is now located at 1.2468 (Nov 12 low) at followed by 1.2800 (Nov 11 high)

·Yen – 95.70

Initial support is located at 94.48 (Nov 12 low) followed by 93.20 (76.4% retracement of 90.92-100.57 rally). Initial resistance is now at 98.08 (Nov 12 high) followed by 99.48 (Nov 10 high).

·Pound – 1.4915

Initial support at 1.4895 (Nov low) followed by 1.4842 (Oct 2001 high). Initial resistance is now at 1.5481 (Nov 12 high) followed by 1.5703 (Nov 11 high).

·Australian Dollar – 0.6405

Initial support at 0.6339 (Oct 29 low) followed by the 0.6246 (76.4% retracement of 0.6009-0.7015 rally). Initial resistance is now at 0.6663 (Nov 1 high) followed by 0.6758 (Nov 11 high).

·Gold – 713

Initial support at 710 (Nov 12 low) followed by 707.5 (Oct 27 low). Initial resistance is now at 750 (Nov 11 high) followed by 770 (Nov 5 high).