Australian FOREX Daily Outlook 18/11/2008

Citibank to Cut 50 000 Jobs, Economic Worries Persist

CURRENCY TRADING SUMMARY – 18th November 2008 (00:30GMT)

·U.S. Dollar Trading (USD) was broadly weaker as most majors led by the Pound were able to rebound as US stocks initially rallied. Ongoing Economic concerns and fears of a deep recession lead to a late sell off and Dollar losses were pared. Supporting the USD was ongoing commodity weakness. October Industrial Production surprised to the upside recovering from a -2.8% plunge last month to post a +1.3% rise. In U.S. share markets, the NASDAQ was down 34.8 points (-2.29%) and the Dow Jones was down 223.73 points (-2.63%). Crude Oil closed down $2.09 ending the New York session at $54.95 per barrel. Looking ahead, October PPI is seen falling -1.8% m/m vs. -0.4% previously.

·The Euro (EUR) was generally well supported during the Asian and European sessions, extending these gains as US stocks turned positive. The late Dow sell off pared gains but the pair was still well supported at 1.2650. EUR/GBP was one pair that gave up a lot of ground as the market bought the beaten down pound. The September EU trade balance expectations coming at -5.6Bn vs. -7.3Bn forecast. Overall the EUR/USD traded with a low of 1.2515 and a high of 1.2741 before closing the day at 1.2650 in the New York session.

·The Japanese Yen (JPY) initially supported as the market opened after the G20 meeting over the weekend. The meeting was viewed as rather underwhelming response to the market crisis. As Asian stocks turned around most crosses and USD/JPY steadily rose. Overall the USDJPY traded with a low of 96.04 and a high of 97.54 before closing the day around 96.70 in the New York session.

·The Sterling (GBP) rebounded most of the day as the buyers swooped on levels not seen since 2003 and technically was oversold. The bearish backdrop of the UK economy continues to cast a dark shadow on the Pound as it struggled past 1.5000. EUR/GBP selling helped to underpin the gains. Overall the GDP/USD traded with a low of 1.4661 and a high of 1.45081 before closing the day at 1.5000 in the New York session. Looking ahead, October CPI is seen at 0.1% vs. 0.5% previously.

·The Australian Dollar (AUD) was relatively buoyant after a steep sell off at the open as Asian stocks lifted off lows. Q3 Retail Sales were weak at 0.1% vs. 0.5% forecast. Capping gains were weak commodities and a late Dow sell off. Traders are weary of speculation that the RBA is buying around the 0.6350 area and this is helping to dampen speculator interest to the downside. Overall the AUD/USD traded with a low of 0.6382 and a high of 0.6597 before closing the US session at 0.6490. Looking ahead, RBA Minutes are released today from the November Meeting in which they cut 0.75%.

·Gold (XAU) was on the back foot as Oil continued to slide. The market is unsure of the future direction with predictions varying from $600 to $1200 an ounce over the next year. Overall trading with a low of USD$731.65 and high of USD$748.95 before ending the New York session at USD$738 an ounce.

·Euro – 1.2650

Initial support at 1.2513 (Nov 17 low) followed by 1.2389 (Nov 13 low). Initial resistance is now located at 1.2742 (Nov 17 low) at followed by 1.2855 (Nov 13 high)

·Yen – 96.45

Initial support is located at 95.88 (Nov 17 low) followed by 94.48 (Nov 12 low). Initial resistance is now at 97.55 (Nov 17 high) followed by 98.19 (Nov 13 high).

·Pound – 1.5000

Initial support at 1.4647 (Nov 17 low) followed by 1.4558 (Nov 13 low). Initial resistance is now at 1.5083 (Nov 17 high) followed by 1.5366 (38.2% retrace 1.6672 to 1.4558).

·Australian Dollar – 0.6510

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 0.6596 (Nov 17 high) followed by 0.6696 (Nov 14 high).

·Gold – 737

Initial support at 725.40 (Nov 14 low) followed by 700 (Nov 13 low). Initial resistance is now at 754.55 (Nov 14 high) followed by 768.21 (Nov 10 high).