Australian FOREX Weekly Outlook 05/01/2009

New Year and New hope in Markets

5/01/09

last week’s currency trading review

The Dollar was little last changed over the holiday period with quiet markets. Stocks did experience a rally on the first trading day in 2009 and this helped to improve risk sentiment. On the data front December Consumer confidence slipped to a record low 38 vs. 45.2 previously. Improvement was seen in the weekly Unemployment Claims falling to 492K vs. 586K previously. On Friday we saw the December Manufacturing ISM drop to 32.4 vs. 35.5 previously. The Euro lost some ground against the USD but was very well supported against GBP which hit new all time highs above 0.9800 before profit taking on Friday saw the pair sharply retreat. Quiet data releases saw the Final Manufacturing PMI at 33.9 the highlight. The EUR/USD lost -0.80% closing at 1.3916, after opening the week at 1.4027. The Japanese Yen was sold against he dollar as stock markets found some traction and general investor risk sentiment improved. Crosses such as AUD/JPY and NZD/JPY saw large gains. The USD/JPY gained 1.11% closing at 91.78 after opening at 90.76. The GBP was under pressure for most of the week as new year lows were plumbed in low liquidity. Record drops against the GBP and GBP/JPY under 130 Yen underpinned the broad weakness. Friday saw the pair finally rally as profit taking on multiple crosses lifted the Pound. The GBP/USD fell -0.37% closing at 1.4544 after opening at 1.4598. The AUD was one of the week’s best performers as the twin positive effect of improved stocks and commodities saw the high yielder bought up above 0.7000. AUD/JPY also say gains of 3% as carry trades came back into demand. The AUD/USD closed up 3.92% at 0.7111 after opening at 0.6832.

The forex trading week preview

In the States Pending Home Sales in November kick the week off on Tuesday expected at -1.0%. Also released on Tuesday the December ISM non-manufacturing is expected at 37.3 vs. 37 previously. On Wednesday the ADP Employment Change is expected at -485K vs. -472K previously. On Thursday Weekly Jobless Claims are forecast at 540K vs. -472K. On Friday, December Non Farm Payrolls are expected to show a drop of 480K vs. -533K previously. Also released the December Unemployment Rate is forecast at 7.0% vs. 6.5%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Tuesday we have the PMI Services is seen being confirmed at 43 in December. On Wednesday the German ILO Unemployment Rate is forecast to remain at 7.1% in November. German Unemployment change is seen at 10K in December. On Thursday the Eurozone Unemployment Rate is expected to creep higher to 7.8% vs. 7.7% previously. On Friday November Retail Sales are forecast to drop -0.1%. German Production is forecast to drop -2.0%. In the UK On Tuesday we have the December PMI expected to drop to 39.0 vs. 40.1 previously. On Thursday the BoE announces it Interest rate decision widely expected to cut to 1.50% from 2.0%. On Friday December Industrial Production is forecast at -0.5% and Manufacturing Production is expected at -0.5%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan Quiet data week with November Leading Indicators on Friday forecast at 81.4 the only release of note. We will provide our previews and reviews of these data releases in the daily summary.

In Australia On Wednesday November Retail sales are forecast at 0.5% vs. 0.7% previously. On Thursday the November Trade Balance is forecast at 2Bn vs. 2.95Bn previously. Also released the November Building Approvals forecast at -1.3% vs. -5.4%. We will provide our previews and reviews of these data releases in the daily summary.

·Euro – 1.3900

Initial support at 1.3824 (Dec 19 low) followed by 1.3806 (38.2% retrace 1.2329 to 1.4719). Initial resistance is now located at 1.4069 (Jan 1 high) at followed by 1.4148 (Dec 31 high)

·Yen – 92.00

Initial support is located at 90.61 (Jan 2 low) followed by 89.53 (Jan 1 low). Initial resistance is now at 92.88 (Dec 11 high) followed by 93 (Round Figure).

·Pound – 1.4540

Initial support at 1.4354 (Dec 31 low) followed by 1.4044 (Jan 2002). Initial resistance is now at 1.4827 (Jan 2 high) followed by 1.5193 (Dec 26 low).

·Australian Dollar – 0.7120

Initial support at 0.6849 (Dec 31 low) followed by the 0.6798 (Dec 26 low). Initial resistance is now at 0.7139 (Dec 18 high) followed by 0.7240 (100 Day moving average).

·Gold – 874

Initial support at 856 (Dec 31 low) followed by 843 (Dec 26 low). Initial resistance is now at 888 (Jan 1 high) followed by 890 (Dec 29 high).