Australian FOREX Daily Outlook 13/07/2009

Weak Stocks helps USD consolidate gains

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

U.S. Dollar Trading (USD) was stronger as mild risk aversion supported and Crude Oil dipped to new lows. USD/JPY was the exception as the Yen remained the first choice for safe haven flows. US May Trade Balance improved unexpectedly to -26Bn vs. -30Bn previously. This was tempered however as UoM Consumer sentiment in July dropped to 64 from 70 previously, confirming the drop seen in the recent CB survey. Crude Oil closed down $0.52 at $59.89. In US share markets, S&amp P ended -3.55 points (-0.40%) at 879.13, NASDAQ ended +3.48 points (0.20%) at 1756.03 and DOW JONES ended -36.65 points (0.06%) at 8146.52. Looking ahead, June Fed Budget forecast at -97Bn vs. 33Bn previously.

The Euro (EUR) fell heavily from Thursday’s high as the market absorbed reports that Eastern European countries would be looking to expand IMF funding to help them through the financial crisis. Support from central banks help lift the Euro off lows under 1.3900 and end on a neutral footing. Overall the EUR/USD traded with a low of 1.3878 and a high of 1.4030 before closing at 1.3949. Looking ahead, ECB President Trichet Speaks today.

The Japanese Yen (JPY) Yen strength returned with a vengeance with Wednesday lows being retested on the downside. Support for the USD/JPY at 91.80 helped the pair and crosses rebound into the US close. Continued strength would target the key 90 Yen level where government intervention becomes a serious possibility. Overall the USDJPY traded with a low of 91.70 and a high of 93.18 before closing the day around 92.50 in the New York session. Looking ahead, Industrial Output is for May and Japanese Consumer Confidence released today.

The Sterling (GBP) was volatile but ended well off highs with GBP/JPY selling dragging Cable lower. Sentiment is mixed with the short covering seen after the BoE providing fresh selling opportunities but 1.6000 forming as a serious support zone. EUR/GBP continues to edge higher as risk aversion weighs on the pound more than the Euro. Overall the GBP/USD traded with a low of 1.6174 and a high of 1.6333 before closing the day at 1.6189 in the New York session.

The Australian Dollar (AUD) tracked commodities and equity markets lower although found support in the low 0.77’s and bounced into the close. AUD/NZD is beginning to slip from its recent higher 1.24-28 range and is danger of falling to 1.2000 support. The US reporting season will provide most of the direction in the coming weeks. Overall the AUD/USD traded with a low of 0.7740 and a high of 0.7842 before closing the US session at 0.7790.

Gold (XAU) fell back to Wednesday’s supports but looks comfortable trading above $900 an ounce for the time being as USD strength is countered by fresh safe haven flows. Overall trading with a low of USD$907 and high of USD$916 before ending the New York session at USD$912 an ounce.

Euro – 1.3955

Initial support at 1.3827 (Jun 22 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4071 (July 1 high) followed by 1.4201 (Jun 1 high)

Yen – 92.45

Initial support is located at 91.81 (Jul 8 low) followed by 90.52 (76.4 retrace 87.13-101.44). Initial resistance is now at 94.89 (Jul 8 high) followed by 95.46 (Jul 7 high).

Pound – 1.6190

Initial support at 1.5979 (23.6% retrace of 1.3503-1.6743) followed by 1.5803 (Jun 8 low). Initial resistance is now at 1.6546 (Jul 1 high) followed by 1.6745 (Jun 30 high).

Australian Dollar – 0.7800

Initial support at 0.7724 (Jul 8 low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.8038 (Jul 7 high) followed by 0.8155 (Jun 30 high).

Gold – 912

Initial support at 895 (May 6 low) followed by 880 (May 1 low). Initial resistance is now at 934 (Jul 3 high) followed by 948 (Jun 26 high).