Australian FOREX Daily Outlook 23/07/2009

Range Trading Continues

CURRENCY TRADING SUMMARY – 23rd July (00:30GMT)

U.S. Dollar Trading (USD) mixed results and US stocks kept most majors contained to their respective ranges. USD strength in Asia on profit taking was the theme but dip buyers emerged at the noted levels in the market. US House prices were up 0.9% in May and help ignite fresh risk appetite. Fed Chief Bernanke spoke again and was questioned by congress on the lack of consumer protections. Crude Oil closed down $0.21 at $65.40 in September contract. In US share markets, S&amp P ended -0.51 points (-0.05%) at 954.07, NASDAQ ended +10.18 points (+0.36%) at 1926.38 and DOW JONES ended -34.68 points (-0.39%) at 8881.26. Looking ahead, Weekly Jobless claims are forecast at 550K vs. 522k previously. June Existing Home Sales are forecast 4.84M vs. 4.77M previously.

The Euro (EUR) tested 1.4160 before bouncing sharply with US futures. Once again trading above 1.4250 proved hard to sustain and the pair slipped into the close. European Factory Orders fell more than expected to -0.2% vs. 1.9% forecast in May but the rate of decline from previous months is decreasing. Overall the EUR/USD traded with a low of 1.4155 and a high of 1.4259 before closing at 1.4210. Looking ahead, May EU Current Account previously at -9.2Bn.

The Japanese Yen (JPY) was strong as downside supports were tested into the US open before buoyant stocks and Yen sellers gain the upper hand leaving the ranges intact and technical outlook mixed. June Trade Balance at 508BN was slightly worse than forecasts of 620BN. GBP/JPY and EUR/JPY also enjoyed sharp bounce. Overall the USDJPY traded with a low of 93.08 and a high of 93.89 before closing the day around 93.65 in the New York session.

The Sterling (GBP) was weighed into the European open by UK Bank recapitalize fears and leftover sour sentiment from BoE’s comments. The MPC minutes were slightly more bullish than expected and help the pair to rally throughout the rest of the day. July CBI Industrial Orders -59 vs. -46 forecast. Overall the GBP/USD traded with a low of 1.6309 and a high of 1.6507 before closing the day at 1.6460 in the New York session. Looking ahead, June Retail Sales forecast at 0.4% vs. -0.6% previously.

The Australian Dollar (AUD) found support at lows slightly higher than yesterday to continue the trend higher and bounce toward 0.8200. Heavy resistance and a weaker close for US stocks help the pair ease back to 0.8150 supports. Q2 CPI was at forecasts at 0.5% Q/Q and 1.5% Y/Y . Positive sentiment is building for the AUD and a break higher is possible if equities can push new highs. Overall the AUD/USD traded with a low of 0.8099 and a high of 0.8215 before closing the US session at 0.8160.

Gold (XAU) kept to yesterday’s range with more consolidation seen throughout the session. Overall trading with a low of USD$944 and high of USD$955 before ending the New York session at USD$950 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4215

Initial support at 1.4056 (Jul 16 low) followed by 1.3833 (Jul 8 low). Initial resistance is now located at 1.4277 (Jun 21 high) followed by 1.4338 (Jun 3 high)

Yen – 93.55

Initial support is located at 92.72 (Jul 14 low) followed by 91.74 (July 13 low). Initial resistance is now at 94.89 (Jul 8 high) followed by 95.46 (Jul 7 high).

Pound – 1.6445

Initial support at 1.6266 (July 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6558 (Jun 20 high) followed by 1.6745 (June 30 high).

Australian Dollar – 0.8160

Initial support at 0.7925 (July 15 low) followed by the 0.7814 (July 14 low). Initial resistance is now at 0.8237 (June 11 high) followed by 0.8263 (Jun 3 high).

Gold – 950

Initial support at 932 (Jul 17 low) followed by 918 (July 14 low). Initial resistance is now at 965 (June 10 high) followed by 990 (Jun 3 high).