Australian FOREX Daily Outlook 24/08/2009

US Housing Sales Rocket Most in a Decade

CURRENCY TRADING SUMMARY – 24th August (00:30GMT)

U.S. Dollar Trading (USD) had a wild and wooly trading day, gaining in Asia on China concerns before losing ground in Europe on a Euro led rally. In the US session, a 7% gain in July Housing Sales broke records and sent the USD to fresh lows before a rally in 10 Year Bond Yields led some to buying especially against the Yen. Stock Markets finished at Year highs above 9500 on the Dow in a very strong move to end the week. FED Chairman Bernanke spoke about the end of the Global and US recessions in a relatively optimistic speech Friday. Crude Oil Closed up $1.20 at $73.60. In US share markets, S&amp P ended +18 points (+1.86%) at 996, NASDAQ ended +31 points (+1.59%) at 1969 and DOW JONES ended +155 points (+1.67%) at 9505.

The Euro (EUR) broke out of the Thursday’s range on the back of very strong EU PMI survey results. August Services PMI was very strong at 49.5 vs. 45.7 previously. PMI manufacturing at 47.3 vs. 46.3 previously. The market hit day highs after the US data but then profit taking and some fresh USD strength helped to pare gains into the weekend. Overall the EUR/USD traded with a low of 1.4209 and a high of 1.4377 before closing at 1.4345. Looking ahead, June Industrial Orders forecast at 1.5% vs. -0.2% previously.

The Japanese Yen (JPY) fresh multi-month lows on the USD/JPY going into Europe were quickly reversed with USD strength on the back of Housing data and fresh stock market highs. USD/JPY traded above 94.50 and dragged all the crosses higher. EUR/JPY was extremely well supported on the Euro-zone data after basing at 133 Yen multiple times during the week. Overall the USDJPY traded with a low of 93.42 and a high of 94.72 before closing the day around 94.45 in the New York session.

The Sterling (GBP) tested 1.6600 once again on the back of the US data but was sold hard from this level to back below 1.6500 as the change in US interest rate expectations hurt cable. The fall was hard to sustain and the pair finished well supported just above 1.6500. GBP/JPY finished above 155 yen and could retest the key 160 level this week if risk appetite remains supported. Overall the GBP/USD traded with a low of 1.6419 and a high of 1.6625 before closing the day at 1.6510 in the New York session.

The Australian Dollar (AUD) was pushed around with risk appetite, falling on china concerns before rocketing higher with European and US stocks. Fresh highs in Oil also buoyed the commodity currency higher as did AUD/JPY buying from all corners of the market. AUD/NZD continued to track lower towards 1.22 as the kiwi outpaced the Aussie on the move higher. Overall the AUD/USD traded with a low of 0.8216 and a high of 0.8396 before closing the US session at 0.8350.

Gold (XAU) finally started to move higher with the rest of the market breaking above $950 and consolidating the move into the weekend. Overall trading with a low of USD$938 and high of USD$958 before ending the New York session at USD$954 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4340

Initial support at 1.4046 (AUG 17 low) followed by 1.4008 (Jul 29 low). Initial resistance is now located at 1.4447 (Aug 5 high) followed by 1.4621 (61.8% retrace 1.6038 -1.2330)

Yen – 94.50

Initial support is located at 93.10 (July 22 low) followed by 92.72 (July 14 low). Initial resistance is now at 95.29 (August 18 high) followed by 96.73 (Aug 12 high).

Pound – 1.6515

Initial support at 1.6276 (Aug 17 low) followed by 1.6034 (Jul 13 low). Initial resistance is now at 1.6665 (AUG 13 high) followed by 1.6719 (AUG 10 high).

Australian Dollar – 0.8365

Initial support at 0.8126 (July 29 low) followed by the 0.7925 (July 15 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold – 953

Initial support at 930 (Aug 17 low) followed by 925 (July 29 low). Initial resistance is now at 960 (August 13 high) followed by 971 (Aug 6 high).