Australian FOREX Daily Outlook 26/08/2009

Oil crashes after testing $75

CURRENCY TRADING SUMMARY – 26th August (00:30GMT)

U.S. Dollar Trading (USD) had another day of range trading with strength in Asia countered by weakness in Europe followed by Strength in New York. China stocks dropped over 5% at one stage in Asia before paring losses going into Europe. Extremely strong US house prices (+1.4%) and Consumer Confidence(54 vs. 47 previously) led to fresh lows for the Dollar before a crash in Oil saw a rally into the end of the US session. Crude Oil Closed down $2.32 at $72.05. In US share markets, S&amp P ended +2.3 points (0.24%) at 1028, NASDAQ ended +6.25 points (0.31%) at 2024 and DOW JONES ended +30 points (+0.32%) at 9539. Looking ahead, July Durable Goods forecast at 3% vs. -2.2% previously. Also released New Home Sales forecast at 0.39m vs. 3.84M previously and Crude Oil inventories forecast at -2.1mn vs. -8.4mn previously.

The Euro (EUR) found support at 1.4260 before rallying to 1.4360 in Europe topping out and falling back to the 1.4300 level it has been pivoting for the last 3 days. German GDP was confirmed at +0.3% in Q2. ECB Stark talked about no sign of deflation and lack of mandate on Unemployment. Overall the EUR/USD traded with a low of 1.4253 and a high of 1.4363 before closing at 1.4290. Looking ahead, August German IFO Business climate forecast at 88.9 vs. 87.3 previously.

The Japanese Yen (JPY) continued to strengthen on fresh China fears testing 94 in Asia before bouncing with improve sentiment in Europe and trading at day lows after US data. AUD/JPY and EUR/JPY tracked US stocks but came under pressure with the crash in Oil. Overall the USDJPY traded with a low of 93.79 and a high of 94.64 before closing the day around 94.00 in the New York session.

The Sterling (GBP) was surprisingly weak with rally’s lately being smaller than dips to let the pound test new lows. A brief rally in Europe served as better levels to sell and the pair touched 1.6330 supports later in the day. EUR/GBP continued into the 0.8700’s as Pound weakness became widespread. Overall the GBP/USD traded with a low of 1.6309 and a high of 1.6445 before closing the day at 1.6330 in the New York session.

The Australian Dollar (AUD) broke above 0.8400 to test Monday’s highs before slumping on Oil moves to 0.8350 supports. The outlook is mixed and the currency is respecting ranges quite well. Further gains will require more substantial USD weakness especially against the Euro. Overall the AUD/USD traded with a low of 0.8332 and a high of 0.8428 before closing the US session at 0.8365.

Gold (XAU) continued to recover from the sharp drop on Monday to pop above $950 an ounce as Oil tested $75 a barrel before tracking the subsequent crash falling over $10 an ounce. Overall trading with a low of USD$942 and high of USD$954 before ending the New York session at USD$947 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4290

Initial support at 1.4201 (AUG 20 low) followed by 1.4046 (AUG 17 low). Initial resistance is now located at 1.4376 (Aug high) followed by 1.4621 (61.8% retrace 1.6038 -1.2330)

Yen – 93.95

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 – 1.6315

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 – 0.8345

Initial support at 0.8216 (AUG 21 low) followed by the 0.8126 (July 29 low). Initial resistance is now at 0.8478 (Aug 14 high) followed by 0.8519 (Sept 22 high).

Gold – 946

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).