Australian FOREX Daily Outlook 13/10/2009

USD still weak, EURO and Commodity currencies pounce.

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

U.S. Dollar Trading (USD) was mixed on Monday despite US Columbus Day Holidays. The Dollar declined against the EUR and commodity currencies following ongoing concerns regarding USD reserve status. The dollar was further weighed upon by equity market rally in Europe. Fresh concerns regarding the USD currency status were raised following a report by Bloomberg that 63% of new Central Banks reserves were shifted into EUR or JPY in 2^nd quarter of 2009. In US share markets the DJIA was higher by 20.86 (+0.21%) whilst the NASDAQ was slightly lower by -0.14 PTS (-0.01%). In a relatively quiet day on the data front, focus will surround a speech by Fed Reserve member Kohn as well as that of the federal budget.

The Euro (EUR) gained following fears the USD will be dropped as the global reserve currency. The Euro was also propped up by equity market rally in Europe and was well bid against the JPY and its neighboring GBP. Overall the EUR traded with a low of 1.4675 and a high of 1.4813 before closing the day at 1.4774. The German ZEW survey heads the list of key data out of the Euro zone on Tuesday.

The Japanese Yen (JPY) initially lost ground on the back of profit taking as Japanese markets were away on Holidays, and was further weighed upon as EURJPY found heavy demand following an equity market rally in Europe. Overall the USDJPY traded with a low of 89.61 and a high of 90.46 before closing the day at 89.62. Tuesday sees the beginning of a two-day BoJ policy meeting.

The Sterling (GBP) continues to remain heavily pressured following reports the CEBR expects the BoE to keep interest rates low (currently 0.5%) until 2011, and comments by Prime Minister Gordon Brown that an end to quantitative easing would hinder the UK recovery. Overall the GBP traded with a low of 1.5727 and a high of 1.5882 before closing the day at 1.5796. Key data out of the UK on Tuesday include CPI.

The Australian Dollar (AUD) once again traded near 14 month high supported by further rate hike expectations. The AUD was the best performing currency last week and has begun the week in a bid tone. Overall the AUDUSD traded with a low of 0.8981 and a high of 0.9083 before closing the day at 0.9066

Oil &amp Gold (XAU) XAU rebounded yesterday by US$8.90 an ounce to US$1057.50 in reaction to a weaker USD. Oil also headed higher following Cold weather in the US boosting demand. Crude Oils rose by US$1.39 a barrel to US$73.16.

TECHNICAL COMMENTARY

Euro – 1.4790

Initial support at 1.4646 (Oct 6 low) followed by 1.4481 (Oct 2 low). Initial resistance is now located at 1.4844 (Sept 23 high) followed by 1.4908 (August 22 ’08 high)

Yen – 89.70

Initial support is located at 89.35 (Oct 12 low) followed by 88.01 (Oct 7 low). Initial resistance is now at 91.63 (sep 24 high) followed by 92.53 (Sept 21 high).

Pound – 1.5815

Initial support at 1.5450 (May 20 low) followed by 1.5296 (May 19 low). Initial resistance is now at 1.6120 (Oct 8 high) followed by 1.6207 (23.6% retracement 1.3503 – 1.7043).

Australian Dollar – 0.9085

Initial support at 0.8866 (Oct 7 low) followed by the 0.8760 (Oct 5 low). Initial resistance is now at 0.9130 (Aug 07 ’08 high) followed by 0.9347 (Aug 04 ’08 high).

Gold – 1055.10

Initial support at 1036.90 (Oct 7 low) followed by 1015.70 (Oct 6 low). Initial resistance is now at 1061.55 (08 Oct high) followed by 1100 (Psych Level).

Oil – 73.10

Initial support at 72.15 followed by 71.21.Initial resistance is now at 73.94 followed by 74.79.