Australian FOREX Daily Outlook 23/11/2009

USD Carry Trade Under Threat

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

U.S. Dollar Trading (USD) finished the weak on a strong footing with fresh multi-week highs against the Euro, GBP and AUD. Talk in the markets is of traders closing out short USD positions ahead of the end of the year and that weakness in global stock markets is souring the investors mood. In US Stocks, DJIA -14 points closing at 10318, S&amp P -3 points closing at 1091 and NASDAQ -10 points closing at 2146. Looking ahead, October Existing Home sales are forecast at 5.7Mln vs. 5.57Mln previously.

The Euro (EUR) tested the noted 1.4800 support level before recovering late in the US session with stock markets also rising off lows. October German PPI was at 0.0% vs. 0.1% forecast. EUR/JPY came under increasing pressure as the technical picture continues to weaken testing 132 supports. Overall the EUR/USD traded with a low of 1.4800 and a high of 1.4935 before closing at 1.4859. Looking ahead, November PMI Manufacturing is forecast at 51.2 vs. 50.7 whilst PMI services is forecast at 52.8 vs. 52.6 previously.

The Japanese Yen (JPY) risk aversion helped the Yen stay very strong against most currencies although it was relatively unchanged against the other safe haven in the USD. AUD/JPY fell to multi week lows below 81 Yen as the risk sensitive pair came under pressure. GBP/JPY also fell through support at 148 to 146.50. BOJ held at 0.1% and upgraded their economic outlook. Overall the USDJPY traded with a low of 88.69 and a high of 89.13 before closing the day around 88.95 in the New York session.

The Sterling (GBP) was hit very hard by a break lower through 1.6600 support and heavy EUR/GBP buying to above 0.9000. GBP/JPY was very weak as risk aversion spiked higher. GBP is continuing to track stocks and sentient towards financial stocks and UK banks. Overall the GBP/USD traded with a low of 1.6462 and a high of 1.6675 before closing the day at 1.6497 in the New York session.

The Australian Dollar (AUD) hit multi-week lows on a break of 0.9130 before finding support at 0.9060. A rally in gold off lows helped the AUD to recover nicely into the US close. AUD/JPY was on the back foot as risk was taken off the table. Overall the AUD/USD traded with a low of 0.9060 and a high of 0.9215 before closing the US session at 0.9150.

Oil &amp Gold (XAU) reversed losses to finish just off year highs is a show of the precious metal’s strength. Overall trading with a low of USD$1132 and high of USD$1151 before ending the New York session at USD$1150 an ounce. Oil continued to be weak as the recovery story stalled. Crude Oil was down -$0.56 ending the New York session at $77.40.

TECHNICAL COMMENTARY

Euro – 1.4850

Initial support at 1.4802 (Nov 20 low) followed by 1.4786 (0.618 of 1.4624-1.5049). Initial resistance is now located at 1.4966 (Nov 19 high) followed by 1.5016 (Nov 16 high)

Yen – 88.85

Initial support is located at 88.64 (Nov 19 low) followed by 88.36 (Oct 9 low). Initial resistance is now at 89.75 (Nov 16 high) followed by 90.61 (Nov 12 high).

Pound – 1.6475

Initial support at 1.6402 (Nov 4 low) followed by 1.6263 (Nov 3 low). Initial resistance is now at 1.6750 (Nov 19 high) followed by 1.6878 (Nov 16 high).

Australian Dollar – 0.9125

Initial support at 0.8971 (Nov 4 low) followed by the 0.8907 (Nov 2 low). Initial resistance is now at 0.9337 (Nov 18 high) followed by 0.9406 (Nov 16 high).

Gold – 1151

Initial support at 1127 (Nov 17 low) followed by 1118 (Nov 16 high). Initial resistance is now at 1152 (Nov 18 high) followed by 1165 (1.618 of 985 – 1070.80 from 1026.60).

Oil – 77.60

Initial support at 76.00 (Intraday support) followed by 75.00 (Intraday support). Initial resistance is now at 78 (key level) followed by 80 (October high).