Australian FOREX Daily Outlook 01/12/2009

Market Gyrations Continue

CURRENCY TRADING SUMMARY – 1^st December (00:30GMT)

U.S. Dollar Trading (USD) opened up in Asia on the back foot as risk was put back on with the UAE Central Bank’s plan to help and Asian stocks rallying over 2%. Europe was weaker and with US stocks also sluggish little extra direction was given and the Dollar pared losses. November Chicago PMI was at 56.1 vs. 54.2 previously. DJIA +34 points closing at 10344, S&amp P +4 points closing at 1095 and NASDAQ +6 points closing at 2144. Looking ahead, November ISM manufacturing is forecast at 55 vs. 55.7 previously.

The Euro (EUR) pivoted the 1.5000 level as news and sentiment waxed and waned. EUR/JPY was also quite volatile around the key 130 Yen level. November EU Inflation was at 0.6% vs. 0.4% y/y. Helping underpin the Euro was the rally in Oil on renewed Middle East tensions. Overall the EUR/USD traded with a low of 1.4972 and a high of 1.5085 before closing at 1.5010. Looking ahead, German Retail Sales forecast at 0.5% vs. -0.2% previously.

The Japanese Yen (JPY) found support below 86 Yen in Europe but was also facing stiff resistance at the 87.10 level. Lots of comments are still filtering out of Government offices and this is providing much of the direction. EUR/JPY and AUD/JPY are finding support from increased risk appetite as stocks rebound. October Industrial Output at 0.5% vs. 2.5% forecast. Overall the USDJPY traded with a low of 85.85 and a high of 86.88 before closing the day around 86.30 in the New York session.

The Sterling (GBP) was under pressure in Europe giving up most of the gains from the open in Asia as Data was weak and markets focused on weak UK banks. November Consumer Confidence at -17 vs. -13 previously. Temporary Support was found at 1.6400. Overall the GBP/USD traded with a low of 1.6378 and a high of 1.6596 before closing the day at 1.6430 in the New York session. Looking ahead, November Nationwide House Prices forecast at 0.3% vs. 0.4% previously.

The Australian Dollar (AUD) was well supported opening up 1 cent from Friday’s close. Dips were also well supported as the market expects the RBA to raise rates in December. AUD/NZD continued to edge higher with the 1.2800 level tested once again. Overall the AUD/USD traded with a low of 0.9104 and a high of 0.9196 before closing the US session at 0.9150. Looking ahead, RBA is forecast to raise rates by 0.25% to 3.75%.

Oil &amp Gold (XAU) found support on dips and ended near the key $1180 level. Overall trading with a low of USD$1163 and high of USD$1182 before ending the New York session at USD$1179 an ounce. Oil traded higher as Iran tensions returned. Crude Oil was up $1.20 ending the New York session at $77.10.

TECHNICAL COMMENTARY

Euro – 1.5020

Initial support at 1.4828 (Nov 27 low) followed by 1.4802 (Nov 20 low). Initial resistance is now located at 1.5144 (Nov 25 high) followed by 1.5163 (0.764 of 1.6038-1.2330)

Yen – 86.20

Initial support is located at 85.00 (key level) followed by 84.80 (Nov 27 low). Initial resistance is now at 87.48 (Nov 26 low) followed by 88.01 (Oct 7 former low).

Pound – 1.6450

Initial support at 1.6273 (Nov 27 low) followed by 1.6241 (Oct 19 low). Initial resistance is now at 1.6534 (Nov 27 high) followed by 1.6746 (Nov 25 high).

Australian Dollar – 0.9170

Initial support at 0.9056 (0.236 of 0.9406-0.8947) followed by the 0.8947 (Nov 27). Initial resistance is now at 0.9323 (Nov 25 high) followed by 0.9406 (Nov 16 high).

Gold – 1179

Initial support at 1138 (Nov 27 low) followed by 1127 (Nov 17 high). Initial resistance is now at 1195 (Nov 26) followed by 1200 (Key level).

Oil – 77.20

Initial support at 75.00 (Intraday support) followed by 74.50 (Intraday support). Initial resistance is now at 78 (intraday resistance) followed by 80 (Key level).