Australian FOREX Daily Outlook 03/12/2009

Gold Rally Accelerates, ECB Ahead

CURRENCY TRADING SUMMARY – 3rd December (00:30GMT)

U.S. Dollar Trading (USD) made small gains across nearly the whole board as profit taking hit and stocks fell back slightly. ADP November Employment was at -169k vs. -155k forecast. Crude Oil Inventories were quite weak at 2.1mln build vs. -0.4mln forecast and led to a pull back in Oil. DJIA -18 points closing at 10453, S&amp P +1 points closing at 1109 and NASDAQ +9 points closing at 2185. Looking ahead, Weekly jobless claims are forecast at 480k vs. 466k previously. ISM Services is forecast at 51.5 vs. 50.6 previously.

The Euro (EUR) struggled to hold the the 1.5100 and eased back to the lower 1.50’s. US stocks came under modest profit taking pressure when the FED beige book reiterated the risks to the US economy. EUR/JPY made solid gains on a weak Yen after more Government jawboning overnight. October PPI was +0.2% vs. 0.0% forecast in October. Overall the EUR/USD traded with a low of 1.5031 and a high of 1.5112 before closing at 1.5045. Looking ahead, Q3 GDP is forecast at 0.4% vs. -0.2% previously. ECB Rate announcement forecast to remain at 1% with attention on President Trichet’s speech afterward.

The Japanese Yen (JPY) more comments from the Government with PM Hatoyama stating Yen rise against other currencies “cannot be left as is”. USD/JPY reclaimed the 87 Yen level and crosses all edged higher. GBP/JPY was especially buoyant as the GBP rallied. Overall the USDJPY traded with a low of 86.58 and a high of 87.51 before closing the day around 87.40 in the New York session.

The Sterling (GBP) continued to rally off dips and today was no exception as BOE member Dale stated he believed the UK economy had turned and inflation was now a risk going forward. Selling close to 1.6700 capped the rally. EUR/GBP eased towards the key 0.9000 level. Overall the GBP/USD traded with a low of 1.6548 and a high of 1.6698 before closing the day at 1.6640 in the New York session. Looking ahead, November PMI services forecast at 57 vs. 56.9 previously.

The Australian Dollar (AUD) failed to capitalize on golds surge into the $1200’s but was well supported on dips as the interest rate differential continues to inspire support. AUD/JPY tested above 81 Yen briefly as the market tries to revive the Yen carry trade. Overall the AUD/USD traded with a low of 0.9230 and a high of 0.9297 before closing the US session at 0.9250. Looking ahead, October Retail Sales are forecast at 0.3% vs. -0.2% previously.

Oil &amp Gold (XAU) surged in Asia to $1215 as little resistance above the big level of $1200 emboldening the bulls. Overall trading with a low of USD$1196 and high of USD$1217 before ending the New York session at USD$1215 an ounce. Oil was lower on weak US inventories figures. Crude Oil was down -$2.07 ending the New York session at $76.30.

TECHNICAL COMMENTARY

Euro – 1.5045

Initial support at 1.4964 (Nov 30 low) followed by 1.4828 (Nov 27 low). Initial resistance is now located at 1.5117 (Dec 1 high) followed by 1.5144 (Nov 25 high)

Yen – 87.40

Initial support is located at 85.87 (Nov 30 low) followed by 84.83 (Nov 27 low). Initial resistance is now at 87.53 (Dec 1 high) followed by 88.01 (Oct 1 former low).

Pound – 1.6640

Initial support at 1.6381 (Nov 30 low) followed by 1.6273 (Nov 27 low). Initial resistance is now at 1.6746 (Nov 25 high ) followed by 1.6878 (Nov 16 high).

Australian Dollar – 0.9255

Initial support at 0.9097 (Nov 30 low) followed by the 0.8947 (Nov 27 low). Initial resistance is now at 0.9323 (Nov 25 high) followed by 0.9406 (Nov 16 high).

Gold – 1215

Initial support at 1195 (Nov 26 former high) followed by 1175 (Dec 1 low). Initial resistance is now at 1217 (Dec 2 high) followed by 1250 (Key level).

Oil – 76.70

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