Australian FOREX Daily Outlook 07/12/2009

US Jobs Data Surprises, Dollar Jumps

CURRENCY TRADING SUMMARY – 7th December (00:30GMT)

U.S. Dollar Trading (USD) widespread USD buying was seen as November Unemployment Data shocked to the upside. November Non Farm Payrolls dropped -11k vs. -130k forecast and the Unemployment rate fell to 10.0% vs 10.2% forecast. USD buying was also helped as the good data started speculation that the FED would raise rates earlier than forecast. DJIA +22 points closing at 10388, S&amp P +6 points closing at 1105 and NASDAQ +21 points closing at 2194. Looking ahead, Fed Chairman Ben Bernanke Speaks

The Euro (EUR) crash over 200 pips after the USD data was the biggest currency pair in the world took the brunt of USD strength. EUR/JPY held up well though as the Yen became the carry trade of choice and risk appetite was expressed through Yen crosses. Overall the EUR/USD traded with a low of 1.4822 and a high of 1.5091 before closing at 1.4845. Looking ahead, November German Factory Orders forecast at 0.6% vs. 0.9% previously. Also, ECB President Trichet speaks.

The Japanese Yen (JPY) continued to push higher with the pair accelerating higher after the US data as US interest rates started to price in rate hike chances as soon as June 2010. USD/JPY reclaimed the key 90 Yen level and all crosses finished higher. Overall the USDJPY traded with a low of 88.00 and a high of 90.76 before closing the day around 90.49 in the New York session.

The Sterling (GBP) bowed to USD strength but was stronger against most currencies as the risk sensitive currency was supported on the EUR/GBP selling and GBP/JPY buying. UK Construction output rose 2.0% in Q3 vs -1.1% originally released. Overall the GBP/USD traded with a low of 1.6423 and a high of 1.6667 before closing the day at 1.6445 in the New York session.

The Australian Dollar (AUD) tracked the Euro lower but was bought heavily against the Yen to finish the week over 5% higher against the Japanese currency. AUD/NZD finished relatively unchanged near the key 1.2800 level. Hurting the AUD sentiment was the large drop in Gold and sluggish Crude Oil. Overall the AUD/USD traded with a low of 0.9109 and a high of 0.9293 before closing the US session at 0.9144.

Oil &amp Gold (XAU) profit taking turned into a rout as USD strength saw a massive drop in the precious metal. The $50+ drop an ounce was the biggest this year. Overall trading with a low of USD$1148 and high of USD$1211 before ending the New York session at USD$1161 an ounce. Was sluggish against the strength of the USD as any positive sentiment from the jobs numbers was overwhelmed. Crude Oil was down -$0.30 ending the New York session at $75.80.

TECHNICAL COMMENTARY

Euro – 1.4875

Initial support at 1.4822 (Dec 4 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 – 90.10

Initial support is located at 87.32 (Dec 3 low) followed by 86.59 (Dec 2 low). Initial resistance is now at 90.77 (Dec 4 high) followed by 91.32 (Nov 4 High).

Pound – 1.6475

Initial support at 1.6381 (Nov 30 low) followed by 1.6273 (Nov 27 low). Initial resistance is now at 1.6722 (Dec 3 high ) followed by 1.6746 (Nov 25 high).

Australian Dollar – 0.9145

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

Gold – 1158

Initial support at 1148 (Dec 4 former high) followed by 1138 (Nov 27 low). Initial resistance is now at 1226 (Dec 3 high) followed by 1250 (Key level).

Oil – 75.80

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).