Australian FOREX Daily Outlook 14/12/2009

Dollar Gains on US Economic Recovery Hopes

CURRENCY TRADING SUMMARY – 14th December (00:30GMT)

U.S. Dollar Trading (USD) made gains across the board as US economic data surprised, helping to fuel speculation of early Fed action on US interest rates and a widening gap between the US and Eurozone’s recovery speed. November US Retail Sales +1.3% vs. 0.6% forecast. December UoM Consumer Sentiment at 73.4 vs. 69.7. DJIA +65 points closing at 10471, S&amp P +4 points closing at 1106 and NASDAQ -1 points closing at 2190.

The Euro (EUR) was well supported in the Asian and European session creeping to day highs near 1.4780 before plummeting on the US data to break briefly below 1.4600. EUR/JPY was volatile but closed well supported above 130 Yen. EUR/GBP pivoted the 0.9000 as Euro weakness outpaced the Pound. Overall the EUR/USD traded with a low of 1.4587 and a high of 1.4776 before closing at 1.4620. Looking ahead, Q3 Industrial Production forecast at -0.7% vs. 0.3%.

The Japanese Yen (JPY) was weak from the outset at USD/JPY started to move higher in Asia and USD strength in the US pushed the major close to 90 Yen before profit taking into the weekend. Crosses tracked the Major. Helping lift the Market in Asia was strong Chinese data which induced fresh risk taking in global markets. Overall the USDJPY traded with a low of 88.20 and a high of 89.81 before closing the day around 88.25 in the New York session. UPDATE JAPANESE BIG MANUFACTURING TANKAN INDEX -24 vs. -33 PREVIOUSLY.

The Sterling (GBP) was sold against the USD along with the rest of the market but held up relatively well with risk appetite quite strong and GBP/JPY buying providing support. UK PPI rose 0.2% vs. 0.3% expected in November. Overall the GBP/USD traded with a low of 1.6198 and a high of 1.6338 before closing the day at 1.6230 in the New York session. UPDATE November House Price at 1.7% y/y vs. 1.6% y/y previously.

The Australian Dollar (AUD) struggled to take advantage of the improved risk appetite as the USD was broadly strong and Gold and Oil were weak. AUD/JPY was the preferred option to express risk. Chinese data helped improve the mood but AUD/NZD sales were noticeable during the day. Overall the AUD/USD traded with a low of 0.9092 and a high of 0.9194 before closing the US session at 0.9116.

Oil &amp Gold (XAU) the market continued to sell rallies with the USD on the front foot falling $30 in the US session. Overall trading with a low of USD$1110 and high of USD$1142 before ending the New York session at USD$1115 an ounce. Oil Fell below the Critical $70 and closed on a weak note. Crude Oil was down -$0.89 ending the New York session at $69.65.

TECHNICAL COMMENTARY

Euro – 1.4635

Initial support at 1.4586 (Dec 11 low) followed by 1.4481 (Oct 2 low). Initial resistance is now located at 1.4768 (Dec 9 high) followed by 1.4905 (Dec 7 high)

Yen – 88.85

Initial support is located at 88.20 (Dec 11 low) followed by 87.37 (Dec 9 low). Initial resistance is now at 89.81 (Dec 11 high) followed by 90.46 (Dec 7 High).

Pound – 1.6225

Initial support at 1.6168 (Dec 9 low) followed by 1.6126 (Sept 30 low). Initial resistance is now at 1.6375 (Dec 10 high ) followed by 1.6516 (Dec 7 high).

Australian Dollar – 0.9100

Initial support at 0.9016 (Dec 9 low) followed by the 0.8947 (Nov 27 low). Initial resistance is now at 0.9322 (Dec 3 high) followed by 0.9406 (Nov 16 high).

Gold – 1118

Initial support at 1109 (Dec 11 low) followed by 1101 (Nov 13 low). Initial resistance is now at 1147 (Dec 9 high) followed by 1169 (Dec 08 high) .

Oil – 69.40

Initial support at 69.00 (Major level) followed by 68.50 (Intraday support). Initial resistance is now at 70.00 (Key Psychological Level) followed by 72.50 (intraday resistance).