Australian FOREX Daily Outlook 30/12/2009

Dollar Buyers Return

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

U.S. Dollar Trading (USD) initial Dollar weakness during the European session was reversed aggressively in the US session as Dollar buyers returned in force. Stocks remained buoyant globally and this helped risk currencies such as the AUD outperform. December CB Consumer Confidence jumped to 52.9 vs. 49.5 previously. DJIA -1 points closing at 10545, S&amp P -1 points closing at 1126 and NASDAQ -2 points closing at 2288. Looking ahead, December Chicago PMI forecast at 55 vs. 56.1 previously. Also released, Weekly Crude Oil inventories forecast at -1.7 vs. -4.9 previously.

The Euro (EUR) a break higher into the mid 1.44’s was reversed by over a cent in the US session as the Dollar bulls roared back to life. Stops were hit in both directions and have left the technical situation very messy albeit with a bearish tinge. Overall the EUR/USD traded with a low of 1.4331 and a high of 1.4461 before closing at 1.4355.

The Japanese Yen (JPY) Dollar strength carried the pair over Y92 for fresh 2 month highs and most crosses were higher. NZD/JPY and AUD/JPY did especially well as the interest rate outlook between Japan and New Zealand widened. Overall the USDJPY traded with a low of 91.51 and a high of 92.10 before closing the day around 92.00 in the New York session. Looking ahead, December PMI forecast at 52.3.

The Sterling (GBP) suffered the most from the change in Dollar sentiment as the pair crashed from above 1.6000 to below 1.5900 for a 200 pip daily range. Sentiment is still very fragile for the pound and further losses are possible into the year end given the failed attempt to break back above the 1.6000 level. Overall the GBP/USD traded with a low of 1.5865 and a high of 1.6071 before closing the day at 1.5900 in the New York session.

The Australian Dollar (AUD) was second only to it’s neighbour the New Zealand Dollar as risk was expressed through both these high yielding currencies. Expectations for a first half 2010 rate rise in New Zealand and three rate rises already this year in Australia have helped the two commodity currencies gain heavily this year. Overall the AUD/USD traded with a low of 0.8859 and a high of 0.8996 before closing the US session at 0.8940.

Oil &amp Gold (XAU) was relatively quiet having a small rally before retreating below the $1100 level in the US session. Overall trading with a low of USD$1096 and high of USD$1109 before ending the New York session at USD$1097 an ounce. Crude Oil had a flat day with the market consolidating recent gains. Crude Oil was up -$0.01 ending the New York session at $78.76.

TECHNICAL COMMENTARY

Euro – 1.4350

Initial support at 1.4324 (Dec 24 low) followed by 1.4218 (Dec 22 low). Initial resistance is now located at 1.4458 (Dec 29 high) followed by 1.4481 (Oct 2 former low)

Yen – 92.00

Initial support is located at 91.00 (Dec 22 low) followed by 90.16 (Dec 18 low). Initial resistance is now at 92.08 (Dec 29 high) followed by 92.32 (Oct 27 High).

Pound – 1.5890

Initial support at 1.5868 (Dec 29 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.6068 (Dec 29 high) followed by 1.6100 (Dec 22 high).

Australian Dollar – 0.8940

Initial support at 0.8783 (Dec 24 low) followed by the 0.8735 (Dec 23 low). Initial resistance is now at 0.8993 (Dec 29 high) followed by 0.9011 (Dec 17 high).

Gold – 1098

Initial support at 1095 (Dec 24 low) followed by 1074 (Dec 22 low). Initial resistance is now at 1119 (Dec 21 high) followed by 1141 (Dec 17 high) .

Oil – 78.70

Initial support at 78.00 (Intraday support) followed by 75.00 (Intraday support). Initial resistance is now at 80.00 (Key Psychological Level) followed by 82.00 (November High).