Australian FOREX Daily Outlook 04/02/2010

US Data Continues To Improve

CURRENCY TRADING SUMMARY – 4th February (00:30GMT)

U.S. Dollar Trading (USD) reversed losses nicely in the US session as Economic data continued show the worlds largest economy was improving. January ADP Employment change was at -22k vs. -84k previously. January Services ISM also showed improvement to 50.5 vs. 49.8 previously. In US stocks DJIA -26 points closing at 10270, S&amp P -6 points closing at 1097 and NASDAQ +1 points closing at 2190. Looking ahead, Weekly Jobless Claims forecast at 460k vs. 470k previously.

The Euro (EUR) tested resistance at 1.4000 before slumping as Greece/Portugal concerns flared again and the USD strengthened nicely in New York. December Retail Sales did little to help at 0.0% vs. 0.4% forecast. EUR/JPY did manage to hold up well though as USD/JPY broke higher. Overall the EUR/USD traded with a low of 1.3884 and a high of 1.4028 before closing at 1.3900. Looking ahead, ECB Rate announcement expected to hold.

The Japanese Yen (JPY) was on the back foot for most of the day as USD/JPY support finally pushed through resistance at Y91. EUR/JPY traded to Y127 and GBP/JPY pivoted the key Y145 level. US interest rate expectations are still very important for medium term outlook so Fridays US Unemployment Report is especially important for the USD/JPY. Overall the USDJPY traded with a low of 90.06 and a high of 91.30 before closing the day around 90.90 in the New York session.

The Sterling (GBP) broke through the 1.6000 level in early Europe be reversed quite aggressively later in the day as USD gained and concern about UK government debt resurfaced. January Consumer Confidence forecast at 73 vs. 70R previously. Overall the GBP/USD traded with a low of 1.5874 and a high of 1.6072 before closing the day at 1.5900 in the New York session. Looking ahead, BOE rate announcement expected to hold and Asset purchase program decision.

The Australian Dollar (AUD) tracked the Euro movement testing Tuesday’s resistance above 0.8900 before falling for the rest of the day. AUD/JPY remained above Y80 but is struggling to gain traction. AUD/NZD shot higher in late US session Wednesday as New Zealand Q4 Unemployment rate jumped to 7.3% vs. 6.8% previously. Overall the AUD/USD traded with a low of 0.8803 and a high of 0.8919 before closing the US session at 0.8820. Looking ahead, December Retail Sales forecast at -0.2% vs. 1.4% previously.

Oil &amp Gold (XAU) waxed and waned with USD strength throughout the day. Overall trading with a low of USD$1106 and high of USD$1125 before ending the New York session at USD$1110 an ounce. Pulled back as US Crude Inventories unexpectedly rose. Crude Oil was up $-0.29 ending the New York session at $76.80.

TECHNICAL COMMENTARY

Euro – 1.3890

Initial support at 1.3853 (Feb 1 low) followed by 1.3833 (Jun 8 low). Initial resistance is now located at 1.4053 (Jan 28 high) followed by 1.4097 (Jan 27 high)

Yen – 90.95

Initial support is located at 89.59 (Jan 29 low) followed by 89.14 (Jan 27 low). Initial resistance is now at 91.88 (Jan 21 high) followed by 92.05 (Jan 14 high).

Pound – 1.5905

Initial support at 1.5833 (Dec 30 low) followed by 1.5708 (Oct 13 low). Initial resistance is now at 1.6083 (0.236 of 1.6458-1.5851) followed by 1.6179 (Jan 29 high).

Australian Dollar – 0.8815

Initial support at 0.8781 (Feb 2 low) followed by the 0.8735 (Dec 23 low). Initial resistance is now at 0.8928 (Feb 2 high) followed by 0.8962 (Jan 29 high).

Gold – 1111

Initial support at 1100 (Big figure) followed by 1070 (Oct 14 low). Initial resistance is now at 1128 (0.618 of 1161.80-1073.85) followed by 1141 (0.764 of 1161.80-1073.85).

Oil – 76.90

Initial support at 75.00 (Intraday support) followed by 74.00 (Intraday Support). Initial resistance is now at 77.00 (Intraday Resistance) followed by 78.00 (Intraday Resistance).