Australian FOREX Daily Outlook 17/03/2010

US Rates Remain Low for an ‘Extended Period’

CURRENCY TRADING SUMMARY – 17th March (00:30GMT)

U.S. Dollar Trading (USD) was on the back foot as the FED held rates at 0.25% and included the statement ‘extended period’ for holding rate lows. The stock market reacted positively to the low rate environment and commodities rallied in anticipation of economic expansion. In US stocks, DJIA +45 points closing at 10685, S&amp P +8 points closing at 1159 and NASDAQ +15 points closing at 2378. Looking ahead, February PPI Core Output forecast at 0.1% vs. 0.3%.

The Euro (EUR) was already well supported before the FOMC announcement with the S&amp P affirming its current rating on the back of EU Financial Ministers general agreement to support Greece. German ZEW fell to 44.5 vs. 43.7 forecast in March and this helped underpin the move above 1.3700. Overall the EUR/USD traded with a low of 1.3638 and a high of 1.3776 before closing at 1.3780. Looking ahead, Q4 Labor costs previously at 3.2% Q/Q. Also, BUBA President Weber Speaks.

The Japanese Yen (JPY) was stronger on weak USD/JPY in Asia before staging a major reversal of fortune in the European session. GBP/JPY put on 2 Yen and EUR/JPY reclaimed the Y124 level as global stocks pushed to fresh highs. Overall the USDJPY traded with a low of 89.97 and a high of 90.76 before closing the day around 90.30 in the New York session. Looking ahead, BOJ Decision Today.

The Sterling (GBP) tested 1.5000 but the level held and the market rallied hard for the rest of the day on massive short covering and weak USD. GBP/JPY buying was noted in Europe along with central bank bids at the lows. Overall the GBP/USD traded with a low of 1.4975 and a high of 1.5262 before closing the day at 1.5230 in the New York session. Looking ahead, February Claimant Count forecast at 8k vs. 23.5k previously.

The Australian Dollar (AUD) tracked stocks and commodities higher to break above resistance at 0.9200 and trade at 2 month highs. March RBA minutes talked of gradual rate rises ahead but the market is still bullish on general strength of the Australian economy. AUD/NZD reversed from above 1.3000 to test 1.2900 as the NZD/USD surged. Overall the AUD/USD traded with a low of 0.9118 and a high of 0.9219 before closing the US session at 0.9200. Looking ahead, Assistant RBA Governor Debelle speaks.

Oil &amp Gold (XAU) broke above the recent downwards trend line to rally $20 on the weaker USD. Overall trading with a low of USD$1107 and high of USD$1129 before ending the New York session at USD$1127 an ounce. Rallied $2 a barrel on expectations of strong demand. Crude Oil was down $1.90 ending the New York session at $81.70.

TECHNICAL COMMENTARY

Euro – 1.3765

Initial support at 1.3640 (Mar 15 low) followed by 1.3621 (Mar 11 low). Initial resistance is now located at 1.3796 (Mar 12 high) followed by 1.3839 (Feb 9 high)

Yen – 90.35

Initial support is located at 89.99 (Mar 16 low) followed by 89.63 (Mar 9 low). Initial resistance is now at 91.09 (Mar 12 high) followed by 91.29 (Feb 23 high).

Pound – 1.5235

Initial support at 1.4947 (Mar 11 low) followed by 1.4873 (Mar 10 low). Initial resistance is now at 1.5259 (Mar 16 high) followed by 1.5317 (Feb 26 low).

Australian Dollar – 0.9190

Initial support at 0.9096 (Mar 15 low) followed by the 0.9056 (Mar 4 low). Initial resistance is now at 0.9243 (Jan 20 high) followed by 0.9280 (Jan 18 high).

Gold – 1127

Initial support at 1098 (Mar 12 low) followed by 1094 (0.5 of 1044.85-1144.98). Initial resistance is now at 1144 (Mar 3 high) followed by 1161 (Jan 11 high).

Oil – 82.10

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 83.20 (Intraday Resistance) followed by 85.00 (March High).