Australian FOREX Daily Outlook 07/04/2010

Greece Fears keeping Euro on the back foot

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

U.S. Dollar Trading (USD) the FOMC meeting minutes were mixed with the members concerned about the ‘extended period’ language whilst also focusing on the inflation/deflation outlook. The dollar was stronger against the Euro as concerns about Greece debt returned with a vengeance. In US stocks, DJIA -3 points closing at 10970, S&amp P +2 points closing at 1189 and NASDAQ +7 points closing at 2436. Looking ahead, Crude Oil Inventories previously at 2.9M.

The Euro (EUR) with Greece bond yields soaring the chances of the embattled country needing a EU bailout is rising. EUR/JPY fell heavily through Y126 support as risk aversion crept higher and the recent rally was pared back. Overall the EUR/USD traded with a low of 1.3355 and a high of 1.3469 before closing at 1.34. Looking ahead, February PPI is forecast at 0.1% vs. 0.7% previously. Also released, German Industrial Orders are forecast at -0.7% vs. 4.3%.

The Japanese Yen (JPY) fell back through the Y94 level as profit taking continued for a second day and the FOMC minutes were slightly more dovish then forecast. Crosses were also heavy led by the GBP/JPY and EUR/JPY lower although AUD/JPY held up well as the high yielder outperformed. Overall the USDJPY traded with a low of 93.54 and a high of 94.31 before closing the day around 93.80 in the New York session. UPDATE BOJ hold rates at 0.1% as expected.

The Sterling (GBP) came under pressure in Europe as Gordon Brown announced the election will be held on May 6 and some polls still suggested a hung parliament will be the result. EUR/GBP briefly bounced off the 0.8810 support level before plunging to fresh lows at 0.8765. Overall the GBP/USD traded with a low of 1.5127 and a high of 1.5284 before closing the day at 1.5240 in the New York session. Looking ahead, March PMI Services are forecast at 58 vs 58.4 previously.

The Australian Dollar (AUD) was the strongest currency on the day as the RBA hiked rates by 0.25% to 4.25% and confirmed that the Australian economy was well on the way to a strong recovery. AUD/NZD shot to decade highs above 1.32 and EUR/AUD plumbed fresh record lows below 1.4500. Overall the AUD/USD traded with a low of 0.9164 and a high of 0.9291 before closing the US session at 0.9265.

Oil &amp Gold (XAU) took another leg higher as the sovereign debt risk increased the demand for the alternative investment. Overall trading with a low of USD$1122 and high of USD$1139 before ending the New York session at USD$1134 an ounce. Crude Oil shot to fresh. WTI Oil Closed +$1.75 at $86.62 a barrel.

TECHNICAL COMMENTARY

Euro – 1.3375

Initial support at 1.3344 (0.764 of 1.3268-1.3591) followed by 1.3268 (Mar 26 low). Initial resistance is now located at 1.3538 (April 5 high) followed by 1.3591 (Apr 2 high)

Yen – 94.10

Initial support is located at 93.66 (Apr 2 low) followed by 93.28 (Apr 1 low). Initial resistance is now at 94.79 (Apr 5 high) followed by 95.06 (Aug 24 High).

Pound – 1.5240

Initial support at 1.5044 (Mar 31 low) followed by 1.4974 (Mar 30 low). Initial resistance is now at 1.5319 (Apr 5 high) followed by 1.5382 (Mar 31 low).

Australian Dollar – 0.9275

Initial support at 0.9130 (Mar 31 low) followed by the 0.9086 (0.618 of 0.9002-0.9222). Initial resistance is now at 0.9289 (Apr 6 high) followed by 0.9328 (Jan 14 high).

Gold – 1134

Initial support at 1111 (Apr 1 low) followed by 1101 (Mar 30 low). Initial resistance is now at 1138.8 (April 6 high) followed by 1144 (Mar 3 high).

Oil – 86.80

Initial support at 86.00 (Intraday Support) followed by 85.00 (Intraday Support). Initial resistance is now at 88.00 (March high) followed by 90.00 (Intraday Resistance).