Australian FOREX Daily Outlook 23/06/2010

Stock Sell Off Prompts Dollar Rally

CURRENCY TRADING SUMMARY – 23rd June (00:30 GMT)

U.S. Dollar Trading (USD) sentiment turned negative as stocks in the US finished very weak and US existing Home Sales dropped to 5.66mn vs. 6.12mn forecast. The Euro led the risk currencies lower as concerns linger about European Debt remain and European banks were downgraded. In US stocks, DJIA -148 points closing at 10442, S&amp P -17 points closing at 1095 and NASDAQ -27 points closing at 2261. Looking ahead, FOMC Rate Decision is forecast unchanged at 0.25%. May New Home Sales are forecast at 0.41mn vs. 0.504mn.

The Euro (EUR) some solid German IFO numbers were over looked and market traded in a very cautious tone testing support at 1.2250. June German IFO rose to 101.8 vs. 101.5 previously. EUR/GBP fell below 0.8300 after the UK budget inspired fresh Pound Strength. EUR/CHF finally found support at 1.3580 but the trend is overwhelmingly negative still. EUR/USD traded with a low of 1.2251 and a high of 1.2356 before closing at 1.2275. Looking ahead, June Services PMI forecast at 55.9 vs. 56.2 previously and Manufacturing PMI forecast at 55.3 vs. 55.8 previously.

The Japanese Yen (JPY) strengthened across the board with risk aversion pushing the crosses and the major lower. USD/JPY found support at Y90.30 but is still eying a test of Y90. EUR/JPY fell back below Y111 and is close to the key Y110 level. Overall the USDJPY traded with a low of 90.31 and a high of 91.13 before closing the day around 90.50 in the New York session.

The Sterling (GBP) tested day lows as the UK Budget was released and the market was very impressed with the Austerity measures with the rating agency Fitch ‘praising the intent’. Cable soared over 1.4850 before the easing as risk aversion set in during the US session. Overall the GBP/USD traded with a low of 1.4685 and a high of 1.4862 before closing the day at 1.4810 in the New York session. Looking ahead, June CBI Distributive Trades previously at -18.

The Australian Dollar (AUD) the commodity currency was sold tracking stocks down to 0.8700 on a combination of heavy profit taking and AUD/JPY sales. Support for the Aussie is found at 0.8645 near the 10 DMA. With little economic data this week, direction will be set from movement in global stocks. Overall the AUD/USD traded with a low of 0.8701 and a high of 0.8835 before closing the US session at 0.8720.

Oil &amp Gold (XAU) Gold gained after safe haven demand pushed the alternative investment higher. Overall trading with a low of USD$1231 and high of USD$1243 before ending the New York session at USD$1239 an ounce. Oil fell with drop in investor confidence. WTI Oil Closed -$0.61 at $77.21 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2265

Initial support at 1.2242 (June 17 low) followed by 1.2045 (June 11 low). Initial resistance is now located at 1.2453 (May 28 high) followed by 1.2672 (May 21 high)

Yen – 90.55

Initial support is located at 89.81 (May 27 low) followed by 88.97 (May 20 low). Initial resistance is now at 91.48 (June 21 high) followed by 92.12 (June 14 high).

Pound – 1.4825

Initial support at 1.4646 (Jun 17 low) followed by 1.4505 (Jun 11 low). Initial resistance is now at 1.4918 (May 13 high) followed by 1.5054 (May 10 high).

Australian Dollar – 0.8720

Initial support at 0.8582 (June 16 low) followed by the 0.8506 (June 15 low). Initial resistance is now at 0. 8865 (May 17 high) followed by 0.9027 (May 17 high).

Gold – 1239

Initial support at 1227 (June 16 low) followed by 1210 (June 7 low). Initial resistance is now at 1280 (1241.97 plus 1.618 of 1227.09- 1251.18) followed by 1300 (Round Number).

Oil – 77.50

Initial support at 77.00 (Intraday Support) followed by 75.00 (Intraday Support). Initial resistance is now at 79.50 (Intraday Resistance) followed by 80.00 (Intraday Resistance).