Australian FOREX Daily Outlook 09/09/2010

Stocks Resume Rally

CURRENCY TRADING SUMMARY – 9th September (00:30 GMT)

Written by Anthony Darvall

U.S. Dollar Trading (USD) risk was put on after concerns about the Eurozone faded on solid auction from some European Countries and US stocks rallied new stimulus proposals from Obama ahead of the US Mid-term elections. In US stocks, DJIA -10378 points closing at 10387, S&amp P +7 points closing at 1098 and NASDAQ +19 points closing at 2228. Looking ahead, July Trade Balance is forecast at -47.3bn vs. -49.9bn previously. Also released, Weekly Jobless Claims are forecast at 470k vs. 472k previously.

The Euro (EUR) rallied off lows as the successful Portuguese Debt Auction went well and fears eased on the Irish banking situation. The Irish government proposed that nationalized banks be split into ‘good’ and ‘bad’ banks. German Trade Balance was 12.7bn Surplus in July. EUR/USD traded with a low of 1.2658 and a high of 1.2765 before closing at 1.2730. Looking ahead, August CPI forecast at 0.0% vs. 0.3% m/m.

The Japanese Yen (JPY) fresh 15 year lows were seen as mixed signals come from the BOJ/MPF in regards to intervening on the strengthening Yen. EUR/JPY was particularly weak in Asia and helps the Major break below Y83.50 before bouncing with positive Auctions. Overall the USDJPY traded with a low of 83.33 and a high of 84.06 before closing the day around 83.75 in the New York session.

The Sterling (GBP) rallied at the start of Europe on better than expected House prices. August Halifax HPI rose 0.2% and Industrial Output jumped 0.3% m/m. GBP/JPY buying also kick in as USD/JPY reversed direction in the US section and allowed GBP/USD to test 1.5500. Overall the GBP/USD traded with a low of 1.5349 and a high of 1.5536 before closing the day at 1.5480 in the New York session. Looking ahead, BOE Rate Announcement forecast at hold of 0.5%.

The Australian Dollar (AUD) found solid support at 0.9100 and when sentiment and stocks rallied from Europe onwards we saw the pair post fresh month highs above 0.9180 resistance. Sentiment towards the Aussie is still very strong as economic fundamentals outperform other countries. Overall the AUD/USD traded with a low of 0.9106 and a high of 0.9196 before closing the US session at 0.9180. UPDATE AUGUST EMPLOYMENT +30k vs. +29k forecast.

Oil &amp Gold (XAU) gold tested fresh month highs just under all time highs of $1265 before easing once again on profit taking. Overall trading with a low of USD$1253 and high of USD $1263 before ending the New York session at USD$1256 an ounce. Oil Rallied as investor sentiment improved. WTI Oil Closed +$0.90 at $74.70 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2730

Initial support at 1.2588 (Aug 24 low) followed by 1.2434 (61.8% retrace of 1.1877-1.3334). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3000 (Big figure Resistance)

Yen – 83.80

Initial support is located at 83.35 (Sept 8 low) followed by 81.85 (May 1995 low). Initial resistance is now at 85.23 (Sept 3 high) followed by 86.36 (Aug 13 high).

Pound – 1.5465

Initial support at 1.5297 (Sept 7 low) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5500 (Big Figure) followed by 1.5713 (Aug 12 high).

Australian Dollar – 0.9220

Initial support at 0.9055 (Sept 2 low) followed by the 0.8771 (Aug 25 low). Initial resistance is now at 0.9222 (Aug 6 high) followed by 0.9389 (Apr 12 high).

Gold – 1255

Initial support at 1232 (Aug 31 low) followed by 1210 (Aug 24 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (round number).

Oil – 74.70

Initial support at 72.50 (Intraday Support) followed by 71.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).