Australian FOREX Daily Oulook 15/11/2005

MARKET SUMMARY – 15/11/05(03.00GMT)

• The Dollar continued to make gain against all the major currencies as investors continue to focus on the likelihood of higher US interest rates in coming months. Crude oil prices rose modestly on Monday. Traders are keeping a close eye in regards to cooler weather in the US northeast the world’s largest heating oil market. Looking ahead, it will be a busy night in the States with the release of retail sales, producer price index (PPI), New York Fed survey and the nomination hearing of Bernanke at the Senate Banking Committee. The market expects a 0.6% fall in retail sale sin October, following weaker than expected growth of 0.2% in September. The core PPI is expected to rise by 0.3%. This will take the annual core PPI inflation at 2.6%. The New York Fed survey takes on less significance given the other key data releases, and the market expectations are centered on 15.
  

• The Euro fell to fresh two year lows of 1.1660 from 1.1771 and closed the New York session near 1.1660. In the Eurozone, the market will focus on Eurozone GDP and the ZEW survey in Germany both released later today. Third quarter GDP is expected to have increased by 0.6%. The market is looking for an improvement in the ZEW survey with expectations centered on 45.This survey is viewed as an indicator for the interest rate policy of the European Central Bank.
  

• The Japanese yen fell to a 27-month low against the dollar trading at JPY118.89 per US dollar from an opening of JPY117.86. Japan‘s current account was released yesterday. The current account surplus increased 6.5 percent to 1.86 trillion yen ($15.8 billion) compared with the same month a year ago. The median forecast was for the surplus to narrow to 1.65 trillion yen from 1.74 trillion yen.
  

• The Pound softened from 1.7470 to 1.7350 before closing around 1.7370 in New York. The Pound erased its early gains against the USD and the EUR after weaker-than-expected Producer Price Index, which rose at an annualized rate of 2.6%, lower than the expected 2.9%. Headline CPI inflation is due out later today with the forecast to have been unchanged at 2.5%.
  

• The Aussie dollar eased from 0.7344 to a low of 0.7261 before closing in New York at 0.7275. New highs in copper and aluminum were unable to assist the Aussie as it traded to a 13 month low.
  

TECHNICAL COMMENTARY

• Euro – 1.1695

Euro continues to make new trend lows with a breach of the 1.1673 level. This could open for a test of the support at 1.1588 (38.2% retracement of the .8225 (October 2000 low) to 1.3663 (December 2004 high) rally). Only a move above the 1.1773 to 1.1830 congestion zones would put the bear trend on hold.

• Yen – 118.80

USD/JPY has climbed to fresh highs, confirming a continuation of the uptrend. The break above the 118.42 (50% retracement of the major 135.14 – 101.71 decline) opens the door for a move towards 120.00 and 120.68. The previous resistance of 118.43 will now act as support, followed by the 116.88 (Nov 9 low) as a key support level and a break of this level is required to undermine the current uptrend.

• Pound – 1.7380

Resistance is located at 1.7508 (38.2% of 1.7792 to 1.7332) to 1.7523 (reaction high from Nov 4) is proving to be tough resistance.. So a break of the 1.7332 trend low would open the door for a move towards the 1.7270 low from July 20.

• Aussie – 0.7270

Aussie made yet another new trend low below 0.7286. A break and close below this level would signal a move towards the next support around 0.7242. This marks the 61.8% retracement of the rally from 0.6781 (June 17, 2004 low) to 0.7989 (March 08, 2005 high). Short-term resistance is well defined at last Wednesday’s 0.7379 high, followed by 0.7393, the 38.2% retracement of the declines thus far from the Oct 27 0.7601 high.