Australian FOREX Daily Oulook 30/09/2005

30/09/05 (02:00 GMT)

• Dollar managed to pare back its intra day losses but near term direction remains mixed as jobless claims came lower than forecasts, thus giving further evidence that the damage from the Hurricane to the U.S. economy might be less than initially estimated. Q2 GDP outcome remain unrevised but inflation measures were revised slightly higher giving credence to recent Fed statements of a temporary setback from the Hurricane and rising inflation bringing the need to keep raising rates. For now the Dollar’s overall momentum is held back due to its inability to break the key 1.20 mark decisively against the Euro while high oil prices severely threaten GDP results for Q3 &amp Q4. Today’s manufacturing data is eyed to see if Chicago PMI can inch back into expansionary territory.
  

• Euro continues to find strong bid interest on any break below 1.20 with talk of Central banks from Asia and the Middle East showing keen buying interest from the Euro around these levels has helped in keeping it supported. However the Euro’s losses could accelerate if this level breaks decisively. Data was mixed from the zone with positive news for the third consecutive day from Italy with business confidence in the services sector as well as retailers confidence both rising. But German unemployment rate inched higher against expectations while jobless claimants also rose. Data has taken a backseat from the Euro-Zone as the market’s focus is on real money demand and good technical support which is offsetting the Dollar’s momentum for now.

• Yen has see sawed between positive data from its side and the general momentum in the Dollar’s favour and for now is hovering around 113 looking for a clear break. This morning’s data has been positive in line with expectations with the Jobless rate falling &amp improvement in wages has translated to household spending increasing for the first time in four months. The optimism for the economy’s outlook is enhanced further as Industrial Production also increased with the U.S. economy shows signs of strength leading to increased demand for Japanese products while domestic demand is improving by the month. Inflation data suggests that deflationary conditions persist for now, all signs are pointing towards a substantial improvement next year.

• Pound was wounded further after the Nationwide House prices survey showed another slight fall in the monthly outcome thus pushing the annual result to its lowest level in the last 9 years. But confidence is also being maintained that the housing sector is stabilizing &amp expected to pick up soon and while so far this hasn’t been reflected in the prices, the recent rate cut has increased mortgage lending with approvals rising to its highest level since June 2004. However growth is definitely slowing led by a sluggish consumer spending sector with today’s confidence data keenly eyed.

• Australian Dollar was boosted this morning as surprises continue from down under with Retail sales rising twice as much as expected which has emanated from a strong employment sector and increase in wages. The domestic economy remains on a reasonable footing, with commodity prices tipped to rise further on good demand which should boost Aussie exports while rates should remain at 5.5%, thus with these positive factors it is no surprise the Aussie has broken back above 0.76 in spite of the general momentum in the Greenback’s favour.

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FOREX (Foreign Exchange) Key Intra-Day Pivot levels

EUR/USD – Yesterday’s low was 1.2005 and high was 1.2075.
The pair closed at 1.2020.

The pair continues to find strong bid interest just below 1.20 and support around 1.980 is holding firm. Resistance is equally strong in the 1.2090-1.2110 region with a clear and decisive break above to shift the pair in neutral territory. Mixed interest with mild Dollar bias is seen up to the 1.2215 mark where resistance is very strong and gains are expected to be capped around it. On the downside a clear break below 1.20 has the potential to further accelerate losses towards the strong support mark of 1.1910 with decent bid interest down till 1.890. German political outcome and oil prices are eyed for intra day spikes.

Key resistance is seen at 1.2110 followed by 1.2215 while support starts at 1.1980 followed by 1.1910.

USD/JPY – Yesterday’s low was 112.66 and high was 113.35.

The pair closed at 113.30

The Yen has stabilized as recent gains might have been too quick with immediate resistance continuing around 113.50 and profit taking offers lying above it. A break above brings into focus very strong resistance around 114 with offers increasing in strength above it. On the downside conflicting conditions is keeping direction a bit mixed with immediate support around 112.55 followed by strong bid interest just below 112 and good support around 111.90. Only a break into the 11 region will shift the pair back in neutral region otherwise the Yen remains under pressure but its outlook is good on the crosses.

Key Resistance is seen at 113.55 followed by 114.00 while support starts at 112.55 followed by 111.90.

GBP/USD – Yesterday’s low was 1.7569 and high was 1.7701.
The pair closed at 1.7584.

The pair continues to break down with key support levels breached and looks vulnerable for further losses. It is finding good bid interest on a fall below 1.76 but it is likely to be a case of minor profit taking rallies with selling interest intact. Another clear break of support around 1.76 could further accelerate losses with the 1.7550-65 region expected to provide a fair degree of support. On the upside, immediate resistance has moved down to 1.7725 with mixed interest seen above it till very strong resistance lies around 1.78.

Key Resistance is seen at 1.7725 followed by 1.7810 while support starts at 1.7605 followed by 1.7550.

AUD/USD – Yesterday’s low was 0.7578 and high was 0.7624.
The pair closed at 0.7588.

The Australian Dollaris locked between conflicting fundamental factors but mild bids continue to linger within the 0.75 region with immediate support around 0.7545 with a break below likely to accelerate losses towards the 0.7470-85 region which holds very strong support and expected to cap any losses in the near term.On the upside, immediate mild resistance lies around 0.7655 with selling orders lying above this mark lined all the way up to 0.77 where resistance is very strong.

Key Resistance is seen at 0.7655 followed by 0.7705 while support starts at 0.7545 followed by 0.7480.

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