Australian FOREX Daily Outlook 01/03/2010

More talk of Greece Bailout

CURRENCY TRADING SUMMARY – 1st March (00:30GMT)

U.S. Dollar Trading (USD) ended the week on the backfoot as the Euro rallied on Greece bailout talk from Germany and commodities put on a solid performance. Q4 GDP was revised higher to 5.9% from 5.7%. Of Concern though was the drop in January Existing Home Sales by -7.2% adding to the -22% drop the month before. In US stocks DJIA +4 points closing at 10325, S&amp P +1 points closing at 1104 and NASDAQ +4 points closing at 2238. Looking ahead, February ISM manufacturing is forecast at 57.5 vs. 58.4 previously.

The Euro (EUR) the market continued its relief rally with talk that the German and French governments were preparing the ground for a Greece Bond bailout program. Euroland Inflation was unrevised at 1.0% y/y. EUR/GBP enjoyed solid buying to push and close above 0.8900. Overall the EUR/USD traded with a low of 1.3531 and a high of 1.3683 before closing at 1.3613. Looking ahead, January Unemployment is forecast at 10.1% vs. 10.0% previously.

The Japanese Yen (JPY) was unable to gain much traction and stayed close to the Y89 level as the USD remained on the weak side and crosses were mixed. GBP/JPY slipped below Y135 on GBP weakness and is looking very weak as the Pound suffers broadly. Overall the USDJPY traded with a low of 88.75 and a high of 89.50 before closing the day around 88.90 in the New York session.

The Sterling (GBP) the pair struggled as the market turned its attention to the UK elections and burgeoning UK Debt. All the crosses came under pressure with GBP/AUD highlighting the pounds weakness as it neared 1.7000 for the first time in 25 years. One supporting factor was the revision of Q4 GDP to 0.3% vs. 0.1% initially. Overall the GBP/USD traded with a low of 1.5151 and a high of 1.5318 before closing the day at 1.5240 in the New York session. Looking ahead, January Mortgage Approvals are forecast at 50k vs. 59k previously.

The Australian Dollar (AUD) tracked commodities and stocks higher to end the week on a strong footing. The market is keenly awaiting the RBA’s decision on Tuesday with currently a 50-50 chance of a hold or raise. AUD/JPY is close to the key Y80 level as it rebounds from heavy selling last week. Overall the AUD/USD traded with a low of 0.8864 and a high of 0.8980 before closing the US session at 0.8962. UPDATE Q4 Current Account at -17bn vs. -14bn previously.

Oil &amp Gold (XAU) continued to rally as Commodities reacted to the upward revision of Q4 GDP. Overall trading with a low of USD$1104 and high of USD$1119 before ending the New York session at USD$1118 an ounce. Tested $80 in a solid rebound from Thursday. Crude Oil was up +$1.32 ending the New York session at $79.66.

TECHNICAL COMMENTARY

Euro – 1.3605

Initial support at 1.3451 (Feb 25 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3692 (Feb 23 high) followed by 1.3788 (Feb 17 high)

Yen – 89.15

Initial support is located at 88.75 (Feb 26 low) followed by 88.56 (Feb 4 low). Initial resistance is now at 90.36 (Feb 24 high) followed by 91.29 (Feb 23 high).

Pound – 1.5160

Initial support at 1.5153 (Feb 26 low) followed by 1.5117 (May 18 low). Initial resistance is now at 1.5422 (Feb 25 high) followed by 1.5577 (Feb 24 low).

Australian Dollar – 0.8960

Initial support at 0.8801 (Feb 25 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.8979 (Feb 26 high) followed by 0.9071 (Feb 23 high).

Gold – 1116

Initial support at 1088 (Feb 25 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1121 (Feb 23 high) followed by 1131 (Feb 22 high).

Oil – 80.10

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).