Australian FOREX Daily Outlook 04/05/2010

Euro Struggling to stay Afloat

CURRENCY TRADING SUMMARY – 4th May (00:30GMT)

U.S. Dollar Trading (USD) was very well supported as the Euro’s gains were unwound and USD/JPY pushed higher to resistance just under Y95 on strong US economic data. April ISM Manufacturing jumped to 60.4 vs. 59.6 previously. March Personal Income rose 0.3% as expected. In US stocks, DJIA +143 points closing at 11151, S&amp P +15 points closing at 1202 and NASDAQ +37 points closing at 2498. Looking ahead, March Pending Home Sales forecast at 4% vs. 8.2%. March Factory Orders are forecast at -0.1% vs. 0.6% previously.

The Euro (EUR) opened strong testing 1.3360 on news the Greece Bailout expansion was finalized over the weekend, but the markets then sold quite aggressively in Asia as traders remain unconvinced the Greece public would accept the tough new measures. April PMI Manufacturing was finalized at 57.6. EUR/USD traded with a low of 1.3153 and a high of 1.3363 before closing at 1.3190. Looking ahead, March Retail Sales are forecast at 0.0% vs. -0.4% m/m and EU PPI is forecast at 0.7% in March.

The Japanese Yen (JPY) was extremely weak as the USD/JPY pushed higher and Japanese investors were away for golden Week Holiday’s. EUR/JPY was mixed but other crosses such as the AUD/JPY tested recent highs. Friday’s Non Farm Payroll has been the key monthly data release for USD/JPY’s direction in recent times. Overall the USDJPY traded with a low of 93.49 and a high of 94.81 before closing the day around 94.60 in the New York session.

The Sterling (GBP) was not immune to the Euro induced Dollar strength and the pair slipped off the 1.5300 handle. UK was away on Holiday so Tuesday’s reaction to weekend polls and expectations about Thursday’s General elections will be key. EUR/GBP resumed selling with the pair settling at 0.8650 support. Overall the GBP/USD traded with a low of 1.5209 and a high of 1.5340 before closing the day at 1.5250 in the New York session. Looking ahead, March Mortgage Approvals are forecast at 49k vs. 47k previously.

The Australian Dollar (AUD) was well supported on dips as the RBA decision looms and commodities shrug off USD strength to test year highs. Tuesday’s RBA decision is expected to result in another hike of 0.25% according to 18/24 economists in the Reuters poll. Overall the AUD/USD traded with a low of 0.9207 and a high of 0.9278 before closing the US session at 0.9270.Looking ahead, RBA Rate Decision forecast hike to 4.5% vs. 4.25% previously.

Oil &amp Gold (XAU) traded above $1180 comfortably as the bulls remain in control. Overall trading with a low of USD$1176 and high of USD$1188 before ending the New York session at USD$1184 an ounce. Crude Oil posted fresh year highs above $87 a barrel before profit taking hit. WTI Oil Closed +$0.04 at $86.19 a barrel.

TECHNICAL COMMENTARY

Euro – 1.3200

Initial support at 1.3115 (Apr 28 low) followed by 1.2965 (Apr 29 2009 low). Initial resistance is now located at 1.3416 (Apr 27 high) followed by 1.3523 (Apr 20 high)

Yen – 94.60

Initial support is located at 92.74 (Apr 22 low) followed by 92.25 (38.2% retracement of 88.13 – 94.77). Initial resistance is now at 94.79 (Aug 5 high) followed by 95.29 (Aug 18 High).

Pound – 1.5250

Initial support at 1.5126 (Apr 28 low) followed by 1.4805 (Mar 26 low). Initial resistance is now at 1.5391 (Apr 30 low) followed by 1.5524 (Apr 15 low).

Australian Dollar – 0.9270

Initial support at 0.9137 (Apr 28 low) followed by the 0.9003 (Mar 26 low). Initial resistance is now at 0.9364 (Apr 15 high) followed by 0.9406 (Nov 16 high).

Gold – 1183

Initial support at 1166 (Apr 30 low) followed by 1146 (Apr 27 low). Initial resistance is now at 1187 (May 3 high) followed by 1226 (Dec 3 high).

Oil – 86.10

Initial support at 86.00 (Intraday Support) followed by 85 (Intraday Support). Initial resistance is now at 88.00 (March high) followed by 90.00 (Intraday Resistance).