Australian FOREX Daily Outlook 04/11/2008

Australian Reserve Bank expected to cut. US Votes today

CURRENCY TRADING SUMMARY – 4th November 2008 (00:30GMT)

·U.S. Dollar Trading (USD) poor data out of the US was shrugged off as commodities weakened and markets focused on interest rates around the world. On the plus side the 3Month USD Libor slipped below the Psychological important 3% indicating that inter-bank lending is improving. October Manufacturing PMI came in at 38.9 vs. 43.5 previous and indicates a sharp recession is coming for the US. In the U.S. share markets, the NASDAQ was up 5 points (0.31%) and the Dow Jones was down 5.18 points (0.06%). Crude Oil closed down $3.90 ending the New York session at $63.91 per barrel. Looking ahead, September Durable Goods Orders are expected to be confirmed at 0.8% and Factory Orders to fall -0.8% vs. -4% previously. US Presidential election also today.

·The Euro (EUR) well bid in the Asian session but poor Euro zone data and speculation of cuts on the way sent the Euro to new day lows. Large falls in Oil also added weight as did sluggish stocks. October PMI Manufacturing was weak at 41.1 vs. 45 previously. Overall the EUR/USD traded with a low of 1.2578 and a high of 1.2897 before closing the day at 1.2640 in the New York session. Looking ahead, September PPI is expected at -0.1% vs. -0.5%.

·The Japanese Yen (JPY) was sold across the board with Asia as reports that disunity within the BoJ last week was misreported and instead of a 4-4 split, 7-1 was more accurate. USD/JPY broke above 99 and helped to lift the crosses higher. Japan was away yesterday on a Bank holiday. Overall the USDJPY traded with a low of 98.32 and a high of 99.63 before closing the day around 98.80 in the New York session.

·The Sterling (GBP) came under severe pressure after performing well in the Asian session. Focus on the UK economy and Banking sector helped the EUR/GBP break above .8000 and cable fall below 1.6000. Also weighing is the Looming BoE rate decision. Overall the GDP/USD traded with a low of 1.5727 and a high of 1.6399 before closing the day at 1.5820 in the New York session.

·The Australian Dollar (AUD) shrugged off poor September Retail Sales of -1.1% to hit new day highs as short covering intensified and AUD/JPY buying supported. Sluggish European stocks and poor US data sent the Aussie lower. Heavy Oil sales also hurt the commodity currency. Overall the AUD/USD traded with a low of 0.6644 and a high of 0.6860 before closing the US session at 0.6760. Looking ahead, Reserve Bank of Australia is expected to cut -0.5% to 5.5%.

·Gold (XAU) Jumped early in Monday on USD weakness but came off later in the day on sluggish stocks and resurgence of USD buying. Overall trading with a low of USD$724.75 and high of USD$738.15 before ending the New York session at USD$726 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.2625

Initial support at 1.2596 (Nov 3 low) followed by 1.2558 (76.4% retrace 1.2329 to 1.3298). Initial resistance is now located at 1.2898 (Nov 3 high) at followed by 1.3299 (38.2% retrace 1.4867 to 1.2329 and Oct 30 high).

·Yen – 98.95

Initial support is located at 98.22 (Nov 3 low) followed by 96.36 (Oct 31 low). Initial resistance is now at 99.71 (Oct 29 high) followed by 100.57 (Oct 22 high).

·Pound – 1.5820

Initial support at 1.5780 (Nov 3 low) followed by 1.5599 (61.8% retrace 1.5267 to 1.6672). Initial resistance is now at 1.6399 (Nov 3 high) followed by 1.6486 (Oct 31 High).

·Australian Dollar – 0.6750

Initial support at 0.6644 (Nov 3 low) followed by the 0.6551 (Oct 31 low). Initial resistance is now at 0.6864 (Nov 3 high) followed by 0.6893 (Oct 30 high).

·Gold – 727

Initial support at 718 (61.8% retrace 777.90-682.41) followed by 707 (Oct 27 low). Initial resistance is now at 741 (Oct 31 high) followed by 777.5 (Oct 30 Level).