Australian FOREX Daily Outlook 05/05/2010

EURO Breaks 1.3000

CURRENCY TRADING SUMMARY – 5th May (00:30GMT)

U.S. Dollar Trading (USD) major gains were seen across the board as the Euro collapsed and safe haven demand emerged as stock losses mounted. US Data was good but was overlooked with March Pending Home Sales 5.3% vs. 3.9% previously. March Factory Orders are forecast at 1.3% vs. 0.0% previously.In US stocks, DJIA -255 points closing at 10926, S&amp P -28 points closing at 1173 and NASDAQ -74 points closing at 2424. Looking ahead, April ADP Employment Report forecast at 30k vs. -23k previously. Weekly Crude Oil Inventories is forecast at 0.6mn vs. 1.9mn previously. April ISM Services forecast at 56 vs. 55.4 previously.

The Euro (EUR) Crashed lower as support at 1.3100 failed and concerns about Spain and Portugal mounted. The market then broke through 1.3000 in the US session with buyers on the sidelines. German March Retail sales disappointed at -2.4% vs. 0.0% forecast. EUR/USD traded with a low of 1.2961 and a high of 1.3215 before closing at 1.2990. Looking ahead, EU March Retail Sales are forecast at 0.2% vs. -0.6%.

The Japanese Yen (JPY) was strong as the safe haven currency gained heavily on risk aversion. Earlier in the day though USD/JPY tested Y95 on differing medium term monetary policy outlooks. EUR/JPY fell through Y123 support and dragged AUD/JPY and GBP/JPY heavily. Overall the USDJPY traded with a low of 94.31 and a high of 95.00 before closing the day around 94.70 in the New York session. Looking ahead, Japanese Bank Holiday continues.

The Sterling (GBP) was pushed lower as the Euro fell but held up well on improving chances of an Tory win in Thursday’s election and upbeat economic data. April Manufacturing PMI improved to 58 vs. 57.2 previously for the highest level in 18 years. Overall the GBP/USD traded with a low of 1.5089 and a high of 1.5268 before closing the day at 1.5150 in the New York session.

The Australian Dollar (AUD) not even a rate hike was able to stop an Aussie rout yesterday with Oil down $4 a barrel and weekly support at 0.9150 broken. RBA Rate Decision increased rates to 4.5% vs. 4.25% previously. AUD/JPY fell below Y86 before stabilizing. Overall the AUD/USD traded with a low of 0.9070 and a high of 0.9269 before closing the US session at 0.9105.UPDATE MARCH Building Permits at 15% vs. -3% previously.

Oil &amp Gold (XAU) Fresh 2010 Highs above $1190 where short-lived as commodities were liquidated across the board. Overall trading with a low of USD$1166 and high of USD$1192 before ending the New York session at USD$1172 an ounce. Crude Oil fell dramatically on investor concern. WTI Oil Closed -$3.45 at $82.74 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2950

Initial support at 1.2886 (Apr 28 low) followed by 1.2732 (March 12 2009 low). Initial resistance is now located at 1.3361 (May 3 high) followed by 1.3416 (Apr 27 high)

Yen – 94.80

Initial support is located at 93.51 (May 3 low) followed by 93.00 (April 28 low). Initial resistance is now at 95.49 (Aug 14 2009 high) followed by 96.73 (Aug 12 2009 High).

Pound – 1.5130

Initial support at 1.5090 (May 4 low) followed by 1.4805 (Mar 26 low). Initial resistance is now at 1.5391 (Apr 30 High) followed by 1.5524 (Apr 15 low).

Australian Dollar – 0.9090

Initial support at 0.9085 (Apr 28 low) followed by the 0.9035 (Mar 29 low). Initial resistance is now at 0.9325 (Apr 30 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 1212 (Dec 4 high) followed by 1226 (Dec 3 high).

Oil – 82.10

Initial support at 80.00 (Intraday Support) followed by 79.50 (Intraday Support). Initial resistance is now at 85.00 (March high) followed by 88.00 (Intraday Resistance).