Australian FOREX Daily Outlook 06/06/2005

06/06/05 (02:00 GMT)

• Dollar strengthened in spite of a very poor Payrolls outcome as the uncertainty pertaining to the mere existence of the Euro is too important & strong to shift attention to mixed U.S. data. Unemployment rate fell to its lowest level since September 2001 thus making up for the eventual payrolls outcome which came in half the estimated number. Oil has inched back above $55, thus the poor jobs report coupled with sluggish manufacturing sector could lead to the Fed pausing within the next two meetings.

• Euro was rocked at start of the European session after comments from Italian Minister Maroni that they should consider readopting the Euro; however his comments are more likely political in nature rather than economic. Data was mixed as Retail sales slumped with low consumer confidence keeping spending stiffened but it was offset by the unexpected rise in Services PMI. Mixed U.S. data has helped the Euro stabilize for now but the ‘No’ camp in other EU countries is garnering more support by the day after the French and Dutch rejection.

• Yen held firm against the Greenback in spite of the Dollar rallying against other majors as Japanese data has started to pick up with this morning’s much higher than expected result in Capital Spending, maintains the assertion that the economy is on a steady recovery path. Higher global demand has helped boost production with companies increasing their spending. But overall economic conditions still remain a bit mixed as this week’s data is eyed for clues, for now Dollar has mild bids around 107.55 followed by strong ones around 107.10.

• Pound again found offers above 1.82 too hot to handle and was subsequently sold off to slip below 1.81. Services PMI disappointed as it declined against expectations of an increase compared to the previous period. Bottom pickers have succeeded in keeping the Pound above 1.81 with Retail sales data eyed for intra day direction.

• Australian Dollar is hovering around 0.7560 and has been playing the range with offers above 0.76 and bids around 0.7510. This morning’s Job Ads data has declined more than expected with speculation rife that the robust labour market may finally be running out of steam. A poor result in Thursday’s release of the Employment data could lead the Aussie to slip decisively below 0.75.

*Only key potential market moving data is mentioned, for a detailed Economic Calendar please click on the ‘Financial Calendar’ link on the web-site.

EUR/USD – Friday’s low was 1.2203 and high was 1.2338.
The pair closed at 1.2231.

Even a weaker U.S. Payrolls number couldn’t help the Euro as it encountered strong offers on its break above 1.23. For now mild support exists in the 1.2190-1.2210 zone followed by the decent buying interest and strong support in the 1.2140-65 zone. Data is expected to remain weak from the Zone with resistance in the 1.2295-1.2315 zone followed by strong offers on any break above 1.2355. It is expected to remain range bound for today.

Key resistance is seen at 1.2295 followed by 1.2355 while support starts at 1.2195 followed by 1.2145.

USD/JPY – Friday’s low was 107.48 and high was 108.23.
The pair closed at 107.67.

The Yen’s gains were held off by Dollar bids around 107.55 with a break below likely to bring into focus the strong support zone at 106.95-107.10. A decisive break below this zone could shift the momentum back into the Yen’s favour. While on the upside mild resistance lies around 108.25 followed by very strong resistance in the 108.75-90 zone. The pair should remain in narrow range bound movements.

Key Resistance is seen at 108.25 followed by 108.95 while support starts at 107.45 followed by 106.95.

GBP/USD – Friday’s low was 1.8099 and high was 1.8237.
The pair closed at 1.8147.

Sentiment continues to get more sour for the Pound as data remains disappointing thus resistance lies in the 1.8195-1.8220 zone with any foray above 1.8255 likely to lead to strong selling interest. While on the downside profit taking is keeping the pair above 1.81 also bottom pickers are coming up on its break in to the 1.80 region. Decent support exists in the 1.8040-55 region.

Key Resistance is seen at 1.8195 followed by 1.8255 while support starts at 1.8105 followed by 1.8045.

AUD/USD – Friday’s low was 0.7535 and high was 0.7605.
The pair closed at 0.7558

The Australian Dollar has shot back above 0.7550 as commodity prices have rallied higher but for now mild resistance exists around 0.7585 with very strong resistance in the 0.7625-40 zone. On the downside support lies around the 0.7525 mark with decent buying interest on any break below 0.7475. Aussie employment data released on Thursday is eyed with interest.

Key Resistance is seen at 0.7585 followed by 0.7625 while support starts at 0.7525. followed by 0.7475.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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