Australian FOREX Daily Outlook 06/09/2010

‘Risk On’ Inspires Dollar Weakness

CURRENCY TRADING SUMMARY – 6th September (00:30 GMT)

Written by Anthony Darvall

U.S. Dollar Trading (USD) better than expected albeit still negative August Job Numbers helped inspire further US stockmarket gains and create a risk on environment. The USD fared badly across the board with the Euro and Aussie leading the majors higher. August NonFarm Payrolls -54k vs. -100k forecast. The August Unemployment Rate increased to 9.6% vs. 9.5% previously. In US stocks, DJIA +127points closing at 10447, S&amp P +14 points closing at 1104 and NASDAQ +33 points closing at 2233. Looking ahead, US Bank Holiday Today.

The Euro (EUR) the Euro rallied to week highs as stocks moved higher and mixed US data encouraged Dollar sales. Immediate USD strength after better than expected Nonfarm’s was reversed by heavy EUR/JPY buying. When August US ISM services came out weaker at 51.5 vs. 54.3 forecast the Euro’s rally extended to test 1.2900. EUR/USD traded with a low of 1.2810 and a high of 1.2897 before closing at 1.2891. Looking ahead, September Sentix Index forecast at 8 vs. 8.5 previously.

The Japanese Yen (JPY) USD/JPY rallied immediately above Y85 after the Nonfarm Payrolls but was unable to maintain above the Key level as the ISM data disappointed and general USD selling pushed the major back to the lower Y84 level. The market is still watching comments from Japanese Officials about the recent Yen strength and any moves to fight this. Overall the USDJPY traded with a low of 84.18 and a high of 85.22 before closing the day around 84.40 in the New York session.

The Sterling (GBP) continued to underperform the rest of the market as economic data suggests a fragile recovery. August PMI Service dropped to 51.3 vs. 53.1 previously. Dollar weakness inspired on a timid rally but was capped above 1.5460. Overall the GBP/USD traded with a low of 1.5391 and a high of 1.5466 before closing the day at 1.5456 in the New York session. Look Ahead, BRC Retail Sales Monitor August previously at 0.5%.

The Australian Dollar (AUD) the risk sensitive currency tracked stock markets higher, trading at multimonth highs near key 0.9180. AUD/JPY test Y78 briefly but when the USD/JPY slumped the pair fell back to lower Y77 region. Overall the AUD/USD traded with a low of 0.9068 and a high of 0.9175 before closing the US session at 0.9165.

Oil &amp Gold (XAU) fell back after the US jobs data as the safe haven precious metal suffered from profit taking.Overall trading with a low of USD$1238 and high of USD $1253 before ending the New York session at USD$1247 an ounce. Fell back from the $75 level on weak US services data. WTI Oil Closed -$0.42 at $74.60 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2885

Initial support at 1.2588 (Aug 24 low) followed by 1.2434 (61.8% retrace of 1.1877-1.3334). Initial resistance is now located at 1.2933 (Aug 12 low) followed by 1.3000 (Big figure Resistance)

Yen – 84.45

Initial support is located at 83.60 (August 24 low) followed by 81.85 (May 1995 low). Initial resistance is now at 85.23 (Sept 3 high) followed by 86.36 (Aug 13 high).

Pound – 1.5450

Initial support at 1.5324 (38.2% retrace of 1.4231-1.5999) followed by 1.5125 (July 21 low). Initial resistance is now at 1.5492 (Sept 1 high) followed by 1.5713 (Aug 12 high).

Australian Dollar – 0.9145

Initial support at 0.8771 (Aug 25 low) followed by the 0.8634 (July 19 low). Initial resistance is now at 0.9176 (Sept 3 high) followed by 0.9222 (Aug 6 high).

Gold – 1248

Initial support at 1232 (Aug 31 low) followed by 1210 (Aug 24 low). Initial resistance is now at 1265 (June 21 high) followed by 1300 (round number).

Oil – 74.35

Initial support at 72.50 (Intraday Support) followed by 71.00 (Intraday Support). Initial resistance is now at 75.00 (Intraday Resistance) followed by 76.00 (Intraday Resistance).