Australian FOREX Daily Outlook 07/06/2005

07/06/05 (02:00 GMT)

• Dollar gave back some of its recent gains as poor payrolls outcome last week and uncertainty surrounding the Trade deficit result on Friday coupled with the assertion in many quarters that the Dollar’s recent gains have been too high & too quick, has led to some natural profit taking on its longs. But the Dollar has remained firm in spite of these factors which bodes well for further gains next week. Greenspan’s speech on Thursday is the next major focus.

• Euro remained within the 1.22 region which holds mixed technical interest but its losses continued on its crosses and it has fallen a mammoth 1000 points against the Yen in the last ten days. Meanwhile, Euro-Zone foreign ministers were in damage control mode as they dismissed talk of nations quitting the Euro bloc. President Juncker was more disdainful stating that they had no ”time to waste” and coined the recent speculation around Euro’s survival as “stupid things”. Nonetheless, the Euro remains under pressure with German Factory orders coming below expectations.

• Yen rallied across the board as the out performance of its fundamentals in the last week has been rewarded and its gains accelerated after it broke below the 107.55 support mark and managed to close in the 106 region. Household spending data is eyed today to see if it can follow yesterday’s Capex data and inch higher. Greenspan’s speech to international bankers underway right now has brought back the Yuan revaluation issue into focus which has helped the Yen stay bid.

• Pound remained within its broad range but is currently at the upper end with resistance in the 1.8255-70 zone. Meanwhile, U.K. government confirmed that the referendum on the EU constitution has been postponed indefinitely. The BRC Retail sales monitor reported sluggish sales in line with expectations with consumer confidence on the low side amid a backlog of substantial debt.

• Australian Dollar has strengthened more than anticipated primarily due to investors who are disillusioned with the Dollar and the Euro, with commodity bloc appearing as an attractive alternative. Gold and Copper prices have spiked higher in the last few days which has also played a substantial part in the Aussie inching higher. However its gains haven’t been on its own fundamentals as the economy slowly but gradually enters an impending soft patch. For now, decent selling interest exists on any move above 0.77.

*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 – Yesterday’s low was 1.2221 and high was 1.2293.
The pair closed at 1.2262.

Euro’s problems are much bigger than recent poor data for the U.S. and while the pair has stabilized due to the uncertainty around the Dollar, the Euro continues to fall on its crosses. For now mild resistance exists around 1.2310 followed by decent selling interest in the 1.2355-70 zone. On the downside mild support exists around 1.2220 with any break below 1.22 should bring into focus the strong support zone of 1.2155-70. 1.22 region has mixed technical interest and should keep the pair directionless within it.

Key resistance is seen at 1.2315 followed by 1.2375 while support starts at 1.2210 followed by 1.2155.

USD/JPY – Yesterday’s low was 106.70 and high was 107.74.
The pair closed at 106.90.

The Yen gains accelerated after it broke below strong Dollar bids around 107.55 and it currently hovers around 106.95 support mark. A decisive break below 106.50 could accelerate gains for the Yen with decent Dollar buying orders around that mark. Japanese household spending data is eyed for further direction with resistance having moved down to 107.75 followed by strong selling orders around 108.25.

Key Resistance is seen at 107.75 followed by 108.25 while support starts at 106.55 followed by 106.05.

GBP/USD – Yesterday’s low was 1.8127 and high was 1.8246.
The pair closed at 1.8225.

The pair is still within its broad range trading with resistance around 1.8255 holding well for now, selling orders are stronger on any break above 1.83, with resistance in the 1.8325-40 zone. On the downside mild support exists around 1.8155 followed by good buying interest on any break below 1.81. No key data is released from both sides of the Atlantic and cue is taken from other majors.

Key Resistance is seen at 1.8255 followed by 1.8315 while support starts at 1.8155 followed by 1.8095.

AUD/USD – Yesterday’s low was 0.7553 and high was 0.7661.
The pair closed at 0.7649

The Australian Dollar has inched higher more than expected largely due to big fund buying who are disillusioned with the Dollar and the Euro. Commodity prices have also surged higher which helped the Aussie clear the strong resistance mark at 0.7640. However it hasn’t broken decisively higher with mild resistance around 0.7685 followed by strong resistance around 0.7725.

Key Resistance is seen at 0.7685 followed by 0.7725 while support starts at 0.7575. followed by 0.7545.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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