Australian FOREX Daily Outlook 09/07/2009

YEN SOARS AS RISK TURNED OFF

CURRENCY TRADING SUMMARY – 9th July (00:30GMT)

U.S. Dollar Trading (USD) enjoyed gains against most currencies as Oil tumbled to $60 a barrel and risk currencies were pared back. Wall St. managed to finish slightly stronger but the damage done via the Yen and it crosses as market volatility surged. US Consumer Credit came in at -3.2B vs. -9.8B forecast in May. Crude Oil closed down $2.68 at $60.14. In US share markets, S&amp P ended -1.47 points (-0.17%) at 879.56, NASDAQ ended 1 points (0.06%) at 174 and DOW JONES ended -161.27 points (-1.94%) at 8163.60. Looking ahead, Weekly jobless claims forecast at 605k vs. 614k previously.

The Euro (EUR) came under pressure as EUR/JPY capitulated but held up better than other currencies against the USD. Very strong May German Industrial Production at 3.7% vs. 0.5% previously added to the strong Factory Orders seen yesterday. Support at 1.3830 from Asian Central Banks helped reverse the slide. Q1 GDP was revised lower to 2.5% as expected. Overall the EUR/USD traded with a low of 1.3831 and a high of 1.3940 before closing at 1.3880. Looking ahead, June German CPI forecast at 0.4% vs. -0.1%. May Trade Balance forecast at 9Bn.

The Japanese Yen (JPY) was the major mover as the USD/JPY broke through support at 94, 98.35 and 93.50 in capitulation like trading hit 91.80. All the crosses were crushed 4-5% lower even as the US stock market recovered. A large bounce did eventuate at the end of the day but is technically extremely oversold on multiple pairs. Overall the USDJPY traded with a low of 9178 and a high of 94.76 before closing the day around 92.95 in the New York session.

The Sterling (GBP) was one of the hardest hit by the Yen strength with the GBP/JPY falling over 4 yen on the USD/JPY move and the GBP/USD being dragged through 1.6000. The pair managed to reclaim the 1.60 figure but the market is fragile and may come under more selling of Oil falls further. The market is focused on the Quantitative Easing measures the BOE may discuss post rate decision today. Overall the GBP/USD traded with a low of 1.5982 and a high of 1.6142 before closing the day at 1.6060 in the New York session. Looking ahead, BOE announcement widely expected to hold at 0.5%.

The Australian Dollar (AUD) was sold aggressively as the AUD/JPY broke lower and the bottom of the month long range at 0.7780 was broken to the downside. AUD had received support from better economic data but this was overshadowed by concerns about Global growth and slumping commodities. Overall the AUD/USD traded with a low of 0.7722 and a high of 0.7894 before closing the US session at 0.7790. UPDATE Australian Employment for June is forecast at -21.4k vs. -25K forecast and 5.8% vs. 5.9% Unemployment Rate.

Gold (XAU) finally broke out of its recent range to the downside with $900 the natural target on the downside in Oil continues lower. Overall trading with a low of USD$904 and high of USD$927 before ending the New York session at USD$909 an ounce.

TECHNICAL COMMENTARY

Euro – 1.3885

Initial support at 1.3827 (Jun 22 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4051 (July 7 high) followed by 1.4201 (Jun 1 high)

Yen – 92.75

Initial support is located at 92.52 (Feb 20 low) followed by 91.33 (Feb 16 low). Initial resistance is now at 93.86 (May 22 high) followed by 95.46 (Jul 7 high).

Pound – 1.6060

Initial support at 1.5986 (Jun 9 low) followed by 1.5803 (Jun 8 low). Initial resistance is now at 1.6386 (Jul 6 high) followed by 1.6546 (July 1 Level).

Australian Dollar – 0.7785

Initial support at 0.7780 (Previous range low) followed by the 0.7630 (May 19 low). Initial resistance is now at 0.8038 (Jul 7 high) followed by 0.8155 (Jun 30 high).

Gold – 909

Initial support at 906 (May 8 low) followed by 895 (May 8 low). Initial resistance is now at 913 (Jun 23 high) followed by 934 (Jul 3 high).