Australian FOREX Daily Outlook 10/03/2010

Yen Strength Returns

CURRENCY TRADING SUMMARY – 10th March (00:30GMT)

U.S. Dollar Trading (USD) was able to make solid gains in Europe as the Greece fears resurfaced on news Fitch may still downgrade the embattled country. US stocks turned positive however and the market pared back some of the Dollars gains. In US stocks, DJIA +11 points closing at 10564, S&amp P +1 points closing at 1140 and NASDAQ +8 points closing at 2340. Looking ahead,Crude Oil Inventories are forecast at 2.1mn vs. 4.1mn previously.

The Euro (EUR) slumped in Europe through the 1.3600 level on heavy EUR/JPY selling but the downside pressure did not last and the single currency finished at the 1.3600 level. EUR/GBP continued to grind higher as the Pound suffered the most of the majors. Overall the EUR/USD traded with a low of 1.3536 and a high of 1.3637 before closing at 1.3600. Looking ahead, January German Trade Balance is forecast at 16bn vs. 16.7bn previously.

The Japanese Yen (JPY) was strong as the major slipped below the key Y90 level in Europe and heavy crosses led by the GBP/JPY made the Yen the best performer of the day. Friday’s big sell off in the Yen has nearly been fully retraced and the market is looking for a new catalyst before new direction can be found. Overall the USDJPY traded with a low of 89.62 and a high of 90.33 before closing the day around 89.95 in the New York session. Update January Machine Orders -3.7% vs. -4.1% forecast.

The Sterling (GBP) broke below 1.5000 in Early Europe and remained heavy for the rest of the day as markets continue to take a dim view of the political situation and economic data weakened. January Trade Balance was at -8bn vs. -6.9bn forecast as exports deteriorated. Overall the GBP/USD traded with a low of 1.4934 and a high of 1.5046 before closing the day at 1.4995 in the New York session. Looking ahead, January Industrial Output is forecast at 0.3% vs. 0.5% previously.

The Australian Dollar (AUD) did well to end in the black as the market reacted to extremely positive jobs data. February Jobs ads increased 20% vs. January. GBP/AUD trade at fresh 25 year lows under 1.64 and EUR/AUD slumped to under 1.4900. Overall the AUD/USD traded with a low of 0.9054 and a high of 0.9165 before closing the US session at 0.9145. Update February Consumer Sentiment 0.2% vs. -2.6% previously.

Oil &amp Gold (XAU) was heavy as the market digest news that China was not as bullish on gold as first thought at current levels. $1111 held well and the market bounced in the US session back above the $1120. Overall trading with a low of USD$1108 and high of USD$1124 before ending the New York session at USD$1121 an ounce. Crude Oil dipped early and then recovered later in the day as US stocks extended gains. Crude Oil was up -$0.31 ending the New York session at $81.20.

TECHNICAL COMMENTARY

Euro – 1.3595

Initial support at 1.3531 (Mar 5 low) followed by 1.3436 (Mar 2 low). Initial resistance is now located at 1.3736 (Mar 3 high) followed by 1.3788 (Feb 17 high)

Yen – 90.00

Initial support is located at 88.98 (Mar 5 low) followed by 88.14 (Mar 4 low). Initial resistance is now at 90.96 (0.5 of 93.77-88.14) followed by 91.90 (Feb 22 high).

Pound – 1.4970

Initial support at 1.4855 (Mar 2 low) followed by 1.4784 (Mar 2 low). Initial resistance is now at 1.5209 (Mar 1 high) followed by 1.5422 (Feb 25 low).

Australian Dollar – 0.9145

Initial support at 0.8979 (Mar 4 low) followed by the 0.8936 (Mar 1 low). Initial resistance is now at 0.9211 (Jan 20 high) followed by 0.9243 (Jan 20 high).

Gold – 1122

Initial support at 1104 (Feb 26 low) followed by 1088 (Feb 25 low). Initial resistance is now at 1137 (Mar 8 high) followed by 1144 (Mar 3 high).

Oil – 81.20

Initial support at 80.00 (Intraday Support) followed by 78.00 (Intraday Support). Initial resistance is now at 82.00 (Intraday Resistance) followed by 82.50 (Intraday Resistance).