Australian FOREX Daily Outlook 10/06/2005

10/06/05 (02:00 GMT)

• Dollar remained steadfast and rallied across the board as the market was relieved that Greenspan didn’t pull the curtains down on rate hikes and at the same time stated that the economy was on a reasonably firm footing. But nothing new was said and we are back to square one where the Fed will eye data outcomes to determine future rate hike stance, the first test is today’s Trade Balance data (12:30 GMT) with deficit expected to inch higher and the uncertainty surrounding this result led to the Greenback paring back its gains and finish the day around about the same levels where it started.

• Euro after slipping below 1.22 managed to rebound quickly and stabilized around 1.2230 as the market is looking to adopt a semi neutral position ahead of today’s U.S. trade balance data. Meanwhile, data from the zone’s largest economy Germany showed a decline in the Current Account surplus as exports have failed to pick up while inflation was in line with expectations. Meanwhile, a survey by the ECB suggests that growth in the zone is expected to remain subdued but should pick up later in the year.
  

• Yen continued paring back its recent gains and for now has stabilized around the pivot mark of 107.55; this region holds mixed technical interest. While the pick up in Japanese fundamentals is helping it stay below 108 as Consumer Confidence inched slightly higher than expected due to improvements in the labour market. The pair is likely to stay within the 107 region with U.S. data eyed for further direction.
  

• Pound lost ground on mixed domestic data and general Dollar rally post Greenspan but like the Euro it is a bit supported ahead of U.S data and has managed to close above 1.82. Industrial Production rebounded recording its biggest increase this year however overall the sector remains under pressure and is likely to ease back in coming months. Trade Deficit widened more than estimated as imports are growing at a higher rate. Meanwhile, BoE kept rates on hold and calls for a rate cut are increasing under the current tepid spending environment.

• Australian Dollar was confined to a relatively narrow range as strong offers exists above 0.77 while the upside surprise in yesterday’s employment data and uncertainty around the U.S. Trade deficit outcome is keeping it supported above 0.7625. The direction of the Aussie economy is pretty much clear with unemployment rate expected to inch higher in months to come as the labour market may have peaked while interest rates are not likely to rise, thus U.S. data should provide clues for its direction.

*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 1.2175 and high was 1.2256.
The pair closed at 1.2229.

Large selling orders around 1.2355 set the pair crashing back towards it strong support area around 1.22. Uncertain outlook around the Dollar is keeping decent buying interest for the Euro on any foray below 1.22 with very strong support in the 1.2150-75 zone. On the upside mild resistance exists around 1.2280 followed by very strong resistance in the 1.2355-70 zone. U.S. trade Balance data is eyed for further direction.

Key resistance is seen at 1.2280 followed by 1.2375 while support starts at 1.2190 followed by 1.2145.

USD/JPY – Yesterday’s low was 107.07 and high was 107.76.
The pair closed at 107.52.

The Yen stabilized around the technically mixed interest mark of 107.55 with strong offers above 107.75 capping dollar’s gains. Resistance is strong around 108.25 while mild bids lie around 107 followed by very strong buying interest around 106.50. It should remain directionless within the 107 region with U.S. data eyed for further direction.

Key Resistance is seen at 107.55 followed by 107.95 while support starts at 106.45 followed by 106.05.

GBP/USD – Yesterday’s low was 1.8173 and high was 1.8285.
The pair closed at 1.8214.

The pair has fallen by 200 pips in the last two days, thus maintaining its broad range trading with buying interest on any break below 1.82 with decent support around 1.8155 with a break below likely to accelerate losses. With strong support and buying interest in the 1.8075-90 zone while on the upside 1.8275 holds mild resistance followed by strong resistance around the 1.8355. Any foray above 1.84 should lead to very strong selling interest.

Key Resistance is seen at 1.8275 followed by 1.8355 while support starts at 1.8155 followed by 1.8075.

AUD/USD – Yesterday’s low was 0.7651 and high was 0.7688.
The pair closed at 0.7671.

Robust unexpected employment data has helped the Australian Dollar inch higher but decent selling orders exists on any moves above 0.77 with strong resistance in the 0.7725-40 zone. On the downside mild support exists in the 0.7640-55 zone followed by decent buying interest around 0.7575, U.S. Trade Balance is the focus for further direction.

Key Resistance is seen at 0.7695 followed by 0.7740 while support starts at 0.7625. followed by 0.7575.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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