Australian FOREX Daily Outlook 10/12/2009

Oil’s Slide Continues

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

U.S. Dollar Trading (USD) was strong for most of the day as risk aversion remained elevated and markets focused on bad news stories outside of the US. Stocks in the US session finished on a positive note and this led to the USD paring back gains. Helping sentiment was BoA announcement they had repaid $45bn in TARP money. DJIA +51 points closing at 10337, S&amp P +4 points closing at 1095 and NASDAQ +10 points closing at 2183. Looking ahead, Weekly jobless claims forecast at 460k vs. 457k previously.

The Euro (EUR) new 5 week lows in Asia were seen on stoploss runs before consolidation and a small bounce the rest of the day. Weak Oil and a negative rating watch on Spain are hurting sentiment towards the single currency. Overall the EUR/USD traded with a low of 1.4667 and a high of 1.4784 before closing at 1.4730. Looking ahead, Swiss Rate Decision forecast to remain at 0.25%.

The Japanese Yen (JPY) with risk aversion again prevalent in the Asia and European sessions the downside was tested on most crosses and the USD/JPY. Q3 GDP was revised lower to 0.3% vs. 1.2% previously as Capex was very weak. Overall the USDJPY traded with a low of 87.35 and a high of 88.73 before closing the day around 88.00 in the New York session.

The Sterling (GBP) came under pressure as the UK budget was put under the microscope and UK’s Darling slapped a 50% tax on bankers bonuses. October Trade Balance was -7.1bn vs. -6.85bn forecast. The cable struggled to rally off lows with the rest of the majors in New York and was very weak on most crosses. Overall the GBP/USD traded with a low of 1.6165 and a high of 1.6379 before closing the day at 1.6260 in the New York session. Looking ahead, BOE Rate decision forecast to remain at 0.5% and keep QE at 200BN.

The Australian Dollar (AUD) found solid support at 0.9020 on three occasions but rallies were subdued as the market is nervous to buy too aggressively in the current market. October Trade Balance -2379mn vs. -1700mn forecast. Overall the AUD/USD traded with a low of 0.9021 and a high of 0.9116 before closing the US session at 0.9090.Looking ahead, Australian Unemployment Rate forecast at 5.9% vs. 5.8% previously and Employment change is expected at 5k vs. 25k previously.

Oil &amp Gold (XAU) rallied in Asia but was sold off again with Oil in the US session before finishing broadly where it began. Overall trading with a low of USD$1115 and high of USD$1147 before ending the New York session at USD$1132 an ounce. Strong Crude numbers were ignored as Crude printed fresh multi month lows below $71 a barrel. Crude Oil was down -$1.95 ending the New York session at $70.67.

TECHNICAL COMMENTARY

Euro – 1.4735

Initial support at 1.4626 (November 3 low) followed by 1.4611 (0.382 of 1.3749-1.5144). Initial resistance is now located at 1.4905 (Dec 7 high) followed by 1.5091 (Dec 4 high)

Yen – 88.05

Initial support is located at 87.32 (Dec 4 low) followed by 86.59 (Dec 2 low). Initial resistance is now at 89.52 (Dec 8 high) followed by 90.77 (Dec 4 High).

Pound – 1.6270

Initial support at 1.6126 (Sept 30 low) followed by 1.5973 (Oct 15 low). Initial resistance is now at 1.6516 (Dec 7 high ) followed by 1.6722 (Dec 3 high).

Australian Dollar – 0.9095

Initial support at 0.8947 (Nov 27 low) followed by the 0.8907 (Nov 2 low). Initial resistance is now at 0.9189 (Dec 7 high) followed by 0.9322 (Dec 3 high).

Gold – 1132

Initial support at 1124 (Dec 8 low) followed by 1118 (Nov 16 low). Initial resistance is now at 1169 (Dec 8 high) followed by 1179 (0.236 of 1026.60 – 1226.56) .

Oil – 70.80

Initial support at 70.00 (Major level) followed by 69.50 (Intraday support). Initial resistance is now at 72.50 (intraday resistance) followed by 75 (intraday resistance).