Australian FOREX Daily Outlook 1/10/2009

Oil Soars Above $70 a barrel

CURRENCY TRADING SUMMARY – 1st October (00:30GMT)

U.S. Dollar Trading (USD) lost ground after a few days of strength and consolidation. Commodity currencies led the rally against the Dollar with AUD/USD breaking fresh year highs. US Data was surprisingly weak with September ADP Employment -254k vs. -200k expected. Chicago PMI forecast at 52 shocked at 46.1. In US Stocks, DJIA -29 points closing at 9712, S&amp P -3 points closing at 1057 and NASDAQ -1 points closing at 2122. Looking ahead, ISM Manufacturing Forecast at 54 vs. 52.9 previously. Weekly Jobless Claims are forecast at 530k vs. 530k previously.

The Euro (EUR) strengthened during Europe on strong German Employment Data and intervention from the SNB on the EUR/CHF. German Unemployment in September was -12k vs. +19k forecast. In the US session some volatility was seen after weak data prompted profit taking. Overall the EUR/USD traded with a low of 1.4576 and a high of 1.4674 before closing at 1.4630. Looking ahead, August German Retail Sales forecast at 0.1% vs. 0.7%.

The Japanese Yen (JPY) fell hard at the start of the Europe after Fin Minister Fujii said recent Yen strength will not be a topic at the G7. EUR/JPY dipped but was able to recover to opening level along with most crosses. August Industrial Output at 1.8% vs. 1.9% forecast. Overall the USDJPY traded with a low of 89.63 and a high of 90.37 before closing the day around 90.15 in the New York session. UPDATE Q3 TANKAN Survey at -33 vs -32 forecast.

The Sterling (GBP) rallied hard into Europe on better than expected Consumer Confidence and continued strength on the crosses especially the EUR/GBP. Large quarter end flows supported. Also helping was the massive rally in Commodities and improvement in risk sentiment. Overall the GBP/USD traded with a low of 1.5945 and a high of 1.6125 before closing the day at 1.5990 in the New York session.

The Australian Dollar (AUD) soared on strong August Retail Sales at 0.9% vs. 0.5% forecast. When the pair broke above 0.8800 the market held and pushed higher as gold and Oil pushed higher in the US session outweighing stock market gyrations. Overall the AUD/USD traded with a low of 0.8734 and a high of 0.8847 before closing the US session at 0.8825.

Oil &amp Gold (XAU) was very strong breaking back above $1000 an ounce with broad USD weakness and pushing higher into the US close. Overall trading with a low of USD$991 and high of USD$1009 before ending the New York session at USD$1007 an ounce. Had its biggest rally in over a month up +6% to break above $70 a barrel. Crude Oil was up $3.90 ending the New York session at $70.61.

TECHNICAL COMMENTARY

Euro – 1.4635

Initial support at 1.4527 (Sept 29 low) followed by 1.4467 (Sept 9 low). Initial resistance is now located at 1.4725 (Sept 25 high) followed by 1.4844 (September 23 high)

Yen – 89.70

Initial support is located at 88.24 (Sept 28 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 90.51 (76.4% retrace 87.13-101.44) followed by 91.63 (Sept 24 high).

Pound – 1.6005

Initial support at 1.5771 (Sept 28 low) followed by 1.5691 (38.2% retrace 1.3503 – 1.7043). Initial resistance is now at 1.6207 (23.6% retrace 1.3503-1.7043) followed by 1.6468 (Sept 23 high).

Australian Dollar – 0.8835

Initial support at 0.8676 (Sept 29 low) followed by the 0.8587 (Sept 28 low). Initial resistance is now at 0.8943 (76.4% retrace 0.9850-0.6009) followed by 0.9130 (Aug 07 ’08 high).

Gold – 1007

Initial support at 985 (Sept 29 low) followed by 982 (Sept 10 low). Initial resistance is now at 1020 (Sept 22 high) followed by 1024 (September 17 high).

Oil – 70.40

Initial support at 69.40 (Fib Support) followed by 68.00 (Fib Support). Initial resistance is now at 70.75 (Sept 30 high) followed by 72.05 (Sept 22 High).