Australian FOREX Daily Outlook 11/07/2005

11/07/05 (02:00 GMT)

• Dollar gave back some of its gains as the U.S. employment data results were not decisive enough to push it past key technical barriers, thus its inability to do so led to a bout of profit taking. Unemployment rate went to 4 year low while previous months jobs were revised higher this offset the disappointment of a lower than expected Payrolls outcome. Nonetheless the Greenback has more positives in its favour than others and sentiment remains in its favour. Key data eyed this week includes the Trade balance as well as Inflation & Retail Sales.
  

• Euro ended last week at same price level it started it and has shown good resilience with the strong support zone of 1.1850-75 continuing to hold well for now. Data was weak with German Industrial Production remaining in negative territory which is its third in last four months. A weaker Euro has boosted exports which helped the manufacturing sector but in spite of this the negative result shows the extent of sluggishness in domestic demand. Selling interest remains on any foray above 1.2055.
  

• Yen remained on the back foot as data was mixed while high oil prices continue to weigh against it. Machine Orders had a larger than expected decline with Household spending also on the weak side. Oil prices are eyed for intra day sentiment with mild resistance in the 112.55-70 zone. This week’s data is not expected to provide much support for the Yen with general Dollar movements to drive the pair.
  

• Pound continued to suffer from the increase in bearish sentiment with the loss of 1.74 support accelerating its losses towards 1.73 before bottom pickers and profit taking helped it stabilize above 1.7375. Brief alerts and evacuations following Thursday’s bombings is adding to the uncertainty which also increases the likelihood of BoE going for a rate cut in their next meeting to try and lift consumer confidence. The focus shifts to key U.K. data today with PPI, House price survey as well as Trade Balance figures.

• Australian Dollar managed to close above 0.74 with the record employment result keeping it mildly supported in the face of a stronger Dollar. Sentiment is slowly but surely shifting away from the Aussie with its high yield advantage withering away and the economy not as strong as it was in the last few years. Mild resistance lies around 0.7455 with strong offers above 0.75.

EUR/USD – Friday’s low was 1.1872 and high was 1.1985.
The pair closed at 1.1967.

The pair rallied back above 1.19 after the strong support zone of 1.1850-75 wasn’t broken below. Decent buying interest exists around that region and any decisive break below that pivot mark could accelerate its losses with next distant support seen around 1.17. On the upside, sell on rallies remains as the market’s strategy with mild resistance around 1.20 followed by selling interest on any foray above 1.2055. Resistance is strong around 1.2115 with any foray above that mark likely to shift intra day sentiment in the Euro’s favour.

Key resistance is seen at 1.2055 followed by 1.2115 while support starts at 1.1875 followed by 1.1780.

USD/JPY – Friday’s low was 111.78 and high was 112.57.
The pair closed at 112.16.

The pair remains locked in its recent range with the Dollar finding good support around 111.50 with any break below finding good buying interest. A decisive break below could bring into focus the strong support zone of 110.90-111.10 with break below 110.75 could shift intra day sentiment in the Yen’s favour. On the upside resistance continues in the 112.50-75 zone which is holding well for now but a decisive break above will further accelerate its losses. Oil price movements are eyed for intra day movements.

Key Resistance is seen at 112.75 followed by 113.25 while support starts at 111.55 followed by 110.95.

GBP/USD – Friday’s low was 1.7310 and high was 1.7437.
The pair closed at 1.7381.

The Pound remains in negative territory but oversold in the short term thus any positive U.K. data could see a relief rally through profit taking. Mild resistance lies around 1.7475 with any break above could lead to moves towards 1.7525-50 zone which holds strong resistance with decent sized offers around that region. Any move above 1.76 could shift intra day sentiment in the Pound’s favour. On the downside, support lies around 1.73 a break of which, could further accelerate its losses. U.K. data released today is eyed for direction.

Key Resistance is seen at 1.7475 followed by 1.7550 while support starts at 1.7315 followed by 1.7270.

AUD/USD – Friday’s low was 0.7366 and high was 0.7443.
The pair closed at 0.7402.

The Australian Dollar has failed to benefit from a robust employment report and has slipped back into the 0.73 region. Mild support and decent buying interest lies around 0.7355 with a decisive break below to accelerate losses and bring into focus the strong support zone at 0.7310-25. On the upside, the market seems content on selling on rallies with mild resistance around 0.7445 with a break above to lead to the 0.7495-0.7510 strong resistance zone with offers above that region.

Key Resistance is seen at 0.7455 followed by 0.7505 while support starts at 0.7345. followed by 0.7325.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)
E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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