Australian FOREX Daily Outlook 11/09/2008

EURO breaks 1.40 on Slowing Eurozone Growth

CURRENCY TRADING SUMMARY – 11th September 2008 (00:30GMT)

·U.S. Dollar Trading (USD) was able to shrug off terrible earning data from Lehman Brothers and stage a late rally that took it multi year highs against a basket of currencies. US Oil Inventories fell 5.9 Million barrels but Crude Futures were unable to capitalize on these bullish numbers as USD strengthened and Commodities Broadly fell. Initial weakness in US stocks was reversed as markets recovered from heavy losses on Tuesday. In the U.S. share markets, the NASDAQ was up 18 points (0.85%) and the Dow Jones was up 38 points (0.34%). Crude Oil closed down -$0.68 ending the New York session at $102.58 per barrel. Looking Ahead, Weekly Jobless claims seen at 440k and July Trade Balance is seen at $-58 Billion. August Import Prices are seen -1.8%.

·The Euro (EUR) rebounded as Lehman reported heavy losses but was sold heavily late in the day as EU commission downgraded growth forecasts suggesting a technical recession in Germany. The market is eyeing a test of the 1.40 level. Overall the EUR/USD traded with a low of 1.3989 and a high of 1.4179 before closing the day at 1.3990 in the New York session. Looking ahead, August Wholesale Price Index is seen down -0.6%. UPDATE EUR/USD BREAKS 1.40

·The Japanese Yen (JPY) rebounded from lows as equities consolidated Tuesday’s losses. A brief spike lower was seen on the back of Lehman Brothers results but then recovered inline with US stocks. Leading Indicators rose to 91.6% in July. Overall the USDJPY traded with a low of 106.58 and a high of 107.94 before closing the day around 107.70 in the New York session. Looking ahead, Machinery Orders expected to fall 4.3% in July.

·The Sterling (GBP) traded in a fairly tight range recovering as Oil made gains on news OPEC was cutting Oil output but fell in line with the Euro ending the day at the bottom of the current range. Did break back below the .8000 on the EUR/GBP in a possible sign that the recent plunge on the pound may be finding a base. July Trade Balance deficit shrank to 7.7 from 8 billion in June. Overall the GDP/USD traded with a low of 1.7520 and a high of 1.7679 before closing the day at 1.7530 in the New York session. UPDATE CABLE BREAKS BELOW 1.7500

·The Australian Dollar (AUD) Broke through the .8000 level during the Asian session before rebounding as stocks recovered and Oil jumped on OPECS report. As Oil came off highs and Gold fell heavily, Aussie again came under pressure and broke back below .8000 as RBNZ cut New Zealand interest rates by 0.50%. Overall the AUD/USD traded with a low of 0.7978 and a high of 0.8135 before closing the US session at 0.8010. Looking Ahead, August Unemployment Rate is expected to rise 4.4% vs. 4.3% in July. The Unemployment change is expected at +5K.

·Gold (XAU) fell heavily as the USD strengthened and Oil remained near lows. Overall trading with a low of USD$753.00 and high of USD$783.60 before ending the New York session at USD$756 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.3950

Initial support at 1.3900 (Round Number) followed by 1.3838 (50% retracement of 1.1639-1.6038). Initial resistance is now located at 1.4003 (Sept 10 low) at followed by 1.4179 (Sept 10 high).

·Yen – 107.50

Initial support is located at 106.61 (Sep 10 low) followed by 105.53 (Sep 5 low). Initial resistance is now at 108.22 (Sep 9 high) followed by 109.08 (Sept 8 high).

·Pound – 1.7495

Initial support at 1.7472 (Sept 8 low) followed by 1.7371 (Apr 5, 2006 low). Initial resistance is now at 1.7707 (Sep 9 high) followed by 1.7976 (Sep 8 high).

·Australian Dollar – 0.7970

Initial support at 0.7893 (Aug 20, 2007 low) followed by 0.7675 (Aug 19, 2007 low). Initial resistance is now at 0.8131 (Sept 10 High) followed by 0.8178 (Sept 9 high).

·Gold – 752

Initial support at 750 (Psychological Round Number) followed by 745.83 (Oct 22, 2007 low). Initial resistance is now at 805.15 (Sep 9 high) followed by 819 (Sep 5 high).