Australian FOREX Daily Outlook 14/06/2005

14/06/05 (02:00 GMT)

• Dollar had a see saw effect on a thin trading day and its inability to break below key support barriers against European currencies led to it retracing its gains and end the day around the same levels it started it. The lack of any major discussion on the Yuan revaluation issue in the G8 summit helped the Dollar rally significantly against the Yen. A concern for the Greenback is the refusal of oil prices to abate as they went back up towards $55 pb. In spite of OPEC’s continuous assurances of raising supply it’s the shortage of adequate refineries that are causing uncertainty and pushing prices up.
  

• Euro bears failed to break it below the crucial 1.20 mark in the European session and it managed to reverse its intra day losses closing above 1.21. Earlier the continuous deadlock between the EU Finance Ministers with regards to the budget as well as speculation of a possible rate cut in the near future weighed in against the Euro. Looses halted around the strong support mark of 1.2025 and uncertainty around the U.S. inflation figures led to position squaring helping the Euro inch higher.
  

• Yen finally gave in and the Dollar managed to break above the strong resistance area around 109. The unexpected downward revision of GDP, another spike in oil prices as well as Yuan revaluation being a non issue in the G8 summit all combined to send the Yen crashing as well as becoming a good excuse to take profit on its crosses which have rallied significantly in the last few weeks. No clear trend is seen in the economy’s direction but upside is the more likely scenario for the second half of the year.
  

• Pound like the Euro bounced back up after bears failed to push it below the crucial 1.80 mark. However the Pound is under greater pressure after much weaker than estimated data outcomes, with RICS house price survey reporting the worst monthly outcome since November 1992 while another survey by ODPM also confirmed the sharp decline. PPI output fell on declining demand but rising raw material costs led to an unexpected rise in input costs which would hit the manufacturers hard. Today’s CPI could decline more than estimated with loss of support at 1.80 likely to accelerate losses.

• Australian Dollar has bounced back strongly towards 0.7650 after briefly slipping below 0.76 due to general profit taking on Dollar longs in the American session. Gold prices are showing strong resilience and have rallied significantly in the past week which has done its bit to keep the Aussie supported. The lack of knowledge on local fundamentals by overseas investors has also helped it but like Europe, Australia too is facing a housing downturn and decline in consumer spending. 0.77 is the pivot mark with selling orders above it.

*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 1.2027 and high was 1.2120.
The pair closed at 1.2104.

Thin trading conditions led to volatile trading as the Euro has slipped below 1.21 and then managed to close above it with mild support around 1.2055 followed by the crucial psychological mark of 1.20. Good support and buying orders exists for this pair in the 1.1990-1.2010 zone with a break below likely to accelerate Euro’s losses into the 1.18 territory. On the upside mild resistance exists around 1.2175 followed by very strong resistance and offers on any break above 1.2255.

Key resistance is seen at 1.2175 followed by 1.2255 while support starts at 1.2055 followed by 1.1990.

USD/JPY –Yesterday’s low was 108.44 and high was 109.68.
The pair closed at 109.59.

The pair’s strong resistance around 109 was finally broken and its risks acceleration of losses towards 111 on continuous broad based Dollar strength. U.S. data as well as oil prices are eyed for further direction. On the downside previous resistance marks have become strong support with 108.85 providing mild buying interest followed by strong bid interest in the 108.10-25 zone. Cue is also taken from the Yen’s crosses especially against the Euro.

Key Resistance is seen at 109.75 followed by 110.45 while support starts at 108.85 followed by 108.25.

GBP/USD – Yesterday’s low was 1.8000 and high was 1.8125.
The pair closed at 1.8030.

The pair is moving in tandem with the Euro with 1.80 the crucial psychological support mark for this pair. A break below could accelerate losses for the pair with mild support around 1.8045, the next distant support zone is seen at 1.7920-35. On the upside, mild resistance is seen around 1.8125 followed by strong selling interest on any move above 1.82.

Key Resistance is seen at 1.8125 followed by 1.8195 while support starts at 1.8005 followed by 1.7935.

AUD/USD – Yesterday’s low was 0.7589 and high was 0.7638.
The pair closed at 0.7612.

Commodity prices have remained firm thus keeping the Australian Dollar supported above 0.76 with mild support around 0.7605 followed by very strong support in the 0.7525-40 zone. A break below 0.75 could accelerate losses for the Aussie. On the upside mild resistance exists around 0.7655 followed by strong selling interest on any break above 0.77.

Key Resistance is seen at 0.7655 followed by 0.7710 while support starts at 0.7605. followed by 0.7540.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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