Australian FOREX Daily Outlook 16/06/2010

Stocks Soar as Investors Return

CURRENCY TRADING SUMMARY – 16^th June (00:30 GMT)

U.S. Dollar Trading (USD) the Euro led the majors higher against the Dollar with US stocks markets extending the recent rally and ending in the overall positive territory for the first time this month. June US NAHB Housing market index fell to 17 vs. 22 in a substantial weakening of home builders sentiment. Tonight’s housing data will be checked to see whether this drop in sentiment has translated into actual numbers. In US stocks, DJIA +213 points closing at 10404, S&amp P +25 points closing at 1115 and NASDAQ +61 points closing at 2305. Looking ahead, May Industrial Output is forecast at 0.9% vs. 0.8% previously. Also Released, May Housing Starts are forecast at 0.65mn vs. 0.672mn previously.

The Euro (EUR) shrugged off an awful German Zew survey in June which dropped to 28.7 vs. 48.7 the sharpest drop since Lehman’s Brothers Collapse. The Pair tested support under 1.2200 going into Europe but from that point on it was all one way action up to 1.2350 highs. Helping Sentiment was solid Bond Auctions in Spain and Ireland.EUR/USD traded with a low of 1.2167 and a high of 1.2351 before closing at 1.2330. Looking ahead, May Inflation forecast at 0.1% vs. 0.5% previously m/m.

The Japanese Yen (JPY) was once again contained versus the USD but lost ground against all the other currencies with risk appetite surging with equities. The BOJ held at 0.1% and offered a small new lending facility to try and spur further activity in growth industries. Overall the USDJPY traded with a low of 91.06 and a high of 91.72 before closing the day around 91.40 in the New York session.

The Sterling (GBP) pushed higher but struggled to match the pace of the Euro as May CPI came in weaker then expected at 3.2% vs. 3.5% forecast. EUR/GBP broke above 0.8300 as the market rebounded after weeks of selling. Overall the GBP/USD traded with a low of 1.4680 and a high of 1.4839 before closing the day at 1.4800 in the New York session. Looking ahead, May Claimant Count is forecast at 20k vs. 27.1k previously.

The Australian Dollar (AUD) broke back above 0.8600 as stocks continued to push higher throughout the US session able to shrug off neutral RBA minutes released earlier in the day that suggested interest rates were appropriate for now. AUD/JPY settled above Y79 and is in striking distance of the Key Y80. Overall the AUD/USD traded with a low of 0.8504 and a high of 0.8664 before closing the US session at 0.8640.

Oil &amp Gold (XAU) Grinded higher on weak USD and alternative investment demand after finding solid support under $1220. Overall trading with a low of USD$1219 and high of USD$1237 before ending the New York session at USD$1233 an ounce. Oil rallied over $2 a barrel tracking stocks higher. WTI Oil Closed +$2.30 at $77.10 a barrel.

TECHNICAL COMMENTARY

Euro – 1.2320

Initial support at 1.2103 (June 14 low) followed by 1.1881 (June 7 low). Initial resistance is now located at 1.2368 (0.618 of 1.2672-1.1877) followed by 1.2453 (May 28 high)

Yen – 91.55

Initial support is located at 91.24 (June 11 low) followed by 90.54 (June 1 low). Initial resistance is now at 92.97 (May 18 high) followed by 93.64 (May 13 high).

Pound – 1.4805

Initial support at 1.4505 (Jun 11 low) followed by 1.4347 (Jun 8 low). Initial resistance is now at 1.4878 (50% 0f 1.5544-1.4231) followed by 1.4918 (May 13 high).

Australian Dollar – 0.8645

Initial support at 0.8427 (June 11 low) followed by the 0.8263 (June 10 low). Initial resistance is now at 0. 8728 (0.505 retrace of 0.9388 – 0.8068) followed by 0.8865 (May 17 high).

Gold – 1232

Initial support at 1211 (June 7 low) followed by 1197 (June 4 low). Initial resistance is now at 1252 (Jun 8 high) followed by 1261 (1123.90 plus 1.618 of 1085.3-1170.1).

Oil – 77.10

Initial support at 75.00 (Intraday Support) followed by 72.50 (Intraday Support). Initial resistance is now at 78.00 (Intraday Resistance) followed by 80.00 (Intraday Resistance).