Australian FOREX Daily Outlook 2/02/2009

US GDP Falls 3.8% in Q4

CURRENCY TRADING SUMMARY – 2nd February 2009 (00:30GMT)

·U.S. Dollar Trading (USD) was well supported as US GDP beat estimates although it fell the most in 18 years down -3.8% in the 4^th quarter Y/Y. US stocks fell 2% as the market absorbed the recessionary numbers. The USD benefited though as safe haven buying supported. Consumer Sentiment was revised to 61.2 vs. 61.9 previously in January. Crude Oil closed up $0.24 ending the New York session at $41.68 per barrel. In US share markets, the Dow Jones fell 148 points or -1.82% and the NASDAQ fell 31 points or -2.08%. Looking ahead, December Core PCE expected at 0.0% unchanged from November. Also released, January ISM forecast to rise 33.1 vs. 32.9 in December.

·The Euro (EUR) continued weak sentiment weighed on the Euro breaking below support at 1.2800. Moody’s put Ireland on negative watch and heavy EUR/JPY selling was a major catalyst. January Inflation dropped to 1.1% Y/Y well below target rates leading to speculation that the ECB may have more room to cut on Friday. Also concerning December Eurozone Unemployment jumping to 7.9% vs. 7.7% previously. Overall the EUR/USD traded with a low of 1.2778 and a high of 1.2950 before closing the day at 1.2793. Looking ahead, January Manufacturing forecast at 34.5 vs. 33.9 previously.

·The Japanese Yen (JPY) tracked the fall in equities making solid gains against the EUR and AUD. The USD/JPY held up well as USD strength kept the pair close to the 90 level. December Industrial Output fell -9.6% vs. -9% forecast in further signs of a Japanese slowdown.Overall the USDJPY traded with a low of 89.17 and a high of 90.14 before closing the day around 90.10 in the New York session.

·The Sterling (GBP) in surprising moves the Pound was the strongest currency Friday as the market found support from heavy EUR/GBP selling. Talk of very large options at .8885 on the EUR/GBP saw resistance at 90 give way and the cable surge to 1.4500. GBP/JPY also rallied past the 130 yen resistance level. Overall the GDP/USD traded with a low of 1.4188 and a high of 1.4498 before closing the day at 1.4455 in the New York session. Looking ahead, January PMI Manufacturing forecast at 34.5 vs. 34.9 previously.

·The Australian Dollar (AUD) was sold all day as the market focused on world recessionary fears and the RBA rate decision on Tuesday. Profit taking on the AUD/NZD also helped to push the pair to strong support at .6350. AUD/JPY fell to 57 and is close to the record lows of 55 set back in October. Overall the AUD/USD traded with a low of 0.6347 and a high of 0.6507 before closing the US session at 0.6357.

·Gold (XAU) surged higher as investors sought the safety of the precious metal given the financial risk in the current market. Overall trading with a low of USD$901 and high of USD$930 before ending the New York session at USD$928 an ounce.

·Euro – 1.2750

Initial support at 1.2549 (Dec 4 low) followed by 1.2389 (Nov 13 low). Initial resistance is now located at 1.2961 (Jan 30 high) at followed by 1.3179 (Jan 29 high)

·Yen – 89.70

Initial support is located at 88.89 (Jan 28 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 90.76 (Jan 28 high) followed by 90.97 (Jan 20 high).

·Pound – 1.4400

Initial support at 1.4070 (Jan 29 low) followed by 1.3931 (Jan 27 low). Initial resistance is now at 1.4416 (61.8% retrace 1.4980 to 1.3504) followed by 1.4430 (Jan 20 high).

·Australian Dollar – 0.6350

Initial support at 0.6291 (Dec 5 low) followed by the 0.6077 (Nov 20 low). Initial resistance is now at 0.6524 (Jan 30 high) followed by 0.6682 (Jan 29 high).

·Gold – 917

Initial support at 874 (Jan 29 low) followed by 852 (Jan 22 low). Initial resistance is now at 930 (Jan 29 high) followed by 949 (July 2008 low).