Australian FOREX Daily Outlook 23/12/2009

US GDP Slows Down

CURRENCY TRADING SUMMARY – 23rd December (00:30GMT)

U.S. Dollar Trading (USD) more Dollar strength was seen as the market ignored weaker than expected Q3 GDP to +2.2% from +2.8%. November US Existing Home Sales were +7.4% m/m at 6.54mln vs. 6.25mn forecast. DJIA +50 points closing at 10464, S&amp P +3 points closing at 1118 and NASDAQ +15 points closing at 2252. Looking ahead, November New Home Sales are forecast at 0.44mln vs. 0.43mln previously. Weekly Crude Oil Inventories are forecast at -1.5mln vs. -3.7mln previously.

The Euro (EUR) traded at new month lows after breaking through support at 1.4250. The market bounced later in the US session but is still very heavy. Targets on the downside include the key psychological level of 1.4000. EUR/JPY continued to grind higher but was contained by resistance at Y131. Overall the EUR/USD traded with a low of 1.4216 and a high of 1.4334 before closing at 1.4250. Looking ahead, German November Imports are forecast at 0.3% vs. 0.5% m/m.

The Japanese Yen (JPY) more selling was seen throughout the day as markets continue to take a dovish view of the recent BoJ actions in the market. Speculation remains that to counter deflation in Japan the government stimulus will have to expanded significantly beyond the current levels and this will put downside pressure on the Yen. Overall the USDJPY traded with a low of 90.98 and a high of 91.89 before closing the day around 91.80 in the New York session.

The Sterling (GBP) fell against most major currencies as the market reacted to poor Q3 GDP revisions of -0.2% vs. -0.1% forecast. The Key 1.6000 level in cable was broken and the pair also fell through the 200 day MA in a bearish technical sign. One measure of support was seen in the GBP/JPY which bounced off the Y146 level. Overall the GBP/USD traded with a low of 1.5919 and a high of 1.6103 before closing the day at 1.5960 in the New York session. Looking ahead, December Bank of England Minutes released.

The Australian Dollar (AUD) strong risk appetite did little to stem the pressure on the Aussie with the market buying the USD aggressively against all currencies. Support at 0.8750 held and AUD/JPY buying helped to stem the downside. Overall the AUD/USD traded with a low of 0.8741 and a high of 0.8837 before closing the US session at 0.8760. Update New Zealand Q3 GDP at 0.2% vs. 0.4% forecast.

Oil &amp Gold (XAU) continued to fall but support at $1080 allows the precious metal to bounce. Overall trading with a low of USD$1074 and high of USD$1098 before ending the New York session at USD$1084 an ounce. Bounced as the Oil market remained resilient to recent USD strength. Crude Oil was up +$0.68 ending the New York session at $74.40.

TECHNICAL COMMENTARY

Euro – 1.4255

Initial support at 1.4218 (Dec 22 low) followed by 1.4178 (Sept 1 low). Initial resistance is now located at 1.4373 (Dec 21 high) followed by 1.4412 (Dec 18 high)

Yen – 91.80

Initial support is located at 90.16 (Dec 21 low) followed by 88.97 (Dec 18 low). Initial resistance is now at 91.87 (Dec 22 high) followed by 92.32 (Oct 27 High).

Pound – 1.5965

Initial support at 1.5922 (Dec 22 low) followed by 1.5903 (Oct 14 low). Initial resistance is now at 1.6165 (Dec 21 high) followed by 1.6248 (Dec 18 high).

Australian Dollar – 0.8765

Initial support at 0.8751 (Dec 22 low) followed by the 0.8647 (Oct 5 low). Initial resistance is now at 0.8925 (Dec 21 high) followed by 0.9011 (Dec 17 high).

Gold – 1084

Initial support at 1074 (Dec 22 low) followed by 1055 (Nov 3 low). Initial resistance is now at 1119 (Dec 21 high) followed by 1141 (Dec 17 high) .

Oil – 74.50

Initial support at 72.50 (Intraday support) followed by 70.00 (Intraday support). Initial resistance is now at 75.00 (Key Psychological Level) followed by 76.00 (Intraday resistance).