Australian FOREX Daily Outlook 24/02/2010

US Consumer Confidence Crashes

CURRENCY TRADING SUMMARY – 24th February (00:30GMT)

U.S. Dollar Trading (USD) gained on safe haven flows as risk aversion spiked higher in the US on very weak US Consumer Confidence falling to 46 in February from 56 previously. The souring of sentiment had already begun in the European session and was in stark contrast to the positive Asian market. In US stocks DJIA -100 points closing at 10282, S&amp P -13 points closing at 1094 and NASDAQ -28 points closing at 2213. Looking ahead, January New Home Sales are forecast at 0.36mln vs. 0.342mln previously.

The Euro (EUR) rallied at the start of Europe before the market reversed aggressively on weak German February IFO numbers at 95.2 vs. 96 forecast. The slump in EUR/JPY later in the US session dragged the pair towards the key 1.3500 support. Overall the EUR/USD traded with a low of 1.3495 and a high of 1.3694 before closing at 1.3515. Looking ahead, December EU Industrial Orders are forecast at -1% vs. 2.7% m/m.

The Japanese Yen (JPY) broke through Y91 on general USD weakness at the start of the European session before weak US Data sent the pair back below the psychological Y90 level. AUD/JPY and GBP/JPY were under selling heavy pressure. Overall the USDJPY traded with a low of 89.90 and a high of 91.31 before closing the day around 90.20 in the New York session. Looking ahead, January Trade Balance is forecast at -108bn vs. 545bn previously.

The Sterling (GBP) had a very volatile day crashing in Europe on comments from BOE Governor King that the UK economy was recovering slowly and the QE program may still be expanded if the economy weakens more. Crosses held up well later in the day with EUR/GBP falling back from the 0.8800 level and GBP/AUD reclaiming the 1.7300 level. Overall the GBP/USD traded with a low of 1.5391 and a high of 1.5579 before closing the day at 1.5435 in the New York session.

The Australian Dollar (AUD) broke higher to month highs in Early Europe above 0.9050 before reversing direction for the rest of the day on weak gold and stocks. Supporting the pair was comments from RBA Deputy Governor that Australia was to experience a mining boom and that China and India’s expansion might continue for 20 more years. Overall the AUD/USD traded with a low of 0.8876 and a high of 0.9074 before closing the US session at 0.8910. Looking ahead, Q4 Wage Price index forecast at 0.8% vs. 0.7% Q/Q.

Oil &amp Gold (XAU) continued with recent volatility trading within at $20 range but ending close to the $1100 level as the Dollar gained late in the day. Overall trading with a low of USD$1098 and high of USD$1121 before ending the New York session at USD$1104 an ounce. Felt downside pressure due to the weak investor sentiment. Crude Oil was down -$1.45 ending the New York session at $78.86.

TECHNICAL COMMENTARY

Euro – 1.3515

Initial support at 1.3444 (Feb 19 low) followed by 1.3424 (May 18 low). Initial resistance is now located at 1.3655 (Feb 18 high) followed by 1.3788 (Feb 17 high)

Yen – 90.20

Initial support is located at 89.92 (Feb 23 low) followed by 89.72 (Feb 16 low). Initial resistance is now at 91.91 (Feb 22 high) followed by 92.15 (Feb 19 high).

Pound – 1.5435

Initial support at 1.5357 (Feb 19 low) followed by 1.5273 (0.5 of 1.3503-1.7043). Initial resistance is now at 1.5688 (Feb 18 high) followed by 1.5816 (Feb 17 low).

Australian Dollar – 0.8915

Initial support at 0.8879 (Feb 23 low) followed by the 0.8786 (Feb 12 low). Initial resistance is now at 0.9093 (Jan 25 high) followed by 0.9147 (Jan 21 high).

Gold – 1103

Initial support at 1098 (Feb 18 low) followed by 1078 (Feb 12 low). Initial resistance is now at 1131 (Feb 22 high) followed by 1141 (Jan 20 high).

Oil – 79.20

Initial support at 78.00 (Intraday Support) followed by 77.00 (Intraday Support). Initial resistance is now at 80.00 (Intraday Resistance) followed by 81.50 (Intraday Resistance).