Australian FOREX Daily Outlook 27/06/2005

27/06/05 (03:00 GMT)

• Dollar after making impressive gains in the Asian session, slipped back after failing to sustain its momentum in spite of breaking below 1.20 against the Euro and also due to the disappointment of durable Goods orders outcome. Although the headline figure was much higher than expected, excluding defense and aircraft orders, the figure actually declined. Thus the Manufacturing sector continues to project mixed signals with a weakish tone and the Fed will no doubt take note of this. Also making it hard for the Greenback to surge ahead were Oil prices going back above $60 pb as demand fails to cow down and the U.S. stock market recording its biggest weekly decline in 2 months.

• Euro’s strong rebound after briefly breaking below the crucial 1.20 mark suggests the market is not yet ready to take that path, especially since a few bearish factors are around the Greenback as well. Meanwhile a few positives for the Euro, as German CPI came in line with expectations while the EU figure for the year came above forecasts.. ECB President Trichet stated that inflation was well contained and hinted on rates staying on hold as they were around historic lows. The recent fall in the Euro has helped export growth but outlook still looks very weak compared to the U.S.

• Yen which faced with many contradictory factors ended the week around 109 the same level as it started. Data was weak with Nationwide Department store sales experienced its 18^th decline in 19 months as the result was again below forecasts. After weakening towards 109.30 it managed on break back into the 108 region on the general softness in the Dollar, but it can’t expect to rally substantially with oil prices around $60. Another negative for the Yen were comments from Chinese Premier Jiabao over the weekend as he rejected any immediate shift in its currency regime as well as comments from Japan and South Korea indicating that their current currency reserves were unlikely to be altered significantly.

• Pound took cue from other majors with no data releases from the U.K. it remained within its recent range and closed above 1.82 as pre weekend profit taking minimized the negative impact still around it post minutes of BoE meeting. Many in the market are assuming a rate cut by the end of the year thus lending and consumption data will be keenly eyed this week. Meanwhile many EU members believe that a Budget solution might not eventuate within the U.K.’s six month presidency of the EU which starts on July 1^st. For now, selling interest remains strong in the 1.83 region.

• Australian Dollar took cue from the profit taking in key commodities and slipped back below 0.77 before stabilizing around it. It is feared that the sharp rise in oil prices would dent demand for key commodities as global growth is bound to suffer. Also weighing in against it were comments from China dismissing Yuan revaluation in the near term which has seen all Australasian currencies start the week on a soft tone. For now, strong selling interest exists on any foray above 0.7755 while mild support lies around 0.7655.

EUR/USD – Friday’s low was 1.1982 and high was 1.2106.
The pair closed at 1.2093.

The pair finally broke below 1.20 but only briefly and rebounded strongly and went back above 1.21. It has stabilized within the technically mixed region of 1.2045-1.2155 with mild support in the 1.2030-45 zone with a break below bringing the strong support zone with decent buying interest around 1.1980-95. A decisive break below will accelerate losses for the Euro with distant support around 1.1880. On the upside, mild resistance lies around 1.2175 followed by strong resistance and selling interest in the 1.2245-60 zone.

Key resistance is seen at 1.2175 followed by 1.2245 while support starts at 1.2030 followed by 1.1975.

USD/JPY – Friday’s low was 108.87 and high was 109.38.
The pair closed at 108.98.

The pair is still largely unchanged and continues to hover around 109 with the 108.55-109.25 region holding mixed technical interest. 108.55 holds mild support with a break below leading to the 107.85-108.10 zone which has strong support and decent buying interest. On the upside 109.25-40 has mild resistance with a break above bringing into focus the strong resistance zone of 109.75-90 which has decent selling interest.

Key Resistance is seen at 109.40 followed by 109.95 while support starts at 108.55 followed by 108.05.

GBP/USD – Friday’s low was 1.8123 and high was 1.8247.
The pair closed at 1.8238.

Another day of absence of any key U.K. has seen the pair take cue from the Euro finishing above 1.82. 1.83 is still a sell region with selling orders laced all the way up to 1.84 with strong resistance around the 1.8355. On the downside, 1.8145-60 holds mild support with a break below leading to the 1.8075-90 zone with decent support.

Key Resistance is seen at 1.8305 followed by 1.8355 while support starts at 1.8145 followed by 1.8090.

AUD/USD – Friday’s low was 0.7665 and high was 0.7744.
The pair closed at 0.7689.
The Australian Dollar slipped back taking cue from other majors with mild support in the 0.7655-70 zone with a break below bringing the 0.7625 support mark which has held well so far. On the upside resistance has moved down to 0.7755 with strong resistance and heavy selling interest on any foray above 0.78. Commodity prices trend is eyed to see if more profit taking eventuates.

Key Resistance is seen at 0.7755 followed by 0.7795 while support starts at 0.7655. followed by 0.7615.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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