Australian FOREX Daily Outlook 29/06/2005

29/06/05 (03:00 GMT)

• Dollar remained well bid as Consumer Confidence went to a 3 year high while Oil prices eased back below $60 due to profit taking at such high levels ahead of U.S. inventory data released today. Also the likely upward revision to the GDP coupled with the Fed increasing rates tomorrow and other nation’s fundamentals looking much weaker in comparison brought up too many supportive factors for the Dollar to rally on all majors. Fed’s statement will be keenly eyed and they are expected to be very positive about the growth outlook as they have been so far this year but the continuation of energy prices to stay at such levels could alter some of their optimism.

• Euro slipped back into the 1.20 region on the general Greenback rally while the larger than expected drop in German Consumer Confidence survey also weighed in against it. This was a bit of surprise since their expectations for the economy increased slightly but it just goes to show there are many aspects of the economy that need fixing with unemployment, no doubt, uppermost in peoples mind. However, the sharp drop in the Euro is boosting export orders which is increasing Business Confidence across the zone, as reflected by the French result with the German data expected to follow suit. A decisive break below 1.20 could accelerate its losses.

• Yen has slipped further on yet another bout of poor data which becomes more bearish in the current environment of oil prices staying at such high levels and the chances of Yuan revaluation in the short term dismissed by China. This morning’s Industrial Production has declined due to a sharp fall in exports as demand for goods remains weak globally. It has gone into the 110 region but the market is likely to wait for the crucial Tankan surveys to push it decisively.

• Pound took cue from other majors on yet another day devoid of any data from the U.K. but still within its recent range in a technically mixed interest region. Any probable foray above 1.83 remains a strong offered zone while break below 1.8075 could accelerate its losses. Today’s Lending data is eyed with consumers debt level expected to increase from already high record levels. Mortgage approvals data should suggest the housing market is stabilizing but trend remains weak.

• Australian Dollar fell after a sharp fall in Commodity prices with the Commodity Research Bureau index recording its biggest one day plunge in nearly 14 years. While Aussie interest rates are not expected to increase thus its yield advantage is set to reduce while Retail trade outcome is eyed on Friday. For now support lies around 0.76 with selling interest above 0.77.

EUR/USD – Yesterday’s low was 1.2049 and high was 1.2173.
The pair closed at 1.2168.

The pair has slipped back below 1.21 but still within its recent range with support in the 1.2030-45 holding well for now. A break below brings into focus the strong support zone of 1.1980-95 with decent buying interest around that region. A decisive break below could accelerate Euro’s losses with distance support around 1.1890. On the upside mild resistance exists in the 1.2155-70 zone followed by strong resistance in the 1.2245-60 zone with any break above 1.23 likely to lead to very strong selling interest.

Key resistance is seen at 1.2175 followed by 1.2255 while support starts at 1.2030 followed by 1.1980.

USD/JPY – Yesterday’s low was 109.35 and high was 110.07.
The pair closed at 109.83.

Yen has fallen further on weak data as it hovers around the 110 mark with more losses likely and. distant support is seen in the 110.90-111.05 zone but oil price movements are eyed for further direction. On the downside mild Dollar bids have now moved up to 109.45 with any break below targeting the 108.75-90 support zone which has very strong Dollar bid interest. Apart from focus on the Fed, the crucial Japanese Tankan surveys are eyed on Friday to drive this pair decisively.

Key Resistance is seen at 110.25 followed by 110.95 while support starts at 109.45 followed by 108.75.

GBP/USD – Yesterday’s low was 1.8141 and high was 1.8282.
The pair closed at 1.8164.

The Pound has taken cue from the Euro on a day devoid of any U.K. data and has slipped below 1.82 and is hovering around the mild support mark of 1.8145. A break below 1.81 brings into focus the support zone at 1.8045-60 with decent buying interest around 1.80 a decisive break below could accelerate losses for the Pound. On the upside mild resistance has moved down to 1.8255-70 zone with a break below targeting the strong resistance zone of 1.8325-40. Strong selling orders are laced from 1.8325 up to 1.84.

Key Resistance is seen at 1.8245 followed by 1.8325 while support starts at 1.8125 followed by 1.8045.

AUD/USD – Yesterday’s low was 0.7620 and high was 0.7697.
The pair closed at 0.7635.

The Australian Dollar has weakened further as commodity prices slipped on profit taking with the mild support mark of 0.7655 having broken below. 0.7605 support is the next in line with a break below bringing the pivot mark of 0.7575 into focus. On the upside resistance has moved down to 0.7705 with very strong resistance and selling interest around 0.7755. Commodity prices are eyed for further direction.

Key Resistance is seen at 0.7705 followed by 0.7755 while support starts at 0.7605. followed by 0.7575.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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