Australian FOREX Daily Outlook 29/09/2009

US Stocks Rebound on M&amp A action

CURRENCY TRADING SUMMARY – 29th September (00:30GMT)

U.S. Dollar Trading (USD) found strength in Asia on Nikkei losses (-2.5%) but had a very volatile day against the Yen. A sharpy reversal in Sentiment in the US session from a substantial broad based rally in US stocks sent the Dollar lower once again. Oil rallied as much as $2 from lows with Iran concerns helping to underpin. Crude Oil was up $0.82 closing at $66.84. In US Stocks, DJIA +124 points closing at 9789, S&amp P +18 points closing at 1062 and NASDAQ +39 points closing at 2130. Looking ahead, July Case Schiller forecast at 0.5% vs. 1.4%.

The Euro (EUR) moved lower in Asia on heavy EUR/JPY sales but when the 130 Yen level held the pair rebounded sharply dragging the major back above 1.4600. Gains from US equities could not be held though with ECB’s Trichet and Nowotny both commenting that a Strong USD is in the US interests. Overall the EUR/USD traded with a low of 1.4564 and a high of 1.4712 before closing at 1.4620. Looking ahead, August German Imports prices forecast at 0.6% vs. -0.9%.

The Japanese Yen (JPY) opened to immediate strength as USD/JPY pushed lower through 89 and 88.50 supports. Eventually a sharpy reversal began in Asia session but the damage to crosses had been done with EUR/JPY and AUD/JPY both falling to multi month lows. The outlook is mixed with comments from Japanese officials showing inconsistency. Overall the USDJPY traded with a low of 89.50 and a high of 91.50 before closing the day around 89.80 in the New York session. Looking ahead, August Industrial Output forecast at 1.9% vs. 2.1% previously.

The Sterling (GBP) fell sharply yesterday but bounced into Europe on heavy GBP/JPY short covering which has fallen over 20 Yen in the Prior month. Helping the recovery was September UK house prices rose 0.2% in the second month of gains. EUR/GBP manages to reverse hard after fresh multi month highs above 0.9300. Overall the GBP/USD traded with a low of 1.5771 and a high of 1.5989 before closing the day at 1.5880 in the New York session. Looking ahead, Q2 GDP final forecast at -0.7% vs. -0.7% initially. August Consumer Credit is forecast at 0bn vs. -0.22bn previously.

The Australian Dollar (AUD) was the strongest currency yesterday shrugging off weakness at the beginning of the day with the market continuing to respect the 0.8600 support zone. The rally in US stocks saw the pair soar past 0.8700 to highs above 0.8750. Helping lift the Aussie was continued hawkish articles in the press on the chance of interest rate hikes as soon as next month. Overall the AUD/USD traded with a low of 0.8585 and a high of 0.8757 before closing the US session at 0.8720.

Gold (XAU) failed to track Oil higher with the market nervous to test $1000 without a further catalyst. Overall trading with a low of USD$986 and high of USD$996 before ending the New York session at USD$991 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4620

Initial support at 1.4515 (Sept 14 low) followed by 1.4467 (Sept 9 low). Initial resistance is now located at 1.4844 (Sept 23 high) followed by 1.4866 (September 22 2008 high)

Yen – 89.65

Initial support is located at 88.24 (Sept 28 low) followed by 87.99 (Jan 23 low). Initial resistance is now at 90.51 (76.4% retrace 87.13 – 101.44) followed by 91.63 (Sept 24 high).

Pound – 1.5880

Initial support at 1.5691 (38.2% retrace 1.3503 – 1.7043) followed by 1.5450 (May 20 low). Initial resistance is now at 1.6067 (Sept 25 high) followed by 1.6207 (38.2% retrace 1.3503 – 1.7043).

Australian Dollar – 0.8725

Initial support at 0.8529 (Sept 8 low) followed by the 0.8383 (61.8% retrace 0..9850-0.6009). Initial resistance is now at 0.8789 (Sept 23 high) followed by 0.8814 (Aug 22 ’08 high).

Gold – 990

Initial support at 982 (Sept 10 low) followed by 974 (Sept 3 low). Initial resistance is now at 999 (Sept 25 high) followed by 1020 (September 22 high).