Australian FOREX Daily Outlook 30/06/2005

30/06/05 (03:00 GMT)

• Dollar rallied across the board before stabilizing and giving back some of its gains as it approached key technical barriers while yesterday’s volatile movements are likely to be a precursor for today with key data releases from across the globe. Earlier, an upward revision to U.S. GDP and the fall in oil prices below $60 mark due to an unexpected rise in crude oil inventories helped in keeping the Dollar’s bid tone intact. The main focus among today’s heavy data calendar is Fed’s meeting, and it remains to be seen if they would become less hawkish due to the recent slowdown in manufacturing and spike in oil prices.

• Euro after slipping down towards the first support mark around 1.2020 on Dollar positive events, rebounded strongly to break back above 1.21, thanks to German unemployment outcome scheduled to be released today, being leaked yesterday with unemployment rate inching lower. This is in line with recent increase in Business Confidence due to a weaker Euro boosting export demand, thus helping the labour market stabilize. The zone’s inflation is expected to inch higher than the ECB’s target mark which should add more arguments against a rate cut in the short term horizon.

• Yen continues to suffer from the strong denial of Yuan revaluation move by China last weekend; this has lifted the veil from the negatives surrounding the Yen. Apart from high oil prices and the economy struggling to stay on the recovery path, having the lowest interest rates compared to other major currencies is also shifting capital towards high yielders. Apart from U.S. data, Japanese Tankan surveys are also eyed for further direction but for now a weak tone persists for the Yen.

• Pound fell sharply against the Dollar as well as on its crosses after the CBI Industrial Trends survey had its weakest reading in 22 years with retail sales slumping and spending is not expected to improve in the following months. This result wiped off any mild positives emanating from the higher than expected results in mortgage lending and consumer credit data. This reflects stabilization in the housing market with steady demand seen, allaying fears of an interest rate cut in the near future. It managed to pull back after briefly breaking below 1.80 with another decisive break likely to accelerate its losses.

• Australian Dollar finished the day around the same levels as it started it, but not before breaking below the 0.76 mark with bottom pickers sending it back up. The direction of commodity prices remains mixed with occasional bouts of profit taking leading to volatile moves in the Aussie. It’s fundamentals are comparatively on a much firmer footing than most majors with tomorrow’s Retail sales result expected to rebound. For now support is seen around 0.7570 with focus on U.S. data to drive the pair further.

EUR/USD – Yesterday’s low was 1.2014 and high was 1.2111.
The pair closed at 1.2092.

The pair experienced volatile moves on contradictory factors but has ended around the same levels as the day before as it continues to hover within the 1.20 region. Mild support lies around the 1.2020 mark with 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 1.2225-40 zone with any break above 1.23 likely to lead to very strong selling interest.

Key resistance is seen at 1.2155 followed by 1.2225 while support starts at 1.2020 followed by 1.1980.

USD/JPY – Yesterday’s low was 109.70 and high was 110.63.
The pair closed at 110.42.

Yen has fallen further on weak data as it hovers within the 110 mark with more losses likely and. support is seen in the 110.90-111.05 zone with U.S. data outcomes eyed for further direction. On the downside mild Dollar bids have now moved up to 109.75 with any break below targeting the 109.10-25 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. 111 is a crucial pivot mark which holds mixed technical interest.

Key Resistance is seen at 110.95 followed by 111.45 while support starts at 109.75 followed by 109.15.

GBP/USD – Yesterday’s low was 1.7994 and high was 1.8179.
The pair closed at 1.8166.

The Pound slipped sharply and broke below the crucial 1.80 mark however bottom pickers came up at that level with decent buying interest around that level, thus sending it higher. It is hovering within the 1.80 region with mild resistance around 1.8155. A break above brings into focus the strong resistance zone of 1.8225-50 with any foray into the 1.83 region likely to lead to strong selling interest. A decisive break below 1.80 could accelerate its losses with distant support around 1.7925.

Key Resistance is seen at 1.8155 followed by 1.8245 while support starts at 1.8005 followed by 1.7925.

AUD/USD – Yesterday’s low was 0.7585 and high was 0.7643.
The pair closed at 0.7632.

The Australian Dollar has weakened further as commodity prices slipped on profit taking but has rebounded impressively after breaking into the 0.75 region. 0.7575 is the pivot support mark with decent buying interest around that mark with a break below bringing into focus the 0.7525-40 support zone. On the upside resistance lies around 0.77 with selling offers lined up to 0.7755 with very strong resistance around that mark.

Key Resistance is seen at 0.7695 followed by 0.7755 while support starts at 0.7575. followed by 0.7525.

Kunal Sharma
Forex Analyst

Easy Forex Pty Ltd. (Australia)

E-mail: kunal@easy-forex.com

Australian Financial Services License 246566

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