Australian FOREX Daily Outlook 30/10/2009

Sharp Bounce Rescues Bulls

CURRENCY TRADING SUMMARY – 30th October (00:30GMT)

U.S. Dollar Trading (USD) gave back all the gains of the previous day as the US economy emerged from recession a blistering 3.5% pace in Q3. Major stimulus programs and large rebounds in asset values all helped the economy recover. Stocks soared and risk appetite came back to life. In US Stocks, DJIA +199 points closing at 9962, S&amp P +23 points closing at 1066 and NASDAQ +37 points closing at 2097. Looking ahead, September Core PCE Index previously at 0.2% vs. 0.1%. Chicago PMI for October is forecast at 49 vs. 46.1 previously.

The Euro (EUR) stabilized in Asia on solid Central Bank support before gaining with the US data back above 1.4800. Helping sentiment towards the single currency was the better than expected German unemployment change of -15k vs. +15k forecast in October. Overall the EUR/USD traded with a low of 1.4684 and a high of 1.4859 before closing at 1.4840. Looking ahead, October EU inflation is forecast at -0.1% vs. -0.3% previously.

The Japanese Yen (JPY) weakened aggressively across the board as the downside attempt failed to break the key 90 Yen level on the USD/JPY and then a surge in US stocks sent the crosses up over 2%. AUD/JPY was up over 3% and GBP/JPY surged through the 150 Yen level. September Industrial Output Preliminary at 1.4% vs. 1.0% previously. Overall the USDJPY traded with a low of 90.25 and a high of 91.63 before closing the day around 91.35 in the New York session. Update September Unemployment at 5.3% vs. 5.5% forecast.

The Sterling (GBP) built upon the solid base from Wednesday to gain aggressively against the Yen and the Dollar. Dealers are reporting large inflows into the UK as outside investors pick up cheap companies with the exchange rate currently so competitive. Overall the GBP/USD traded with a low of 1.6339 and a high of 1.6604 before closing the day at 1.6550 in the New York session. Looking ahead, October Nationwide House Prices previously at 0.9% m/m.

The Australian Dollar (AUD) was the leader on the way up as the heavily battered Aussie recovered strongly in the US session. With risk appetite back on and the Rate announcement on Tuesday looming the market is once again turning bullish on the commodity currency. Overall the AUD/USD traded with a low of 0.8944 and a high of 0.9182 before closing the US session at 0.9150.

Oil &amp Gold (XAU) gold rallied nearly $20 an ounce as the USD broadly weakened and Oil surged. Overall trading with a low of USD$1028 and high of USD$1047 before ending the New York session at USD$1047 an ounce. Oil rebounded strongly after US data confirmed the worlds largest economy was growing again. Crude Oil was up $2.41 ending the New York session at $79.87.

TECHNICAL COMMENTARY

Euro – 1.4850

Initial support at 1.4646 (Oct 6 low) followed by 1.4581 (Oct 5 low). Initial resistance is now located at 1.4859 (Oct 29 high) followed by 1.4927 (Oct 27 high)

Yen – 91.50

Initial support is located at 90.08 (Oct 20 low) followed by 89.28 (Oct 15 low). Initial resistance is now at 91.82 (Oct 28 high) followed by 92.53 (Sept 21 high).

Pound – 1.6550

Initial support at 1.6252 (Oct 26 low) followed by 1.6120 (Oct 8 low). Initial resistance is now at 1.6604 (Oct 29 high) followed by 1.6693 (Oct 23 high).

Australian Dollar – 0.9150

Initial support at 0.8866 (Oct 7 low) followed by the 0.8760 (Oct 6 low). Initial resistance is now at 0.9218 (Oct 27 high) followed by 0.9329 (Oct 21 high).

Gold – 1047

Initial support at 1024 (Sept 17 low) followed by 1000 (big figure). Initial resistance is now at 1047.85 (Oct 29 high) followed by 1067 (Oct 20 high).

Oil – 80.20

Initial support at 80.00 (Intraday Support) followed by 78.50 (major level). Initial resistance is now at 81.10 (previous support) followed by 82.00 (Major Level).