Australian FOREX Weekly Outlook 18/05/2009

Reversals and Corrections seize markets

18/05/09

last week’s currency trading review

The Dollar found a level of support after equities gave up some of the gains in a post stress test comedown. Concerns about GM survivability also helped to pare back risk appetite. On the data front retail sales fell -0.4% vs. 0.0% forecast. April CPI was flat vs. -0.1% drop last week. The Euro fell on profit taking although the market gave up gains only grudgingly. Support at the 200 day moving average at 1.3420 should provide a major test. Hurting sentiment was the German GDP Q1 which dropped -3.8% vs. -2.2% previously. The EUR/USD lost -1.07% closing at 1.3495, after opening the week at 1.3639. The Japanese Yen was the major mover strengthening more than even the USD as support for crosses disappeared. Highs seen on Monday quickly pulled back with AUD/JPY losing over 6%. The USD/JPY fell 3.46% closing at 95.17 after opening at 98.46. The GBP fell back but finished relatively well off gaining against the Euro and CHF. Economic data all beat expectations with Manufacturing Production at -0.1% vs. -0.8%. BoE Inflation Report showed a much more sober assessment of the future. GBP/USD fell -0.34% closing at 1.5235 after opening at 1.4916. The AUD ran out of steam at 0.7700 and pulled back quite sharply. The annual budget was released and showed that the budget deficit will grow to a record due the recession. The AUD/USD closed up 1.87% at 0.7490 after opening at 0.7633.

The forex trading week preview

In the States On Tuesday we start things off with Housing starts (Apr) forecast at 0.52M vs. 0.51M previously. On Wednesday Treasury Secretary Geithner speaks and the FOMC minutes are released. Weekly Jobless Claims are forecast at 633k vs. 637k previously. Finally on Friday, Fed Chief Bernanke speaks. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Tuesday German ZEW Economic Sentiment survey forecast at 20.0 vs. 13.0 previously. On Thursday, German May Flash Services and Manufacturing PMI’s forecast at 44.3 and 37 respectively. In the UK On Tuesday CPI is forecast at 2.4% vs. 2.9% previously. On Wednesday MPC minutes from the last interest rate meeting released. Also CBI Order Expectations forecast at -50 vs. -57. On Thursday, Retail Sales are forecast at 0.5% vs. 0.3% previously. We will provide our previews and reviews of these data releases in the daily summary.

In Japan On Wednesday Preliminary GDP is forecast at -4.2% vs. -3.2% previously. Finally the BOJ meet on Friday and are widely expected to remain at 0.1%. We will provide our previews and reviews of these data releases in the daily summary.

In Australia On Tuesday RBA Meeting Minutes released from the May meeting. On Wednesday, Consumer Sentiment is released previously at +8.3%. We will provide our previews and reviews of these data releases in the daily summary.

Euro – 1.3430

Initial support at 1.3343 (May 8 low) followed by 1.3247 (May 6 low). Initial resistance is now located at 1.3739 (March 19 high) followed by 1.3799 (Jan 8 high)

Yen – 94.75

Initial support is located at 94.15 (May 20 low) followed by 93.54 (Mar 19 low). Initial resistance is now at 96.69 (May 12 high) followed by 97.84 (May 11 high).

Pound – 1.5135

Initial support at 1.5061 (May 7 low) followed by 1.4944 (May 4 low). Initial resistance is now at 1.5373 (Jan 8 high) followed by 1.5477 (38.2% retrace 1.3503-1.8669).

Australian Dollar – 0.7470

Initial support at 0.7459 (May 7 low) followed by the 0.7337 (May 6 low). Initial resistance is now at 0.7738 (Oct 6 high) followed by 0.8097 (Sept 30 high).

Gold – 930

Initial support at 906 (May 8 low) followed by 895 (May 6 low). Initial resistance is now at 934.2 (May 15 high) followed by 945 (Mar 26 high).