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Daily Forex Technical Report

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Daily Forex Technical Report − Aussie Firm as Stocks Rally

Mon, Jan 5 2009, 06:29 GMT
by ActionForex.com Team

ActionForex.com

Action Insight Daily Report

Aussie Firm as Stocks Rally

Return of risk appetite is still the main theme as another week starts. Aussie and Kiwi are generally higher, lifted by rally in Asian stock markets while the Japanese yen weakens. Markets are pretty steady elsewhere with the greenback staying in range against European majors. The economic calendar is rather light today which features Swiss SVME PMI, Eurozone Sentix investor confidence, UK construction PMI and US construction spending. As mentioned before, in early part of Jan, commodity currencies will likely remain firm on stocks rise but such effects would fade as stock complete the corrective rally.

Switzerland's SVME PMI in December is going to show further contraction in the country's manufacturing sector with another record low of 34.5, after plunging to 35.2 in November, as companies continue to cut back production. Eurozone's Sentix investor confidence in January is expected slip to another record low at -44, after falling to -42.3 in December, suggesting much concerns on the nation's economic condition and labor market. In the UK, economists anticipate construction PMI in December to have dropped to 30.5, another weaker reading after 31.8 in November.

In the US, November construction spending is expected to have deteriorated further to 1.3% from -1.2% in October. While the residential component should have dropped sharply as suggested by poor housing starts and housing permits reported earlier.

BoJ Governor Shirakawa said during the weekend that central banks would like to keeping thinking of ways to cope with the "financial crisis " with monetary policy. BoJ is always watching yen's strength closely. San Francisco Fed Yellen said that Fed must ensure it has an "exit strategy to wind down the facilities in a timely and effective way" when they're no longer needed. The Sunday Time's Shadow BoE MPC voted 6-3 to keep rates unchanged at 2.00%.

More Forex Technical Analysis Reports Here.

AUD/USD Daily Outlook

Daily Pivots: (S1) 0.6979; (P) 0.7047; (R1) 0.7179; More

AUD/USD rises further to 0.7159 today and break of 0.7140 confirms that rise from 0.6075 is resuming. At this point, intraday bias remains on the upside as long as 0.7041 minor support holds and further rally could be seen towards 38.2% retracement of 0.9849 to 0.6008 at 0.7475. Nevertheless, as mentioned before, rise from 0.6075 is treated as third leg of consolidation from 0.6008 and therefore should be limited by 0.7475 fibo resistance and bring medium term down trend resumption. On the downside, below 0.7041 will turn intraday outlook neutral first. Further break of 0.6760 support will be an early alert that such consolidation has completed and will turn short term outlook bearish for a retest of 0.6008 low.

In the bigger picture, whole fall from 0.9849 made a bottom at 0.6008 and turned into sideway consolidation since then. However, note that the impulsive nature of the fall from 0.9849 to 0.6008 indicate that price actions from 0.6008 is developing into correction/consolidation only. The long term down trend is still expected to resume after completing the consolidation. Sustained break of 0.6008 will indicate that the down trend from 0.9849 has resumed for at least another five wave medium term decline, targeting 0.4773 (01 low). But, note that as long as 0.6008 low holds, consolidation from could still extend further. Above 0.7140 will target 38.2% retracement of 0.9849 to 0.6008 at 0.7475 before completing the consolidation.

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Published on  Mon, Jan 5 2009, 06:37 GMT