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Daily Forex Outlook

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Weak US data but Strong USD ahead of Senate Bailout Vote

Thu, Oct 2 2008, 03:22 GMT
by Easy Forex Team

Easy Forex

Weak US data but Strong USD ahead of Senate Bailout Vote

U.S. Dollar Trading (USD) continued to be well supported as Oil fell and US Jobs data beat expectations. The September ADP Unemployment report showed -8K vs. -55K expected job losses. Other US data was very weak though with the September Manufacturing ISM showing a shock fall to 43.5 vs. 49.5 forecast. In the U.S. share markets, the NASDAQ was down -22 points (-1.07%) and the Dow Jones was down 19 points (-0.18%). Crude Oil closed down -$2.11 ending the New York session at $98.53 per barrel. Looking ahead, Weekly Jobless Claims seen at 475K vs. 493K previously. Also released the August Factory Orders are seen -2.5% vs. 1.4% previously.

The Euro (EUR) started to fall in Europe coming off its day highs as markets sought a retest of the 1.40 level and Oil came off over $2 on increased supply. EU data was mixed with German Retail Sales gaining 3.1% M/M and August Eurozone Unemployment increasing to 7.5%.   Overall the EUR/USD traded with a low of 1.3975 and a high of 1.4175 before closing the day at 1.4015 in the New York session. Looking ahead, EU PPI expected at -0.5% vs. 1.1%. The ECB meets today and is expected to hold interest rates at 4.25%. There is some chance of a cut given recent market turbulence.

The Japanese Yen (JPY) strengthened on sluggish stocks and falling crosses. Some attention given to Buffet investing in a GE capital raising and concerns that this shows the level of funding constraints that such a company would need to raise funds. The Q2 Tankan Survey came in Negative -3 vs. 5 previously. Overall the USDJPY traded with a low of 105.33 and a high of 106.54 before closing the day around 105.80 in the New York session.

The Sterling (GBP) came under pressure again as USD strengthened and Data continued to be dreadful. September Manufacturing PMI came in at 41.0 vs. 45.0 expected. Calls for Rate cuts in the UK are getting louder also hurting GBP sentiment.  Overall the GDP/USD traded with a low of 1.7635 and a high of 1.7878 before closing the day at 1.7720 in the New York session. Looking ahead, Nationwide House Prices are expected at -1.6% in September.

The Australian Dollar (AUD) rallied during the Asian session as Stocks were positive but also succumbed to USD strength in the US session as Oil and Gold were heavy. Also of note is the weakness of AUD/NZD in recent sessions breaking key levels to the downside. This suggests broad AUD weakness in the market and is a good measure of the lack of investor confidence right now. Overall the AUD/USD traded with a low of 0.7869 and a high of 0.8020 before closing the US session at 0.7880. Looking ahead, August Trade Balance is seen +300M vs. -717M previously.

Gold (XAU) gained on terrible US manufacturing data but fell into the US close on broad based USD strength and falling Oil. Overall trading with a low of USD$865 and high of USD$892 before ending the New York session at USD$872 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4020 
Initial support at 1.3973 (Sept 12 low) followed by 1.3882 (Sept 11 low). Initial resistance is now located at 1.4302 (former support) at followed by 1.4435 (Sept 30 high).

Yen – 105.80
Initial support is located at 103.50 (Sept 16 low) followed by 102.57 (May 12 low). Initial resistance is now at 106.96 (Sep 29 high) followed by 107.02 (Sept 25 high).

Pound – 1.7710
Initial support at 1.7544 (Sept 12 low) followed by 1.7447 (Sep 11 low). Initial resistance is now at 1.8118 (Sep 30 high) followed by 1.8445 (Sep 29 High).

Australian Dollar – 0.7910
Initial support at 0.7802 (Sept 17 low) followed by the 0.7676 (Aug 17 2007 low). Initial resistance is now at 0.8097 (Sept 30 high) followed by 0.8348 (Sept 29 high).

Gold – 871
Initial support at 860 (Sept 30 low) followed by 844 (Aug 28 low). Initial resistance is now at 925.1 (Sep 29 high) followed by 935 (July 25 high).

Published on  Thu, Oct 2 2008, 03:29 GMT