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Daily Forex Outlook

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Market Rallies with ‘Risk On'

Wed, Jul 1 2009, 02:54 GMT
by Easy Forex Team

Easy Forex

Market Rallies with ‘Risk On’

U.S. Dollar Trading (USD) a bounce in US stocks as investors snapped up those beaten down last week. Commodities and risk currencies rallied hurting the USD. With a major data week ahead, the market will search for confirmation that ‘green shoots’ are sprouting. Crude Oil closes up $2.33 to close the day at $71.49. In US share markets, the Nasdaq was up 5 points or 0.32% and the Dow Jones was up 90 points or 1.08%. Looking ahead, Chicago PMI forecast at 55 vs. 54.9 previously. Also released June CB Consumer Confidence forecast at 55.4 vs. 54.9 previously.

The Euro (EUR) tested 1.4000 in early Asia before rallying for the rest of the day tracking equity markets and Oil. Eurozone Consumer Confidence improved to -25 vs. -29 previously. EUR/JPY surged as the Yen was pressured. Overall the EUR/USD traded with a low of 1.3981 and a high of 1.4114 before closing at 1.4070. Looking ahead, June German Unemployment is forecast at 8.3% vs. 8.2%. June Flash Inflation is forecast at -0.2% vs. 0.0%.

The Japanese Yen (JPY) the market aggressively sold the Yen overnight with all crosses rallying and USD/JPY reclaiming 96 Yen level. The double test of 95 last week is discouraging the bears, whilst the crosses are providing solid support. Overall the USDJPY traded with a low of 95.14 and a high of 96.30 before closing the day around 96.10 in the New York session. UPDATE May Unemployment forecast at 5.2% vs. 5.0% previously.

The Sterling (GBP) was extremely bullish as EUR/GBP selling and GBP/JPY buying buoyed the pound towards 1.6000. June GFK Index is at -25 vs. -27 its highest level since April 2008. Helping Cable is the old relationship it has with Oil which also rallied overnight. Overall the GBP/USD traded with a low of 1.6426 and a high of 1.6602 before closing the day at 1.6580 in the New York session. Looking ahead, Q1 GDP is forecast at -2.1% vs. -1.9% initial.

The Australian Dollar (AUD) rallied with the improved mood in the market although is still well off the year highs above 0.8200. Heavy resistance between 0.8120-50 and a general feeling that the AUD is expensive is hampering gains. AUD/JPY out of Tokyo continues to support with many investors searching higher yields. Overall the AUD/USD traded with a low of 0.7982 and a high of 0.8116 before closing the US session at 0.8080.

Gold (XAU) kept to a tight range above the $930 support with USD weakness and Oil helping support on dips. Overall trading with a low of USD$934 and high of USD$943 before ending the New York session at USD$940 an ounce.

TECHNICAL COMMENTARY

Euro – 1.4105

Initial support at 1.3827 (Jun 22 low) followed by 1.3749 (Jun 16 low). Initial resistance is now located at 1.4178 (Jun 11 high) followed by 1.4267 (Jun 5 high)

Yen – 95.65

Initial support is located at 94.45 (Jun 1 low) followed by 93.86 (May 22 low). Initial resistance is now at 96.57 (Jun 25 high) followed by 97.19 (Jun 19 high).

Pound – 1.6630

Initial support at 1.6189 (Jun 18) followed by 1.6041 (Resistance Nov 6). Initial resistance is now at 1.6662 (Jun 3 high) followed by 1.6739 (61.8% retrace).

Australian Dollar – 0.8090

Initial support at 0.7918 (Jun 24 low) followed by the 0.7790 (Jun 23 low). Initial resistance is now at 0.8119 (Jun 19 high) followed by 0.8263 (Jun 3 high).

Gold – 942

Initial support at 912 (Fibo level low) followed by 906 (May 8 low). Initial resistance is now at 948 (Jun 26 high) followed by 965 (June 10 high).

Published on  Wed, Jul 1 2009, 02:55 GMT