Australian FOREX Weekly Outlook 24/03/2008

US Quantitative Easing sinks Dollar

24/03/09

last week’s currency trading review

The Dollar accelerated the weakness seen last week as the FED let the market know about a 1 Trillion $USD Quantitative Easing program. Such programs amount to printing money and severely undermined Dollar support as equity continued to rally. The FED held rates at 0.25% band and Core Retail Sales jumped 1.3% vs. -3.1% previously. The Euro surged on the back on the FED QE plan outpacing other currencies as the key 1.31 level gave weigh further adding to gains. EUR/GBP surged towards 95 falling just short as the Pound failed to keep up. The German ZEW survey showed unexpected improvement to -3.5 vs. -5.8 previously. The EUR/USD gained 4.81% closing at 1.3580, after opening the week at 1.2927. The Japanese Yen fell against the USD/JPY but gained almost everywhere else as investor confidence returned to the market. The BOJ held at 0.1% as expected but did announce plans to invest in the corporate bond market. The USD/JPY fell -2.14% closing at 95.95 after opening at 98. The GBP had a fight with the 1.4000 level before finally breaking to the topside after the FED announcement. The sterling is still weak though as the BOE plans to QE itself and the UK economy is in recession. The MPC minutes were 9-0 for the 0.5% cut as expected. The GBP/USD gained 3.22% closing at 1.4465 after opening at 1.3999. The AUD performed extremely well as commodities rallied and stocks surged which would have provided reason enough to rally without the USD weakness. The AUD/USD closed up 4.05% at 0.6858 after opening at 0.6580.

The forex trading week preview

In the States On Wednesday Core Durable Goods Orders (Feb) are forecast at -2% vs. 3.0% previously. Also released, New Home Sales are forecast at 302K vs. 309K previously. On Thursday, Weekly Jobless claims seen at 650K vs. 646K previously. Also released Final Q4 GDP forecast at -6.6% vs. -6.2%. On Friday, Personal Spending is forecast at 0.2% at vs. 0.6%. UoM Consumer Sentiment is forecast to be revised to 56.7 vs. 56.6 initially read. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone On Wednesday, March German IFO Business Climate forecast at 82.2 vs. 82.6 previously. On Thursday we have March GFK consumer Climate forecast at 2.5 vs. 2.6 previously. Finally Friday we have German CPI forecast at 0.2% in March and January New Industrial Orders forecast at -6.0%. In the UK On Wednesday CBI Realized Sales are forecast at -35 vs. -25 previously. On Friday, Current Account is forecast at -5.8B vs. -7.7B previously. Final Q4 GDP is forecast to remain at 1.5%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan CPI for March Forecast at 0.0% Y/Y. Also released Retail Sales for February forecast at -3.6% vs. -2.4% Y/Y. We will provide our previews and reviews of these data releases in the daily summary.

In Australia No data this week with RBA Stevens Speech on Wednesday the highlight. We will provide our previews and reviews of these data releases in the daily summary.

·Euro – 1.3475

Initial support at 1.3432 (Mar 24 low) followed by 1.3417 (Mar 19 low). Initial resistance is now located at 1.3739 (Mar 19 high) at followed by 1.3799 (Jan 8 high)

·Yen – 98.00

Initial support is located at 95.43 (Mar 23 low) followed by 95.67 (Mar 12 low). Initial resistance is now at 98.97 (Mar 17 high) followed by 99.68 (Mar 5 high).

·Pound – 1.4690

Initial support at 1.4395 (Mar 20 low) followed by 1.4160 (Mar 19 low). Initial resistance is now at 1.4778 (Mar 24 high) followed by 1.4986 (Feb 9 high).

·Australian Dollar – 0.6975

Initial support at 0.6852 (Mar 20 low) followed by the 0.6742 (Mar 19 low). Initial resistance is now at 0.7142 (Jan 8 high) followed by 0.7268 (Jan 7 high).

·Gold – 929

Initial support at 912 (Fib Retracement) followed by 883 (Mar 18 low). Initial resistance is now at 967 (Mar 20 high) followed by 978 (Feb 25 high).