Australian FOREX Daily Outlook 15/01/2007

CURRENCY TRADING SUMMARY –15 JANUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) while initially stronger fell off against the majors in the Friday night foreign exchange trading session as a strong retail sales release prompted profit taking after the recent run in the greenback. Retail sales for December came in at 0.9% compared to a 0.6% rise previously. With most of the US fourth-quarter data coming in above forecasts, investors have rolled back interest rate cut expectations from the Federal Reserve. In other markets, the Dow Jones index climbed 41pts and the NASDAQ added 17pts as the market took comfort that moderating price pressures will keep interest rates steady. Crude oil jumped US$1.17 to US$53.06 a barrel as worries increased OPEC would cut production to stem the 15% drop in oil prices recently. Looking ahead, the US is on holiday Monday to commemorate Dr. Martin Luther King Jr.

• The Euro (EUR) traded within a low of 1.2865 and a high of 1.2945, before closing at 1.2921 in the New York session.

• The Japanese Yen (JPY) traded within a low of 120.16 and a high of 120.74 versus the dollar, before closing at 120.39 in the New York session. On the data front, Japanese Finance Minister Koji Omi said on Friday that Japan is not planning to alter the composition of their fx reserves (second largest in the world mainly held in US dollars). Private machinery orders came in at 3.8% compared to a 3.4% estimate.

• The Sterling (GBP) traded within a low of 1.9427 and a high of 1.9610, before closing at 1.9570 in the New York session.

• The Australian Dollar (AUD) traded within a low of 0.7782 and a high of 0.7839, before closing at 0.7836 in the New York session.

• Gold (XAU) rose by US$13.00 to US$626.90 an ounce in response to a weaker greenback, stronger oil, and short-covering ahead of long weekend.