Australian FOREX Daily Outlook 07/02/2007

CURRENCY TRADING SUMMARY –07 FEBRUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) fell against all other majors on Tuesday, largely due to the fact that Fed Reserve Chairman Bernanke made no mention regarding interest rates in his speech on economic well being. In other news, quiet trading dominated the US share markets, with the NASDAQ up 0.89points (0.04%) and the Dow Jones also up 4.57points (0.04%). Crude Oil rose last night by US$0.34 to $US59.08 a barrel. Looking ahead in what is a quiet week with reference to economic data out of the US, today sees the release of Unit Labor Costs for the fourth quarter with market expectations at 2.10% higher than the previous 2.30%.

• The Euro (EUR) rose by 0.3% against the Dollar despite softer than expected Retail Sales coming out of the Eurozone at 0.3% (forecast: 1.1%, previous: 0.5%). Overall, the Euro traded with a low of 1.2913 to a high of 1.2991 before closing at 1.2978 in the New York session. Looking ahead, little data is due out of the Euro zone with only German Industrial Production (December) holding some importance. Economists are predicting a figure of 0.5% down on the previous 1.8% for the month of November. In other news, the G7 summit beginning on Friday the 9^th of February continues to hold key importance to the Euro zone in regards to Yen weakness.

• The Japanese Yen (JPY) rose against the USD and the Euro reaching three week highs following Treasury Secretary Henry Paulson stating that the currency value is set by market fundamentals, suggesting that the U.S. government sees no problem with the Yens weakness. Market trends saw investors hold off selling the currency in anticipation of discussions on the weakness in the upcoming G7 meeting. Overall the USDJPY traded with a low of 119.96 and a high of 120.58 before closing at 120.09 in the New York session.
• The Sterling (GBP) strengthened following previous day depreciations against the USD. Overall the GBP traded with a low of 1.9591 to high of 1.9722 before closing at 1.9703 in the New York session. Looking ahead the UK industrial output is scheduled for release with forecasts at 0.10% whilst previous was at 0.50%. Furthermore, manufacturing output is also set for release with market expectations at 0.10% lower than the previous 0.30%.

• The Australian Dollar (AUD) awaits the RBA interest rate announcement with expectation for it to remain unchanged at 6.25%. The AUD traded within a range of a low 0.7742 and a high of 0.7781 before closing at 0.7778 in the New York session. UPDATE: interest rates at 6.25% (unchanged).

• Gold (XAU) rose today on the back of an upward drift in energy prices. Gold rose by $1.40 an ounce to $657.50