Australian FOREX Daily Outlook 09/02/2007

CURRENCY TRADING SUMMARY –09 FEBRUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) dropped against all other majors last night except for the Japanese Yen. In what has been a quiet week for the US in terms of economic data, Initial Jobless claims was released yesterday with the figure coming in better than expected at 311K rather than the forecasted 313K, yet worse than the previous number of 308K. In other markets, the NASDAQ was down 1.83 points (-0.07%) whilst the Dow Jones was also down by 29.24 points (-0.23%). Crude Oil rose by US$2.04 to US$59.71 a barrel. Looking ahead, in what continues to be a quiet week out of the US the Federal reserves Poole speaks today, with market hoping of some reference on the US economy. In related news, the much anticipated G7 summit held in Essen, Germany begins today. Plenty of interest will surround the mention of the Yen weakness and the position that the US and the Eurozone take on the issue..

• The Euro (EUR) saw the ECB keep interest rates on hold at 3.5% which was widely expected by markets. Yet it was the accompanying statement made by ECB president Trichet and usage of the phrase “strong vigilance” to describe how the bank will monitor Euro zone inflation that caused Euro buying. That phrase usually preceded a rate hike in the following month. Against the USD however the Euro was just marginally higher trading with a low of 1.2975 and a high of 1.3043 before closing the day at 1.3037 in the New York session. Looking ahead, the Eurozone will hold a key presence at the upcoming G7 summit.

• The Japanese Yen (JPY) dropped across the board as reports filtered through that the Yen weakness will not be a topic of discussion over the weekend in Essen, from both US and Japanese officials. Furthermore, the BoJs Haru stated yesterday that the Yen weakness “is good for the Japanese Economy” causing further selling off. Overall the JPY traded with a low of 120.58 and a high of 121.45 before closing at 121.04 in the New York session.
• The Sterling (GBP) fell significantly on the back of the BoE decision to keep interest rates unchanged at 5.25%. Although many anticipated this would be the case there was some minor expectations for a rate hike following the surprise in January. Overall, the Sterling traded within a range of a low 1.9543 and a high 1.9728 before closing at 1.9580 in the New York session, significantly down on the previous days 1.9692. Looking ahead the UK trade balance is scheduled for release later on today with economists expecting a figure of -6.90 bln better than the previous -7.19 bln.
• The Australian Dollar (AUD) strengthened on Thursday trading within a range of a low 0.7763 and a high of 0.7819 before closing at 0.7815 near day trade highs in the New York session. Unemployment rate came in better than the expected 4.6%, at 4.5%.

• Gold (XAU) was volatile yesterday before rising by US$7.00 and ounce to $664.30 largely due to a weaker Dollar.

TECHNICAL COMMENTARY

• Euro 1.3040

Initial support at 1.2968 (Feb 7 low) followed by 1.2911 (Feb 6 low). Initial resistance is now located at 1.3043 (Feb 8 high) followed by 1.3074 (Feb 2 high)

• Yen 121.15

Initial support is located at 120.57 (Feb 8 low) followed by 119.96 (Feb 6 low). Initial resistance is now at 121.75 (Jan 31 high) followed by 121.20 (Jan 29 trend high)

• Pound – 1.9585

Initial support at 1.9536 (Feb 2 low) followed by 1.9482 (Jan 31 low). Initial resistance is now at 1.9751 (61.8% retracement 1.9917 to 1.9482 is Feb 2 high) followed by 1.9833 (Jan 24 high)

• Australian Dollar – 0.7815

Initial support at 0.7762 (Feb 8 low) followed by 0.7715 (Feb 2 corrective low). Initial resistance is now at 0.7822 (Feb 8 high) followed by 0.7847 (61.8% retracement of the 0.7490 to 0.7697decline).

• Gold – 659.70

Initial support at 643.50 (Feb 2 low) followed by 641.10 (Jan 26 low). Initial resistance is now at 661.3 (Feb 1 trend high) followed by 676.35 (Jul 17 reaction high)