Australian FOREX Daily Outlook 23/02/2007

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

• U.S. Dollar Trading (USD) was initially stronger against all other majors reaching a week high against the Euro, as further details of the Fed reserve policy meeting reduced expectations for an interest rate cut this year. In other news initial Jobless claims out of the US were released on Thursday (with markets expected a figure of 325K) came in worse than expected at 332K as the previous revised higher at 359 K. In US share markets, the NASDAQ rose by 6 points (0.6%) whilst the Dow Jones was down -52 point (-0.41%). Crude oil rose by US$0.69 a barrel to US$60.76. Looking ahead another light data day is expected for the US to end the week of trading.

• The Euro (EUR) dropped to a week low against the USD. Overall the Euro traded within a range of a low of 1.3081 and a high of 1.3144 before closing at 1.3125 by the end of the New York session. Looking ahead, the German IFO business climate survey is set for release today with expectations are a slightly weaker figure of 107.5 down on the previous 107.9.

• The Japanese Yen (JPY) fell for the fifth straight day against the Dollar and Euro. The JPY hit a record low against the Euro a day after the BoJ interest rate hike. However the major reason for the weakness was due to accompanying statements emphasizing that the pace of further rate increase would be slow. Added to this investors still believed that at levels of 0.5%, the JPY remained an attractive currency to fund carry trades. Overall, the JPY traded within a range of a low 120.84 and a high of 121.49 before closing the day at 121.45 in the New York session (near day highs). Looking ahead the BoJ governor Fukui is scheduled to talk on the 25^th at 0330 GMT.

• The Sterling (GBP) initially weakened against the USD as pressure still remained following the previous day BoE minutes indicating a future rate hike in March was highly unlikely. Sterling however did receive some support with the CBI industrial trends survey, which showed that business investment rose at its fastest pace in nearly a decade over the fourth quarter. Overall, the GBP traded within a range of a low 1.9462 and a high 1.9602 before closing at 1.9567 in the New York session. Looking ahead the GDP (Q4, second release) is due on Friday with expectations that growth will be confirmed at 0.8%.

• The Australian Dollar (AUD) slid against the USD following previous day gains. The AUD eased from levels of 0.7910 (high) to 0.7875 (low) before closing the day at 0.7890 in the New York session.

• Gold (XAU) softened as investors sought to take profits from the previous day $22 rise. Gold dropped on Thursday by US$2.90 an ounce before closing at US$681.10.