Australian FOREX Daily Outlook 19/03/2007

CURRENCY TRADING SUMMARY –19 MARCH 07 (23:30GMT)

• U.S. Dollar Trading (USD) weakened against all majors on Friday as markets were still skeptical following the number of defaults in the sub prime mortgage markets. On the back of expected core CPI data the dollar strengthened as the figure indicated that a Fed rate cut some time this year was most likely a distant possibility. With markets expecting a figure of 1.8%. As a result the uncertainty led to a decline in equity markets. In US share markets, the NASDAQ dropped by 6.04 points (-0.25%) whilst the Dow Jones also dropped 49.27 points (-0.40%). Crude oil continued to ease on Friday, falling by US$0.45 to US$57.10 a barrel. Looking ahead, the NAHB house prices is out of the US today with markets expecting a figure of 38 slightly down on the previous 40.

• The Euro (EUR) continued to strengthen reaching 3 month highs against the dollar as further worries on the outlook of the US economy remained. Former Federal Reserve Chairman Alan Greenspan sounded these concerns throughout the week outlining the bleak US inflation Situation. Overall the Euro traded with a range of a low 1.3234 and a high of 1.3340 before closing at 1.3309 in the New York session.

• The Japanese Yen (JPY) strengthened against the Dollar on Friday as US economic outlook remained uninviting. Overall, the JPY traded within a range of a low 116.51 and a high of 117.59 before closing at 116.72 in the New York session. Looking ahead the BoJ begin there two day meeting for the March interest rate announcement.

• The Sterling (GBP) strengthened on the back of a weaker dollar. Overall the GBP traded within a range of a low 1.9360 and a high of 1.9505 before surrendering gains to close at 1.9418 in The New York session. Looking ahead, key data will be released out of the UK today with Rightmove House Prices scheduled for release. The previous figure for the month of February came in at 0.9%.
• The Australian Dollar (AUD) continued to look bullish to end the week on Friday. Overall the AUD traded within a range of a low 0.7879 and a high of 0.7976 to end the day at 0.7957 in the New York session.

• Gold (XAU) rebounded strongly on Friday despite volatility and uncertainty surrounding US equity markets. Gold rose by US$6.00 an ounce to US$656.10.

TECHNICAL COMMENTARY

• Euro 1.3320

Initial support at 1.3229 (Mar 16 low) followed by 1.3187 (Former resistance of Mar 7 low). Initial resistance is now located at 1.3342 (High Day’s close on Dec 4) followed by 1.3368 (Dec 4 trend high).

• Yen 116.35

Initial support is located at 115.76 (Mar 14 low) followed by 115.55 (Mar 5 reaction low). Initial resistance is now at 117.50 (Mar 16 high) followed by 117.78 (Mar 15 high)

• Pound – 1.9415

Initial support at 1.9357 (Mar 16 low) followed by 1.9307 (Mar 15 low). Initial resistance is now at 1.9506 (Mar 16 high) followed by 1.9551 (50% retracement of the 1.9919 to 1.9184 decline)

• Australian Dollar – 0.7950

Initial support a 0.7876 (Mar 16 low) followed by 0.7848 (Mar 15 low). Initial resistance is now at 0.7982 (Jan 3 reaction high) followed by 0.8005 (Feb 18, 2004 high)

• Gold – 652.85

Initial support at 637.00 (Mar 14 low) followed by 633.00 (Mar 6 low). Initial resistance is now at 655.60 (Mar 16 high) followed by 658.10 (Mar 9 high).