Australian FOREX Daily Outlook 04/05/2007

USD rallies for the third straight day with growth in the service sector. Non-Farm Payrolls and Unemployment the key data out of US on Friday.

CURRENCY TRADING SUMMARY –04 MAY 07 (23:30GMT)

• U.S. Dollar Trading (USD) continued its rally for the third consecutive day, following Non-manufacturing ISM eased concerns of a stagnating economy ahead of jobs data on Friday. In US share markets, the NASDAQ rose by 7.62 points (+0.30%) whilst the Dow Jones rose by 29.5 points (+0.22%). Crude oil dropped by US$0.49 a barrel to US$63.19. Looking ahead, undoubtedly the key data release on Friday will be Non-Farm Payrolls with markets expecting a step decline to 100k from the previous of 180k. Further weak jobs data is scheduled for release with Unemployment Rate is also scheduled to rise to 4.5% from the previous 4.4%.
  
• The Euro (EUR) saw PPI come in on consensus at 0.3% before the Euro slid on the back of a broadly stronger dollar. Overall, the Euro traded with a low 1.3547 before closing the day at 1.3554 in the New York session. Looking ahead key data is set for release out of the EZ with services PMI expected at 57.6 (Prior: 57.4) whilst a rise in Retail sales is expected at 0.5% (Prior: 0.3%)
  

• The Japanese Yen (JPY) saw a two month low against the USD on Thursday. Overall the JPY traded with a range of a low 119.97 and a high of 120.47 before closing at 120.43 in the New York session.
  

• The Sterling (GBP) eased as data showed that PMI services had eased from 57.6 to 57.2 (worse than expected), indicating that the expansion of services sector was at its slowest in the past seven months. Overall the GBP traded with a low of 1.9855 and a high of 1.9946 before closing the day at 1.9878 in the New York session.
  

• The Australian Dollar (AUD) traded in a very tight range with much uncertainty surrounding the AUD post RBA announcement. Overall, the AUD traded with a range of a low of 0.8223 and a high of 0.8240. Looking ahead, the Trade Balance is set for release with economists expecting a further widening of the deficit -1000 mio (Previous: -838 mio). Furthermore the RBA Quarterly Monetary Policy statement is also made public with markets sure to be paying attention.
  

• The South African Rand (ZAR) strengthened versus the dollar on Thursday on positive emerging market sentiment amidst investors.
  
• Gold (XAU) strengthened by US$9.20 an ounce to US$684.40 despite a stronger dollar.

TECHNICAL COMMENTARY

• Euro 1.3555

Initial support at 1.3540 (Apr 23 low) followed by 1.3522 (Apr 17 low). Initial resistance is now located at 1.3623 (May 3 high) followed by 1.3683 (Apr 27 trend high)

• Yen 120.40

Initial support is located at 119.50 (May 2 low) followed by 119.06 (May 1 low). Initial resistance is now at 120.54 (76.4% retracement of the 122.20 to 115.15 decline) followed by 121.65 (Feb 22 reaction high).

• Pound – 1.9875

Initial support at 1.9855 (May 3 low) followed by 1.9823 (Former resistance from Apr 3) Initial resistance is now at 1.9948 (May 3 high) followed by 2.0076 (May 1 high)

• Australian Dollar – 0.8225

Initial support a 0.8219 (May 2 low) followed by 0.8150 (Apr 9 low). Initial resistance is now at 0.8308 (38.2% retracement of the 0.8396 to 0.8219 decline) followed by 0.8328 (61.8% retracement of the 0.8396 to 0.8219 decline)

• Gold – 681.85

Initial support at 667.65 (May 2 low) followed by 663.85 (Apr 4 low). Initial resistance is now at 687.00 (Apr 26 high) followed by 693.80 (Apr 23 high)