Australian FOREX Daily Outlook 08/06/2007

Aussie and Kiwi surge on respective Unemployment Rate and Interest rate releases, whilst the BoE hold. US trade balance to end the week

CURRENCY TRADING SUMMARY –08 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was mixed against all other majors before rebounding against the Euro on Thursday, as expectations for solid economic growth launched US government debt yields above 5%, providing a big potential draw for foreign investors. Further uncertainty in global stock (third consecutive session) caused investors to liquidate foreign equity holdings adding to USD strength. In U.S. share markets, the NASDAQ fell by 45.80 points (-1.77%) and the Dow Jones also fell by 198.94 points (-1.48%). Crude oil continued to rise amidst market volatility by US$0.72 to US$66.68 a barrel. Looking ahead key data is released out of the U.S. markets today in the form of Trade Balance with markets forecasting a figure of -63.50 bln for the month of April (Previous: -63.89 bln). With recent meetings between US and China centered on the Trade deficit, proves Friday’s data release will receive plenty of attention.

• The Euro (EUR) slipped against the USD on Thursday against a broadly stronger dollar. Overall the EURUSD traded with a range of a low 1.3423 and a high of 1.3513 before closing the day at 1.3432 in the New York session. Looking ahead little data is expected out of the EZ to end the week.

• The Japanese Yen (JPY) rallied following earlier losses against the USD with recent equity weakness and signs of mounting global pressures caused investors to trim there Japanese Yen funded carry trades. Overall, the USDJPY traded with a range of a low 120.777 and a high of 121.57 before closing the day at 121.10 in the New York session. Looking ahead key data in the form of Machine Orders are due for release today with expectations that the figure will be released at 4.5% (Previous: -4.5%). UPDATE: Machine Orders at 2.2%

• The Sterling (GBP) slid violently against the USD as the BoE chose to keep rates on hold at 5.5%. Overall the GBPUSD traded with a range of a low 1.9748 and a high of 1.9942 before closing the day at 1.9771 in the New York session. Looking ahead further data out of the UK in the form of Industrial Production (Forecast: 0.2% Prior: 0.3%) and Manufacturing Production (Forecast: 0.2% Prior: 0.6%) for the month of April.

• The Australian Dollar (AUD) was buoyed in the early part of the Asian session following a surprising drop in Aussie Unemployment. The Unemployment rate for the month of May came in significantly better than the 4.4% forecast released at 4.2% giving further indication of overheating economy to coincide with the weeks earlier release of GDP. Overall the AUDUSD traded with a range of a low 0.8405 and a high of 0.8476 before closing the day at 0.8421 in the New York session. In other news the RBNZ surprisingly hiked rates on Thursday by 25 basis points to sit at 8% the highest of the G10 nations. As a result the NZD rose to 0.7574, the highest level since the currency had been floated in 1985.

• The South African Rand (ZAR) drifted slightly weaker against the dollar, despite a central bank 50 point interest rates increase

• Gold (XAU) plunged by US$9.40 an ounce to US$665.20 on the back of a rebounding dollar.