Australian FOREX Daily Outlook 15/06/2007

US Producer Prices boost dollar as RBA buys time on rate hike. Outlook on BoJ, key US inflationary data, and Capital Net Flows.

CURRENCY TRADING SUMMARY –15 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was mixed against all majors as Core Produce Price index rose to 1.6% for the month of May y/y, up from the previous month of 1.5%.In U.S share markets, the NASDAQ was up 17.10 points (+0.66%) whilst the Dow Jones was also up by 71.37 points (+0.53%). Crude oil rose slightly by US$0.08 a barrel to US$67.73. Looking ahead a heavy data day is scheduled for the U.S. markets, with expectations that Core CPI for the month of May, to come in at 0.2% same as the previous.In other news, Current account for the first quarter is expected to decline sharply to -201 bln (Previous: 195.70 bln). Furthermore, Key data will also be released in the form of TIC flows, with economists expecting a figure of 75 bln for the month of April (Previous: 67.6 bln). Other data news to be released include NY Fed Manufacturing Survey, Michigan Sentiment Survey, and Industrial Production.

• The Euro (EUR) was relatively unchanged against the greenback on Thursday despite positive economic data out of the U.S. Overall, the EURUSD traded with a range of a low 1.3279 and a high of 1.3325 before closing the day at 1.3305 in the New York session. Looking ahead, the EZ will release Trade Balance on Friday with the previous figure at 7.4 bln.

• The Japanese Yen (JPY) saw the USD reach fresh 4.5 year highs for the second successive session breaking key levels of 123.00. Overall, the USDJPY traded with a low of 122.55 and high of 123.14 before closing the day at 122.95 in the New York session. Looking ahead, The Bank of Japan is widely seen keeping rates at 0.5 percent on Friday, but with expectations running high for a rate hike in August, investors will closely watch the post-meeting news conference by BoJ Governor Toshihiko Fukui.

• The Sterling (GBP) eased against the dollar, despite mixed data out of the UK. Retail Sales rose by 0.4% for the month of May, better than the expected 0.3%. Overall the GBPUSD traded with a range of a low 1.9657 and a high of 1.9735 before closing the day at 1.9693 in the New York session.

• The Australian Dollar (AUD) experienced plenty of volatility on Thursday, as RBA Gov Stevens said the favorable near-term inflation outlook gave the bank more time to assess the need for higher interest rates. As result, the AUD fell 0.6%. Overall the AUDUSD traded with a range of a low 0.8333 and a high of 0.8406 before closing the day at 0.8359 in the New York session.

• The Swiss Franc (CHF) Swiss National Bank raised interest rates by 25 basis points for the seventh quarter running on Thursday and said more increases were likely if the economy remained strong, causing the Swiss Franc to depreciate as the hike had been widely expected. Overall the USDCHF traded with a range of a low 1.2434 and high of 1.2469 before closing the day at 1.2467 in the New York session.

• Gold (XAU) rose by US$2.40 an ounce to US$655.10 on the back of rising oil prices.

TECHNICAL COMMENTARY

• Euro 1.3310

Initial support at 1.3262 (June 13 low) followed by 1.3252 (Mar 26 low). Initial resistance is now located at 1.3373 (June 11 high) followed by 1.3436 (June 8 high)

• Yen 122.95

Initial support is located at 121.54 (June 13 low) followed by 121.49 (Jun 13 low). Initial resistance is now at 123.13 (Jan 14 high) followed by 123.20 (Rising Chanel resistance)

• Pound – 1.9695

Initial support at 1.9622 (June 8 low) followed by 1.9591 (April 9 low). Initial resistance is now at 1.9793 (June 8 high) followed by 1.9969 (June 5 reaction high)

• Australian Dollar – 0.8360

Initial support a 0.8333 (June 14 low) followed by 0.8309 (June 4 low). Initial resistance is now at 0.8412 (Jun 14 high) followed by 0.8479 (Jun 7 trend high)

• Gold – 653.10

Initial support at 643.50 (June 13 low) followed by 637.36 (Mar 14 low). Initial resistance is now at 655.00 (June 11 high) followed by 661.65 (June 8 high)