Australian FOREX Daily Outlook 20/07/2007

Bernanke further signals slowing housing sector. Poor UK Retail Sales, ahead of GDP data release on Friday

CURRENCY TRADING SUMMARY –20 JULY 2007 (00:30GMT)

• U.S. Dollar Trading (USD) a mixed overnight as uncertainty in the US housing sector continued to weigh upon the dollar. A second day of testimony from Federal Reserve Chairman Ben Bernanke provided added ammunition for dollar bears when he told the Senate Banking Committee that losses on sub-prime mortgages could hit $100 billion and curb consumer spending. Bernanke began his semi-annual testimony on Wednesday, when he announced the Fed had trimmed growth forecasts for this year and next but reiterated that inflation is its top concern. In U.S, share markets the NASDAQ was up 20.55 points (+0.76%) whilst the Dow Jones broke key levels of 14000 points jumping a further 82.19 points (+0.59%). Crude Oil was rose by US$0.87 a barrel to US$75.92 on the following concern on supplies in Angola and a surge in Chinese Economic growth.

• The Euro (EUR) was relatively unchanged on Thursday before edging slightly higher on a broadly weaker dollar. Overall the EURUSD traded with a range of a low1.3786 and a high of 1.3832 before closing the day at 1.3803 in the New York session. Looking ahead, with so much emphasis on central bank speeches this week, ECB President Trichet is also scheduled to talk on Friday.

• The Japanese Yen (JPY) traded lower against the USD and the EURO as investors continued to source the low yielding currency. Overall the USDJPY traded with a range of a low 121.74 and a high of 122.18 before closing the day at 122.06 in the New York session.

• The Sterling (GBP) eased on Thursday as June UK Retail Sales came in softer prompting investors to trim expectations of future interest rate hikes. Overall the GBPUSD traded with a low 2.0472 and a high of 2.0535 before closing the day at 2.0487 in the New York session

• The Australian Dollar (AUD) was range bound for much of the session whilst maintaining its bullish outlook. Overall the AUDUSD traded with a low 0.8764 and a high of 0.8810 before closing the day at 0.8797 in the New York session.

• The Canadian Dollar (CAD) with recent gains by the Canadian dollar against the U.S. dollar has sparked talk of rate cuts by the Bank of Canada.The currency has risen more than 2 percent versus the greenback in July. Overall USDCAD traded with a range of a low 1.0412 and a high of 1.0465 before closing the day at 1.0432 in the New York session.

• Gold (XAU) rose by US$4.40 an ounce to US$678.10.

CURRENCY PAIR IN FOCUS

• CAD/JPY edged higher as a boost for carry trades and a stronger Canadian dollar remained.

TECHNICAL COMMENTARY

• Euro 1.3805

Initial support at 1.3730 (July 11 low) followed by 1.3592 (Jul 10 low). Initial resistance is now located at 1.3834 (Jul 18 trend high) followed by 1.3852 (Open + (Last weeks range * 1.618).

• Yen 121.95

Initial support is located at 121.58 (Jun 18 low) followed by 120.76 (June 8 reaction low). Initial resistance is now at 122.62 (Jul 13 high) followed by 123.68 (Jul 7 high)

• Pound – 2.0515

Initial support at 2.0347 (Jul 17 low) followed by 2.0243 (Jul 10 low). Initial resistance is now at 2.0550 (July 18 trend high) followed by 2.0575 (June 1981 high)

• Australian Dollar – 0.8765

Initial support a 0.8717 (Jul 17 low) followed by 0.8653 (Jul 13 low). Initial resistance is now at 0.8792 (Jul 18 trend high) followed by 0.8827 (2.618 of 0.8333 -0.8514 from 0.8354)

• Gold – 665.70

Initial support at 658.90 (Jul 10 low) followed by 653.80 (Jul 9 low). Initial resistance is now at 674.00 (Jul 18 high) followed by 675.05 (May 14 low)