Australian FOREX Daily Outlook 26/07/2007

RBNZ lift rates as US dollar rallies. Ongoing focus on the US housing sector with New Home Sales made public

CURRENCY TRADING SUMMARY –26 JULY 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was reprieved of its pressure on Wednesday on the back of technical trading. Despite renewed signs of a slowing housing sector, with Existing Home Sales in June at their lowest level since November 2002. The Greenback moved away from multi year lows against a basket of currencies. In U.S. share markets the NASDAQ was up 8.31 points (+0.31%) whilst the Dow Jones was also up 68.12 points (+0.50%). Crude oil rose by US$2.32 a barrel to US$75.88 on reports that stocks had dropped by 1.1 million barrels. Looking ahead, further housing data is expected out of the US, with New Home sales for the month of June expected to come in at 0.895 Mln down from the previous 0.915 Mln. Furthermore, Durable Goods will also be released out of the U.S on Thursday. Economists forecast the figure to be at 1.8% up from the previous figure of -2.4%.

• The Euro (EUR) moved away from record highs against the USD, falling 0.8% on the Day. Overall the EURUSD traded with a low 1.3698 and a high 1.3831 before closing the day at 1.3720 in the New York session. Looking ahead, the German IFO index is made public on Thursday.

• The Japanese Yen (JPY) was well supported in the Asian session of trading with a modest Trade Balance figure. Overall the USDJPY traded with a range of a low 120.03 and a high of 121.14 before closing the day at 120.21 in the New York session. Focus now shifts to Japanese CPI data later on this week.

• The Australian Dollar (AUD) weakened over Wednesday largely on the back of profit taking. The Aussie Dollar eased from of 18 ½ high against the USD. Overall the AUDUSD traded with a range of a high 0.8870 before closing the day at 0.8825 in the New York session. The Kiwi dollar (NZD) saw the RBNZ increase rates by 0.25 points on Thursday morning as expected widely by the market. The call rate now sits at 8.25%.

• The Swiss Franc (CHF) The dollar was up more than 1 percent against the Swiss franc to 1.2156 francs

• The Turkish Lira (TRY) weakened slightly today along with other Turkish assets. The Main stock index in Istanbul stock exchange closed 0.2% lower in a profit taking trade.

• Gold (XAU) fell on Wednesday by US$11.00 an ounce to US$673.80, on a firmer US dollar.

CURRENCY PAIR IN FOCUS

• The Sterling (GBP) fell 0.4% moving away from 26 year highs well below peaks of 2.0655 reached on Tuesday. Overall the GBPO traded with a low of 2.0488 and a high of 2.0628.

TECHNICAL COMMENTARY

• Euro 1.38

Initial support at 1.3662 (July 5 former high) followed by 1.3592 (Jul 10 low). Initial resistance is now located at 1.3853 (Jul 24 trend high) followed by 1.4000 (Psychological round resistance).

• Yen 120.60

Initial support is located at 119.80 (May 25 low) followed by 119.47 (May 11 low). Initial resistance is now at 121.70 (Jul 23 high) followed by 122.62 (Jul 13 high)

• Pound – 2.0520

Initial support at 2.0460 (Jul 18 low) followed by 2.0412 (23.6% retracement of the 1.9622 to 2.0656 advance). Initial resistance is now at 2.0656 (Jul 24 trend high) followed by 2.0683 (Intraday Channel Resistance)

• Australian Dollar – 0.8840

Initial support a 0.8780 (Jul 23 low) followed by 0.8717 (Jul 17 low). Initial resistance is now at 0.887 (Jul 25 trend high) followed by 0.8919 (1.00 progression of 0.8163-0.8749 from 0.8333)

• Gold – 676.00

Initial support at 663.00 (Jul 17 low) followed by 671.60 (Jul 19 low). Initial resistance is now at 687.80 (Jul 20 high) followed by 690.90 (May 7 low)