Australian FOREX Daily Outlook 27/08/2007

Positive US Home Sales provides for a confident market as equity prices continue to rebound.

CURRENCY TRADING SUMMARY –27 AUGUST 2007 (00:30GMT)

• U.S. Dollar Trading (USD) eased further on Friday against a basket of currencies as buoyant economic data did little to ease the economic worries of global credit issues and its affect on liquidity. Reports showed a rise in New Home sales for the month of July and Durable Goods, giving the USD a brief rally before news about exposure by Asian and European banks to the U.S. mortgage market revived concerns about creditworthiness in global markets. In U.S. share markets the NASDAQ was up 34.99 points (1.38%) whilst the Dow Jones was also up by 142.99 points (1.08%). Crude oil gained on a broadly weaker dollar, up by US$1.30 a barrel to US$71.73. Looking ahead, key data out of the U.S. will be released in the form of Existing Home Sales which in at 5.7 Mln for the month of July, down from the previous 5.75 Mln.

• The Euro (EUR) continued on its rally against the greenback as investors did well to shrug of supportive data out of the U.S. Yet the Euro first was subject to selling pressure, trimming it gains as reports circulated that the ECB was non-committal in raising rates during the September meeting. Overall the EURUSD traded with a low 1.3554 and a high of 1.3683 before closing the day at 1.3668 in the New York session.

• The Japanese Yen (JPY) gained as much 0.4% against the USD reacting to data out on Friday. Overall the USDJPY traded with a range of a low 115.53 and a high of 116.50 before closing the day at 116.38 in the New York session.

• The Sterling (GBP) gained on Friday, as markets took to heart strong UK data in the form of GDP, which showed growth had hit its highest level since 1996 for the second quarter of 2007. In hindsight risky traders were confident re-entering the carry trade, further supported by strong US housing data which added to confidence. Overall the GBPUSD traded with a range of a low 1.9981 and a high of 2.0138 before closing the day at 2.0134 in the New York session.

• The Australian Dollar (AUD) also gained throughout the session on Friday with confidence and risk appetite returning to the market. Overall the AUDUSD traded with a low of 0.8156 and a high of 0.8267 before closing the day at 0.8258 in the New York session.

• Gold (XAU) cautiously drifted higher on Friday, assisted by a weaker dollar to close the session at US$668.40 an ounce down by US$0.30 from day highs.

TECHNICAL COMMENTARY

• Euro 1.3670

Initial support at 1.3534 (Aug 23 low) followed by 1.3449 (Aug 22 low). Initial resistance is now located at 1.3665 (61.8% retracement of the 1.3853 to 1.3360 decline) followed by 1.3711 (Aug 13 high).

• Yen 116.45

Initial support is located at 115.29 (Aug 23 low) followed by 113.67 (Aug 20 low). Initial resistance is now at 117.15 (Aug 23 high) followed by 117.89 (50.0% retracement of the 124.17 to 111.60 decline).

• Pound – 2.0135

Initial support at 1.9978 (Aug 24 low) followed by 1.9915 (Aug 23 low). Initial resistance is now at 2.0154 (50% retracement of the 2.0656 to 1.9652 decline) followed by 2.0272 (61.8% retracement of the 2.0656 to 1.9652 decline)

• Australian Dollar – 0.8285

Initial support a 0.8154 (Aug 24 low) followed by 0.8064 (Aug 23 low). Initial resistance is now at 0.8245 (Aug 24 high) followed by 0.8275 (50.0% retracement of the 0.8875 to 0.7674 decline)

• Gold – 668.00

Initial support at 654.90 (Aug 22 low) followed by 653.70 (Aug 20 low). Initial resistance is now at 668.10 (Aug 16 high) followed by 676.80 (Aug 8 high)