Australian FOREX Daily Outlook 07/09/2007

ISM services add to US confidence, while ECPB President Trichet indicates uncertainty.

CURRENCY TRADING SUMMARY –07 SEPTEMBER 2007 (00:30GMT)

• U.S. Dollar Trading (USD) saw the release of ISM services provided confidence in the market, indicating strength in the underlying economy. The USD was also able to gain from a decline in jobless claims earlier in the session, pushing the greenback higher. In U.S. share markets the NASDAQ was up 8.37 points (0.32%) whilst the Dow Jones also rose by 57.88 points (+0.44%). Crude oil was able to gain overnight by US$0.25 a barrel to US$76.55. Looking ahead, plenty of attention will surround the release of Non Farm Payrolls with forecast at 110k for the month of August, up from the previous 92k. In other jobs data, unemployment rate is expected to be released at an unchanged 4.6% for the month of August.

• The Euro (EUR) plenty of attention surrounded the ECB interest rate announcement in which the central bank kept on hold. In post commentary, ECB President Trichet made reference to monetary policy without the use of “strong vigilance”, but may return to its bias when the time comes. The ECB president indicated that turmoil in the credit markets had increased uncertainty, with policy remaining accommodative. Overall the EURUSD traded with a range of a low 1.3636 and a high of 1.3709 before closing the day 1.3684 in the New York session.

• The Japanese Yen (JPY) slipped on re-entering of carry trades. Overall the USDJPY trade with a range of a low 114.81 and a high of 115.57 before closing the day at 115.32 in the New York session.

• The Sterling (GBP) saw the BoE surprise little by keeping rates on hold. Overall the GBPUSD traded with a low of 2.0143 and a high of 2.0265 before closing the day at 2.0230 in the New York session.

• The Australian Dollar (AUD) saw the unemployment rate remain steady at 4.3%, finding support on new jobs rising 31k. Overall the AUDUSD traded with a low 0.8190 and a high of 0.8288 before closing the day 0.8286 in the New York session.

• Gold (XAU) fell by US$0.80 an ounce to US$690.70.

TECHNICAL COMMENTARY

• Euro 1.3675

Initial support at 1.3552 (Sep 4 low) followed by 1.3534 (Aug 23 low). Initial resistance is now located at 1.3719 (Aug 31 high) followed by 1.3842 (Aug 6 reaction high).

• Yen 115.35

Initial support is located at 115.00 (Sep 5 low) followed by 113.85 (Aug 29 low). Initial resistance is now at 116.75 (Aug 27 high) followed by 117.15 (Aug 23 high and key near-term resistance).

• Pound – 2.0190

Initial support at 2.0044 (Sep 5 low) followed by 2.0 (Psychological round number). Initial resistance is now at 2.0233 (Aug 31 high) followed by 2.0272 (61.8% retracement of the 2.0656 to 1.9652 decline)

• Australian Dollar – 0.8275

Initial support a 0.8106 (Aug 31 low) followed by 0.8051 (Aug 29 low). Initial resistance is now at 0.8288 (Aug 28 high) followed by 0.8300 (Round number resistance).

• Gold – 692.70

Initial support at 661.70 (Aug 29 low) followed by 657.70 (Aug 24 low). Initial resistance is now at 683.4 (Sep 4 high) followed by 687.8 (Jul 24 high)