Australian FOREX Daily Outlook 10/09/2007

Non Farm Payrolls declines for the firs time in 4 years by 4 thousand jobs.

CURRENCY TRADING SUMMARY –10 SEPTEMBER 2007 (00:30GMT)

• U.S. Dollar Trading (USD) eased to 15 year lows against a basket of currencies as Non Farm Payrolls for the month of August declined for the first time in four years, by 4k jobs. Poor jobs data added to the notion that the U.S. economy may be heading into a recession placing pressure on an interest rate cuts. Markets are now pricing in a 74 percent chance that the Fed slashes its 5.25 percent benchmark interest rate by half a percentage point when it meets on Sept 18. In U.S. share markets, the NASDAQ was down -48.62 points (-1.86%) whilst the Dow Jones also tumbled by -249.97 points (-1.87%). Crude oil gained on a broadly weaker USD, up by US$0.41 a barrel to US$76.71.

• The Euro (EUR) gained against the USD following poor payrolls data, which pushed the greenback lower across the board. Overall the EURUSD traded with a low 1.3663 and a high of 1.3799 before closing the day at 1.3789 in the New York session.

• The Japanese Yen (JPY) low-yielding yen was the biggest beneficiary as investors fled risky trades funded by borrowing the Japanese currency at low interest rates. Overall the USDJPY 113.13 and a high of 115.65 before closing the day at 113.34 in the New York session. Monday morning has seen a decline in GDP for the second quarter.

• The Sterling (GBP) gained against the dollar on Friday but fell sharply against the Euro and particularly the Yen, two currencies which posted much stronger gains against the greenback after surprisingly soft U.S. employment data. Overall the GBPUSD traded with a range of a low 2.0162 and a high of 2.0324 before closing the day at 2.0279 in the New York session.

• The Australian Dollar (AUD) remained steady despite its role as a high yielding currency. Overall the AUD traded with a range of a low 0.8233 and a high of 0.8309 before closing the day at 0.8265 in the New York session.

• Gold (XAU) gold rocketed to 4.5 month highs following poor payrolls data on Friday. XAU traded with a low of 692.55 and a high of 706.73

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 1.3798 (Sep 7 high) followed by 1.3842 (Aug 6 reaction high).

• Yen 112.80

Initial support is located at 113.13 (Sep 7 low) followed by 112.91 (0.764 of 111.60-117.15). Initial resistance is now at 116.75 (Aug 27 high) followed by 117.15 (Aug 23 high and key near-term resistance).

• Pound – 2.0285

Initial support at 2.0039 (Sep 5 low) followed by 2.0 (Psychological round number). Initial resistance is now at 2.0324 (September 7 high) followed by 2.0400 (Aug 8 reaction high)

• Australian Dollar – 0.8275

Initial support a 0.8106 (Aug 31 low) followed by 0.8051 (Aug 29 low). Initial resistance is now at 0.8335 (Aug 27 high) followed by 0.8416 (61.8% retracement of 0.8873 to 0.7676).

• Gold – 700.70

Initial support at 687.40 (July 24 low) followed by 681.14 (September 6 low). Initial resistance is now at 707.10 (Sep 7 high) followed by 720.10 (May 15 high)