Australian FOREX Daily Outlook 24/09/2007

US dollar fails to sustain any gains. Bernanke to speak in Washington.

CURRENCY TRADING SUMMARY –24 SEPTEMBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) once again traded near record lows against the Euro and continued to ease against a basket of majors having rebounded earlier, with ongoing views Federal Reserve will look to cut rates further in an attempt to stimulate the economy. In U.S. share markets the NASDAQ was up 16.93 points (0.64%) whilst the Dow Jones was also up 53.49 points (+0.39%). Crude oil moved away from its recent record highs, down US$0.48 a barrel to US$81.30. Looking ahead, Fed chairman Bernanke will be speaking in Washington on Monday at 1700 GMT.

·The Euro (EUR) traded at an all time high on Friday on a broadly bearish dollar. The Euro traded at a high of 1.4120 on Friday, reaching an all time peak since the inception of the currency. The Euro was able to gain 1.5% throughout the week versus the USD. Overall the EURUSD traded with a range of a low 1.4056 and a high of 1.4120 before closing the day at 1.4072 in the New York session. Looking ahead, data out of the EZ on Monday will include industrial orders with forecast for the month of July at -3%/10.4% for the m/m and y/y respectively.

·The Japanese Yen (JPY) was one of the only majors that lost ground against a weak USD on Friday as rallying global stock prices gave the green light in a carry led environment. The Japanese Yen fell 0.7% versus the dollar and 0.8% versus the Euro during the session. The EURJPY cross traded at a high of 162.73, the highest level since August 9. With the returning desire for risky one way bets, the Japanese Yen declined against all 16 majors on Friday. Overall the USDJPY traded with a range of a low 114.55 and a high of 115.44 before closing the day at 115.29 in the New York session.

·The Sterling (GBP) failed to pair any of its losses against the Euro, falling for the 3^rd consecutive week amidst growing expectations that the Bank of England would be resigned to cut interest rates in the near future, in order to counter a slowing economy in light of recent credit turmoil. Yet the Sterling Pound was able to find some support late in the day, on funding by low interest bearing currencies in a carry appetite environment. In other news, Barclays Capital reduced its three month forecast for the pound versus the Euro and dollar, saying the Bank of England’s reputation has suffered during the U.K.‘s worst banking crisis in more than a century. Overall the GBPUSD traded with a range of a low 2.0082 and a high of 2.0163 before closing the day at 2.0137 in the New York session.

·The Australian Dollar (AUD) was largely range bound for most of the day. The Aussie dollar was able to gain to end the session following early profit taking. Overall the AUDUSD traded with a range of a low 0.8627 and a high of 0.8703 before closing the day at 0.8651 in the New York session.

·The Canadian Dollar (CAD) headed for the biggest weekly gain since 1988 amid optimism that surging demand for commodities will fuel economic growth. The Canadian dollar had gained 3.2% during the week, its biggest weekly rally since November 1988, pushing it up 16% for the year, the most against the U.S. dollar from all other majors. The currency briefly pared its gains after reports showed retail sales declined 0.8% in July after falling 1.1% in the previous month. Overall the USDCAD traded with a range of a low 0.9939 and a high of 1.0020 before closing the day at 0.9998 in the New York session.

·The Mexican Peso (MXN) rose to a six-week high after central bankers said they’re concerned inflation may quicken, adding to speculation they’ll raise interest rates before year-end. The peso strengthened 0.4 percent to 10.9517 in New York and earlier touched 10.9422, the strongest since Aug. 8. The Peso has gained 1.7 percent this week, the biggest weekly advance since Dec. 8. Banco de Mexico kept the overnight lending rate at 7.25 percent at today’s meeting and maintained a “restrictive bias” it first introduced in May.

·Gold (XAU) fell erasing earlier gains as views the five week rally to reach 27 year highs was overdone. Gold traded with a low of 727.70 and a high of 739.00

TECHNICAL COMMENTARY

·Euro 1.4090

Initial support at 1.3963 (Sep 20 low) followed by 1.3927 (former resistance Sep 13). Initial resistance is now located at 1.4120 (Sep 21 trend high) followed by 1.4160 (Oct 27, 1995 synthetic high).

·Yen 115.35

Initial support is located at 114.59 (Sep 21 low) followed by 113.39 (Sept 11 low). Initial resistance is now at 116.05 (Sep 20 high) followed by 116.38 (Sep 18 high).

• Pound – 2.0215

Initial support at 2.0081 (Sep 21 low) followed by 1.9952 (Sep 19 low). Initial resistance is now at 2.0226 (September 14 high) followed by 2.0366 (Sep 12 reaction high)

• Australian Dollar – 0.8680

Initial support a 0.8606 (Sep 21 low) followed by 0.8552 (Sep 20 low). Initial resistance is now at 0.8704 (Sep 21 high) followed by 0.8770 (July 27 high).

• Gold – 729.50

Initial support at 726.95 (Sep 21 low) followed by 720.76 (Sep 19 low). Initial resistance is now at 739.42 (Sep 21 trend high) followed by 740.00 (Round number resistance)