Australian FOREX Daily Outlook 26/09/2007

Poor housing data weighs heavy on the USD. Focus on UK GDP .

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

·U.S. Dollar Trading (USD) eased once again following declines in US consumer confidence and existing home sales added to expectations that the Federal Reserve will ease a second time for 2007. The USD traded at 15 year lows against a basket of currencies as speculators continue to try and pre-empt rate moves. In other news, Miami based Lennar Corp, the largest U.S. homebuilder, reported the biggest quarterly loss in its 53-year history after $848 million of costs to write down the value of real estate. U.S. share markets rose 15.50 points (0.58%) whilst the Dow Jones rose by 19.59 (0.14%). Crude oil fell by US$0.67 a barrel to US$80.95. Looking ahead, key data out of the US will be released in the form of Durable Goods, with forecasts at -3.1% significantly down from the previous 6%.

·The Euro (EUR) traded at a fresh record high on Tuesday with following poor US data. Overall the EURUSD traded with a low 1.4061 and a high of 1.4153 before closing the day at 1.4090 in the New York session. Early Asian session on Wednesday saw the EUR traded at another record high of 1.4160.

·The Japanese Yen (JPY) gained against a basket of currencies as investors were prompted to diversify away from risky carry trades. Overall the USDJPY traded with a low of 114.59 and a high of 114.97 before closing the day at 114.75 in the New York session. Wednesday saw the release of Japanese Trade Balance which failed to provide any support on the Japanese Yen. Traded Balance Rose from 671.2 bln to 743.2 bln for the month of August.

·The Sterling (GBP) fell from its previous session high falling 0.2% against the USD and 0.55 pence against the Euro to 70.10. Overall the GBPUSD traded with a range of a low 2.0087 and a high of 2.0227 before closing the day at 2.0121 in the New York session. Looking ahead, GDP data for the second quarter is expected to come in at flat 0.8 same as the previous. Other data will include the Current Account with forecasts at -11.3 (Prior: -12.2).

·The Australian Dollar (AUD) broadly held firm against the USD before breaking key 0.8700 levels in the early part of Wednesday’s Asian session. Overall the AUDUSD traded with a range of a low 0.8622 and a high of 0.8682 before closing the day at 0.8651 in the New York session.

·The Canadian Dollar (CAD) traded near a 31- year high after a drop in U.S. consumer confidence increased speculation the housing slump will encourage the Federal Reserve to cut borrowing costs for a second time this year. Overall the USDCAD traded with a range of a low of 1.0018 and a high of 1.0064 before closing the day at 1.0034 in the New York session.

·The South African Rand (ZAR) fell for the first time in more than a week as signs the crisis in credit markets is crimping global growth prompted investors to reduce their holdings of riskier assets. Against the dollar, the rand traded at 6.988 in Johannesburg, from 6.9614 yesterday, when it reached 6.95, the best since Aug. 26.

·Gold (XAU) Gold was little changed after paring losses on speculation the dollar’s slump against the Euro will persist, enhancing the appeal of the precious metal as an alternative investment. XAU traded with a low 722.60 and a high of 733.50.