Australian FOREX Daily Outlook 27/09/2007

USD hold firm despite poor data. All eyes on US New Home Sales.

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

• U.S. Dollar Trading (USD) rebounded from record lows against the Euro and a basket of majors. Orders for U.S. made durable goods fell 4.9 percent in August, the most in seven months. Whilst a private report on Wednesday showed consumer confidence dropped to its lowest in almost two years. In U.S. share markets the NASDAQ was up 15.58 points (+0.58%) whilst the Dow Jones was also up 99.50 points (+0.72%). Crude oil gained by US$0.30 a barrel to US$80.60 a barrel. Looking ahead, further poor readings in US housing data is expected today with the release of New Home Sales, with views that the figure will decline from the previous 870k and to 830k for the month of August. Other key data will include GDP (Q2) and Core PCE (Aug).
  

• The Euro (EUR) eased from record highs against the USD, as markets paid little attention to poor data out of the US. Euro had traded at fresh record highs on five consecutive sessions yet fell short of its bench mark on Wednesday. Overall the EURUSD traded with a low of 1.4112 and a high of 1.4163 before closing the day at 1.4133 in the New York session.
  

• The Japanese Yen (JPY) eased across the board as a rally in global stock prompted investors to build on their high yielding carry trades, weighing heavy on the Japanese Yen. The USDJPY slid 0.7% throughout the session whilst the EURJPY was also up 0.6%, highest levels since August 9. In data news, Japanese Trade Balance data released almost three times on expectations yet failed to provide the low yielder with any support. Overall the USDJPY traded with a range of a low 114.54 and a high of 115.75 before closing the day at 115.43 in the New York session.
  
• The Sterling (GBP) fell against the dollar on speculation the squeeze on short-term bank lending will hurt the economy and reduce demand for higher-yielding assets. However any further downside was capped as the absence of any bids for the 10 billion pounds ($20 billion) offered by the Bank of England stoked speculation strains in the money market aren’t as bad as some had imagined, buoying the pound. Overall the GBPUSD traded with a range of a low 2.0107 and a high of 2.0217 before closing the day at 2.0154 in the New York session.
  
• The Australian Dollar (AUD) was flat, range bound for most or the session due to a lack of data. Overall the AUDUSD traded with a low of 0.8715 and a high of 0.8763 before closing the day at 0.8755 in the New York session.

·The Canadian Dollar (CAD) fell for a third day on speculation the currency’s climb to $1 for the first time since 1976 and an increase in corporate borrowing costs may lead the Bank of Canada to put off raising interest rates. Overall the USDCAD traded with a range of a low 1.0025 and a high of 1.0095 before closing the day at 1.0054 in the New York session.

·The South African Rand (ZAR) gained to a two month high after a report showed inflation exceeded the central bank’s target for a fifth month in August, prompting speculation policy makers will keep raising interest rates. Against the dollar, the rand gained as much as 0.9 percent to the highest since July 26 and traded at 6.9425.

·Gold (XAU) fell on speculation a five- week rally to a 27-year high was overdone. XAU traded with a low of 726.90 and a high of 736.70.

TECHNICAL COMMENTARY

·Euro 1.4125

Initial support at 1.4039 (Sep 21 low) followed by 1.3963 (Sep 20 low). Initial resistance is now located at 1.4163 (Sep 26 trend high) followed by 1.4200 (Psychological resistance).

·Yen 115.50

Initial support is located at 114.04 (Sep 25 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 – 2.0140

Initial support at 2.0086 (Sep 25 low) followed by 2.0081 (Sep 21 low). Initial resistance is now at 2.0321 (September 24 high) followed by 2.0366 (Sep 12 reaction high)

• Australian Dollar – 0.8760

Initial support a 0.8606 (Sep 21 low) followed by 0.8552 (Sep 20 low). Initial resistance is now at 0.8770 (July 27 high) followed by 0.8873 (July 25 trend high).

• Gold – 727.90

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)