Australian FOREX Daily Outlook 24/10/2007

USD weakens as risk appetite resumes. Aussie CPI set for release.

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

·U.S. Dollar Trading (USD) eased against a basket of majors on Tuesday fuelled by growing expectations that the Fed rate cut is certain to materialize. In an absence of data, the Richmond Manufacturing index for the month of October gave little support to the USD coming in at -5, well below the previous figure of 14. In U.S. share markets the NASDAQ was up 45.33 points (+1.65%) whilst the Dow Jones was also up 109.26 points (+0.81%). Crude oil eased by US$0.75 a barrel to US$82.85. Looking ahead, Existing Home Sales is scheduled for the month September

·The Euro (EUR) recovered broadly as officials out of the EZ seem content with a stronger Euro. Overall the EURUSD traded with a range of a low 1.4171 and a high of 1.4280 before closing the day at 1.4257 in the New York session. PMI flash estimates for both manufacturing and services are set for release.

·The Japanese Yen (JPY) declined versus a number of currencies as traders seemed comfortable re-entering risky carry trades as global stock rebounded. The yen fell the most in five weeks against the Euro as gains in global stocks encouraged investors to resume buying higher-yielding assets financed by loans in Japan. Overall the USDJPY traded with a low of 114.24 and a high of 115.04 before closing the day at 114.71 in the New York session. Wednesday morning saw the release of Trade Balance for September, coming in at 1637 Bln, above forecasts of 1481 Bln. .

·The Sterling (GBP) gained against the USD growing confidence that the BoE is likely to keep rates on hold for the remainder of 2007, whilst the Fed is perceived to cut again. Overall the GBPUSD traded with a low of 2.0305 and a high of 2.0509 before closing near day highs of 2.0503 in the New York session.

·The Australian Dollar (AUD) was well performed in an appetite for risk environment. Rebounding global stock ensured that the investors rebuilt high yielding carry trades. Overall the AUDUSD traded with a range of a low 0.8854 before closing the day at 0.8973 in the New York session. Key inflationary measures for Australia are scheduled for release, with CPI for Q3 forecasted at 0.9%/2.1%.

·The Canadian Dollar (CAD) rose to a 33-year high as traders bought currencies of commodity exporters on optimism corporate profits will fuel global growth. Overall the USDCAD traded with a low of 0.9629 and a high of 0.9786 before closing the day at 0.9667 in the New York session.

·Gold (XAU) rose mildly as the market broadly gained against the USD. XAU traded with a low of 753.70 and a high of 761.00.

TECHNICAL COMMENTARY

·Euro 1.4250

Initial support at 1.4125 (Oct 22 low) followed by 1.4094 (Oct 10 low). Initial resistance is now located at 1.4350 (Oct 22 trend high) followed by 1.4369 (1.0410 plus 1.3360 – 1.3719)

·Yen 114.80

Initial support is located at 113.26 (Oct 22 low) followed by 112.61 (Sept 10 reaction low). Initial resistance is now at 115.72 (Oct 19 high) followed by 116.64 (Oct 18 high).

• Pound – 2.0495

Initial support at 2.0304 (Oct 23 low) followed by 2.0259 (Oct 22 low). Initial resistance is now at 2.0574 (Oct 22 high) followed by 2.0624 (Jul 26 high)

• Australian Dollar – 0.8980

Initial support a 0.8856 (Oct 23 low) followed by 0.8749 (Oct 22 low). Initial resistance is now at 0.8994 (Oct 19 high) followed by 0.9013 (Oct 16 high).

• Gold – 758.80

Initial support at 745.35 (Oct 22 low) followed by 741.40 (Oct 11 low). Initial resistance is now at 771.50 (Oct 19 trend high) followed by 774.90 (This weeks open + (last weeks range * 0.618)