Australian FOREX Daily Outlook 06/03/2008

ISM rebounds, as Jobs data causes market volatility. ECB and BoE rate announcements today.

CURRENCY TRADING SUMMARY – 06 MARCH 2008 (00:30GMT)

·U.S. Dollar Trading (USD) eased against a number of majors as ADP employment (often considered a preview to Non Farm Payrolls) came in significantly worse than expectations. According to the report, the US labour force was seen to have lost -23K jobs during the month of February, well below the forecasted rise of 20K jobs and previous 130K reading. The USD woes were compounded further as Services ISM came in at 49.3, although higher than expectations, still below the key 50 level, indicating an ongoing contraction in the sector. The Service sector contributes to 70% of the US economy, economic slowdown remains prominent. In U.S. share markets the NASDAQ was up by 70.90 points (+0.80%) whilst the Dow Jones was also up by 41.19 points (+0.34%). Crude oil traded at fresh record highs on Wednesday on news that US inventories fell throughout the last week, despite OPEC members leaving quotas unchanged. Crude rose by US$4.96 a barrel to US$104.48. Looking ahead Pending Home Sales for the month of January are expected to come in at -1%, with previous figures at -1.5%.

·The Euro (EUR) rallied to fresh record highs on poor data out of the U.S. in the form of Jobs. On specific data out of the EZ, Retail Sales came in on expectations 0.4%. Overall the EURUSD traded with a low of 1.5145 and a high of 1.5305 before closing the day 1.5268 in the New York session. Looking ahead, ECB is expected to keep rate on hold once again, with interest placed on the press conference

·The Japanese Yen (JPY) pared declines against the Euro and Dollar as initial losses in U.S. stocks led traders to exit carry-trade purchases of higher-yielding securities funded by cheap loans in Japan. Overall the USDJPY traded with a low of 103.30 and a high of 104.19 before closing the day at 103.81 in the New York session.

·The Sterling (GBP) edged higher on a broadly weaker dollar, and growing expectations that the BoE will hold rates on Thursday. The GBPUSD traded with a low of 1.9718 and a high of 1.9967 before closing day at 1.9917 in the New York session. The BoE is widely expected to hold rates at 5.25%.

·The Australian Dollar (AUD) rallied on the back of a weakening dollar and rebounding stock prices in the US markets. In data news, GDP data for the fourth quarter was released on expectations at 0.6%. Overall the AUDUSD traded with a low of 0.9226 and a high of 0.9340 before closing the day at 0.9314 in the New York session. Trade Balance data was released at -2732 mln on Thursday morning.

·The Canadian Dollar (CAD) rose the most in almost a week against its U.S. counterpart as prices of the nation’s commodity exports rose, bolstering the currency’s appeal. Overall the USDCAD traded with a low of 0.9851 and a high of 0.9554 before closing the day at 0.9852 in the New York session.

·Gold (XAU) rebounded from previous session, to trade at record highs of 992.70 and a low of 959.55

TECHNICAL COMMENTARY

·Euro – 1.5280

Initial support at 1.5146 (Feb 5 low) followed by 1.5074 (Feb 28 low). Initial resistance is now located at 1.5302 (Mar 5 high) followed by 1.5382 (1.4311 plus 0.618 of 1.3361 to 1.4967).

·Yen – 103.80

Initial support is located at 102.61 (Mar 3 low) followed by 101.67 (Jan 1995 reaction low). Initial resistance is now at 104.97 (Jan 23 high) followed by 105.39 (Feb 29 high)

·Pound – 1.9910

Initial support at 1.9722 (Feb 28 low) followed by 1.9644 (Feb 22 low). Initial resistance is now at 1.9975 (Feb 27 high) followed by 2.0000 (Round Number)

·Australian Dollar – 0.9330

Initial support a 0.9219 (Mar 4 low) followed by 0.9122 (38.2% retracement of the 0.8513 to 0.9499 advance). Initial resistance is now at 0.9421 (Mar 3 high) followed by 0.9499 (Feb 28 high)

·Gold – 985.80

Initial support at 957.20 (Mar 4 low) followed by 949.00 (Feb 27 low). Initial resistance is now at 991.00 (Mar 5 high) followed by 1000.00 (Round Number)