Australian FOREX Daily Outlook 31/03/2008

US Share markets fall on credit concerns, as Michigan Sentiment falls to 16 year low.

CURRENCY TRADING SUMMARY – 31 MARCH 2008 (00:30GMT)

·U.S. Dollar Trading (USD) gave up its daily gains against a number of majors initially buoyed by Core PCE figures for the month of February which were inline with expectations rising by 2.0% for the y/y figures, whilst the monthly figure increased by 0.5% above forecasts of 0.3%. In other news the Michigan sentiment survey for the month March fell to 69.5, its lowest reading in 16 years. In U.S. share markets the NASDAQ was down by -19.65 points (-0.86%) whilst the Dow Jones was also lower by -86.06 points (-0.7%). Financials once again weighed heavy on stock markets with news of Citigroup poised for a second dividend cut. Crude oil also fell on the back of an increase in supply from Iraq’s Basra export terminal. Crude fell by US$2.63 a barrel to US$104.95. Looking ahead, Chicago PMI figures are made public on Monday with figures forecasted to come in at 46.5 for the month March, higher then the previous 44.5.

·The Euro (EURO) paired its gains largely on profit taking ahead of the weekend. In what was a quiet day on the data front, the Euro tracked other currencies to trade with a low of 1.5742 and a high of 1.5840 before closing the day at 1.5803 in the New York session. A data filled day kicks off the week in the Eurozone with Consumer Confidence (Forecast: -12 Previous: -12), CPI estimate (Forecast: 3.3% Previous: 3.3%), and Business Climate (Forecast: 0.7% Previous: 0.72%)

·The Japanese Yen (JPY) had a mixed data on Friday with the Unemployment rate jumping to 3.9% whilst Household spending figures were flat at 2.4% for the month of February. On a positive note, CPI figures though were higher at 1.0% (fastest pace in a decade) as Retail Sales figures were also strong at 1.3%, with growing views that the BoJ will not move until the second half of 2008. Naturally with falling stock prices during the U.S. session, the USDJPY failed to sustain its daily gains trading with a low of 99.11 and a high of 100.40 before closing the day at 99.19 in the New York session.

·The Sterling (GBP) fell on the London open as March house prices declined by -0.6% worse then the expected -0.3%. Whilst GDP figures were in line with expectations, confirmed at 0.6% for the fourth quarter. Overall the GBPUSD traded with a low of 1.9883 and a high of 2.0090 before closing the day at 1.9932 in the New York session. Looking ahead, BoE Governor King is scheduled to speak on Monday.

·The Australian Dollar (AUD) fell on reports emanating out of the US that further large banks will be hampered in light of the credit crisis. As a high yielding currency, a fall in stock prices hampered the AUD ensuring it fell from day highs. Overall the AUDUSD traded with a low of 0.9153 and a high of 0.9253 before closing the day at 0.9176 in the New York session. Looking ahead, the RBA begin there two day meeting today with a decision due tomorrow.

·Gold (XAU) fell over $25 per ounce as oil prices also declined. XAU traded with a low of 924.00 and a high of 950.50

TECHNICAL COMMENTARY

·Euro – 1.5785

Initial support at 1.5584 (Mar 26 low) followed by 1.5408 (Mar 25 low). Initial resistance is now located at 1.5833 (Mar 18 high) followed by 1.5904 (Mar 17 low).

·Yen – 99.15

Initial support is located at 98.89 (Mar 26 low) followed by 98.46 (Mar 20 low). Initial resistance is now at 100.33 (Mar 26 high) followed by 101.04 (Mar 25 high)

·Pound – 1.9935

Initial support at 1.9927 (Mar 26 low) followed by 1.9849 (Mar 25 low). Initial resistance is now at 2.0111 (Mar 26 high) followed by 2.0145 (61.8% retracement of the 2.0398 to 1.9737)

·Australian Dollar – 0.9155

Initial support a 0.9122 (Mar 26 low) followed by 0.9073 (Mar 25 low). Initial resistance is now at 0.9243 (Mar 26 high) followed by 0.9290 (61.8% retracement of the 0.9499 to 0.8953 decline)

·Gold – 928.10

Initial support at 934.80 (Mar 26 low) followed by 912.02 (Mar 25 low). Initial resistance is now at 952.0 (Mar 26 high) followed by 954.03 (38.2% retracement of the 1032.50 to 905.03 decline)