Australian FOREX Daily Outlook 04/04/2008

ISM Services boosts dollar leading into Non Farm Payrolls on Friday.

CURRENCY TRADING SUMMARY – 04 APRIL 2008 (00:30GMT)

·U.S. Dollar Trading (USD) overnight remained stable amongst all other major currencies in anticipation of Non Farm Payrolls, which is to be released on Friday. In data news, the ISM Non-Manufacturing report proved to be an improvement on expectations, coming in at 49.6, up 0.3 from last month. However, this is still below the key 50 point range indicating it is still contracting. Other news released overnight saw jobless claims surge from 38k to 407k, the highest rating in three years. In U.S share market news the NASDAQ was up a poultry 1.90 points to 2363.30 and the Dow Jones improved 20.20 points to 12626.03. Oil fell by US$1.00 a barrel to US$103.83 amid supply concerns. Looking ahead, the Non Farm Payrolls report is due out at 12:30GMT with forecasts suggesting -60, an improvement from last month’s -63. Jobs data remains the focus this week with Unemployment rate also being released for March with expectations of an increase to 5%, up from 4.8% from last month.

·The Euro (EURO) felt the pressure coming from retail sales results overnight, with a contraction in spending by -0.5% for the month of February after initial expectations of a rise by 0.2%. PMI services data released overnight saw a figure of 51.6 for the month of March, a reduction from 52.3 for February. The EURUSD traded at a high of 1.5697 and a low of 1.5511 before closing at 1.5676 in the New York session.

·The Japanese Yen (JPY) traded sideways due to absent data tracking equity markets. The USDJPY had a high of 102.95 and a low of 102.07, before closing at 102.35 in the New York session.

·The Sterling (GBP) was subject to PMI services data which saw it fall from 54 to 52.1 for the month of March, its lowest reading since November 2007 prompting traders to add to bets that the BoE may cut rates as early as next week. The GBPUSD traded at a high 1.9975 and a low of 1.975, before closing out at 1.9950 in the New York session.

·The Australian Dollar (AUD) grinded higher in the early part of Europe trading against the USD before pairing its gains. Friday morning Asian session, RBA Governor Stevens indicated there is a change in demand amongst consumers, although noting that inflation may peak at 4.0%, which is above their target of 2-3%, suggesting interest rates may yet be tightened through the course of 2008. The AUDUSD traded at a high of .9178 and a low of .9093, before closing at .9173 in the New York session. Looking ahead, Retail Sales figures to be released on Friday indicate a growth in spending by 0.3% for the month of March. UPDATE: Aussie retail sales disappoints coming in at -0.1%.

·Gold (XAU) rose by US$9.40 an ounce (1.0%) to US$909.60 finding appeal on growing uncertainty in the US economy.

TECHNICAL COMMENTARY

·Euro – 1.5665

Initial support at 1.5510 (Apr 3 low) followed by 1.5473 (76.4% retracement of the 1.5324 to 1.5896 advance). Initial resistance is now located at 1.5690 (April 3 high) followed by 1.5787 (Apr 1 high).

·Yen – 102.30

Initial support is located at 102.07 (Apr 3 low) followed by 101.52 (Apr 2 low). Initial resistance is now at 102.95 (Apr 3 high) followed by 103.59 (Mar 11 high).

·Pound – 1.9945

Initial support at 1.9760 (Apr 3 low) followed by 1.9722 (Mar 5 low). Initial resistance is now at 1.9979 (Mar 31 high) followed by 2.0090 (Mar 28 high).

·Australian Dollar – 0.9155

Initial support a 0.9024 (76.4% retracement of the 0.8953 to 0.9254 advance) followed by 0.8979 (Mar 24 low). Initial resistance is now at 0.9181 (Apr 3 high) followed by 0.9254 (Mar 27 high)

·Gold – 904.60

Initial support at 888.20 (Apr 3 low) followed by 873.00 (Apr 1 low). Initial resistance is now at 921.0 (Apr 1 high) followed by 940.60 (Mar 31 high).