Australian FOREX Weekly Outlook 07/04/2008

Weak Non-Farm Payrolls Solidifies Recession Woes. ECB and BoE scheduled for rate announcements.

7/04/08

last week’s currency trading review

The Dollar began the week on a surge however it was affected by another week of poor economic data coming out of the World’s biggest economy. The big data release for the week saw Non-Farm Payrolls increase to 80,000, pushing up the unemployment rate to 5.1%, up 0.3% from February. The other big news was in relation to the Fed’s chairman Ben Bernanke’s testimony on economic outlook where he highlighted the likely contraction in the economy for the first quarter, further heightening the likelihood of a recession. The Euro was hampered by worse than expected CPI, from 3.1% yoy to 3.5% yoy, causing the ECB to maintain its hawkish stance on interest rates. Retail Sales figures released saw an unexpected drop of -0.5% mom. The Euro closed last week at 1.5718 having opened at 1.5783. The Japanese Yen reflected news from the quarterly Tankan Survey which came at 11, below a forecast of 13 for the first quarter of 2008. The USDJPY closed at 101.78, after opening at 99.45. The GBP also fluctuated throughout the week following poor data results, which supports the view the BoE may cut rates when it meets this week. The GBPUSD opened at 1.9923 before closing at 1.9924. The AUD fell slightly through the week following poorer than expected Retail Sales figures of -0.1%. RBA’s Governor Stevens speech indicated there is a change in demand amongst consumers, justifying rates being held at 7.25%. He did concede however that inflation rates were still uncomfortably high at could peak at 4.0%. The Aussie Dollar ended the week at 09120 after opening at 0.9223

The forex trading week preview

In the States volatility is likely to continue throughout the week amid recession fears, a poor economic outlook and possible further interest rate cuts. The release of the minutes on Tuesday from the March FOMC meeting is likely to cause some action in an otherwise quiet week in terms of data releases. Some news to look out for is the Trade Balance figures (Thursday) and Import Prices (Friday). We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone the focus is on the ECB’s Thursday rate announcement and whether they will leave rates at 4.0% to maintain their stance on fighting inflation. Other commentary which may affect the Euro will come from ECB’s Bini Smaghi (Monday) and ECB’s Weber (Monday). On the data release side of things, Q4 Eurozone GDP is due out, along with Wholesale prices and PPI data out of Germany which will give an indication on the impact of inflation. In the UK the big news to come out will be the BoE’s rate announcement on Thursday with traders adding to bets the BoE may cut rates, despite the upward pressure on prices. Other news to be released this week is the Trade Balance figures (Thursday), Consumer Confidence (Tuesday) and House Prices (Monday). We will provide our previews and reviews of these data releases in the daily summary.

In Japan again the focus will be on the Central Bank and whether rates will be moved from their current levels of 0.5% following weak Tankan Survey results. Also noteworthy will be BoJ’s economic outlook to be released along with the rate announcement. Other data to be released is Japan’s Current Account Surplus on Wednesday. We will provide our previews and reviews of these data releases in the daily summary.

In Australia the Aussie Dollar can be expected to stay volatile given the current volatility in commodity prices, along with the poor economic data coming out from the States. Furthermore, all eyes will be on the Unemployment rate to be released on Friday with expectations of it maintaining its low levels. Other interesting releases coming out include Thursday’s Australian Labour Force data and Wednesday’s consumer confidence. We will provide our previews and reviews of these data releases in the daily summary.

KEY WEEKLY PIVOT LEVELS