Australian FOREX Daily Outlook 06/05/2008

ISM Services expands as oil trades at record highs.

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

·U.S. Dollar Trading (USD) gave up much of its previous week gains despite further positive data out of the US in regards to Services ISM coming above expectations at 52 with markets forecasting a figure of 49.8. Critically the figure was above key 50 levels indication that the sector had expanded for the month of April. In U.S. share markets the NASDAQ fell by 12.87 points (-0.52%) whilst the Dow Jones also ended lower by -88.66 points (-0.68%). Crude oil traded with a record high of US$120.36 before ending the day up a total of US$3.65 a barrel to US$119.97 with supply concerns remaining in Nigeria.

·The Euro (EURO) rebounded from its multi-week lows it is perceived European Central Bank is winning Europe‘s political leaders over to its policy of focusing on fighting inflation even as economic growth slows. Overall the EURUSD traded with a low of 1.5425 and a high of 1.5519 before closing the day at 1.5496 in the New York session.

·The Japanese Yen (JPY) tracked other majors as Japanese markets remained closed for the day. Upon positive readings in US ISM services the USDJPY came within a two month high of 105.62 and a low of 104.74 before closing the day at 104.79 in the New York session. Japanese markets will remain closed on Tuesday.

·The Sterling (GBP) although saw markets closed for a bank holiday, remained pressured ahead of the BoE rate announcement this week, although widely expected to hold, some speculation persists that there is a slight chance of a rate cut. Overall the GBPUSD traded wit ha low of 1.9657 and a high of 139783 before closing the day at 1.9717 in the New York session.

·The Australian Dollar (AUD) rallied ahead of an RBA rate announcement, and was further boosted by rebounding commodity and energy prices. Overall the AUD and the USD traded with a low of 0.9344 and a high of 0.9466 before closing the day at 0.9465 in the New York session.

·Gold (XAU) recovered trading towards key resistance levels of 873.00. XAU traded with a low of 859.55 and a high of 872.20

TECHNICAL COMMENTARY

·Euro – 1.5520

Initial support at 1.5361 (May 2 low) followed by 1.5342 (Mar 24 reaction Low). Initial resistance is now located at 1.5520 (May 5 high) followed by 1.5661 (Apr 29 high).

·Yen – 104.75

Initial support is located at 104.34 (May 2 low) followed by 103.23 (Apr 29 low). Initial resistance is now at 105.70 (May 2 high) followed by 105.71 (61.8% retracement of 114.66 to 95.76 decline).

·Pound – 1.9735

Initial support at 1.9657 (May 5 low) followed by 1.9624 (Apr 30 low). Initial resistance is now at 1.9913 (Apr 29 high) followed by 1.9966 (Apr 28 high).

·Australian Dollar – 0.9465

Initial support a 0.9272 (Apr 18 low) followed by 0.9249 (50% retracement of the 0.8953 to 0.9544 decline). Initial resistance is now at 0.9473 (Apr 30 high) followed by 0.9496 (Apr 24 high).

·Gold – 872.65

Initial support at 845.87 (May 2 low) followed by 945.80 (Former resistance Nov 8). Initial resistance is now at 881.90 (May 1 high) followed by 896.50 (Apr 25 high).