Australian FOREX Daily Outlook 01/05/2007

USD rallies before poor data hinders its gains. Manufacturing ISM key data release as RBA begin their two day meeting.

CURRENCY TRADING SUMMARY –01 MAY 07 (23:30GMT)

• U.S. Dollar Trading (USD) saw the greenback end the month of April battered, with the dollar index falling by 1.9% for the month, the biggest monthly decline since November 2006. On the data front, poor figures showed a further indication of a slowing economy, with Core PCE and Chicago PMI both coming in softer than expected. In US share markets, the NASDAQ fell by 32.12 points (-1.25%) whilst the Dow Jones also fell by 58.03 (-0.44%). Crude oil fell by US$0.28 a barrel to US$65.43. Looking ahead, Pending Home Sales will be watched cautiously with so much attention being placed on the housing sector, as economists are expecting a figure of 0.2% (Prior: 0.7%). More importantly Manufacturing ISM will also be made public today with a slightly better figure forecasted at 51 (Prior: 50.9)

• The Euro (EUR) initially weakened as investors squared off profits early in the European session, from the all time record high seen last week. Data, in the form of CPI, came in on consensus and consumer confidence came a little worse than first thought at -4 (Forecast: -3). Overall, the Euro traded with a range of a low 1.3589 and a high of 1.3679 before closing the day at 1.3651 in the New York session. Looking ahead, as market holidays are present for many Euro Zone nations thin trading is expected.

• The Japanese Yen (JPY) traded sideways for much of the session. Overall the JPY traded with a range of a low 119.15 and a high of 119.76 before closing the day at 119.53 in the New York session.

• The Sterling (GBP) eased against at broadly firmer USD, before rebounding later on in the session. On the data front, house prices rose 6.8 percent on the year in April, the fastest rate since June 2003. The data did little to change expectations of a Bank of England rate rise to 5.5 percent next week, which would be its fourth hike since last August, but supported economists’ forecasts that May’s hike could be the last. Overall, the GBP traded with a range of a low of 1.9842 and a high of 2.0034 before closing the day at 1.9994 in the New York session. Looking ahead, Manufacturing PMI is made public with the index expected at 54.0 (Prior: 54.4).

• The Australian Dollar (AUD) was range bound for much of the session, rallying in the early European session. Overall the AUD traded with a low of 0.8258 and a high of 0.8330 before closing the day at 0.8308 in the New York session.

• The Turkish Lira (TRY) lost as much as 4.5 percent, weakening to 1.3930 against the dollar, before closing at 1.3600 on the inter-bank market versus Friday’s close of 1.3340. Turkey‘s financial markets tumbled on Monday amid political instability triggered by a court challenge to the presidential election process and a mass demonstration against the ruling party.

• The Canadian Dollar (CAD) Lifted by strong economic data, merger-related interest and rising commodity prices, the Canadian dollar is once again reveling in the attention of momentum players. The Canadian currency is now sitting just shy of its highest level since January 1978. Overall the CAD traded with a range of a low 1.1050 and a high of 1.1196 before closing the day at 1.1088 in the New York session.

• Gold (XAU) Gold rose by US$1.70 an ounce to US$683.50 largely on the back of a weaker dollar.