Australian FOREX Daily Outlook 02/03/2007

CURRENCY TRADING SUMMARY –02 MARCH 07 (23:30GMT)

• U.S. Dollar Trading (USD) was mixed on Thursday, with a better than expected ISM manufacturing index coming in at 52.3 (expected: 50) attributing to a surge against the Euro, up by 0.5%. Core PCE prices were also released to the public with data showing a rise coming in at 0.3% (expected: .2%). In US share markets the NASDAQ dropped by 11.94 (-0.49%) whilst the Dow Jones also dropped by 34.29 points (-0.28%). Crude Oil was up by US$.21 a barrel to US$62.00. Looking ahead, following a big slate of US data this week, Friday sees the release of the Michigan sentiment with expectations at 93.8 slightly higher than the previous 93.3.

• The Euro (EUR) slid against the USD on the back of strong US data. Although PMI manufacturing came in as expected at 55.6, it did little to stop further sliding of the Euro. Overall the Euro traded with a low of 1.3155 and a high of 1.3241 before closing the day at 1.3195.

• The Japanese Yen (JPY) strengthened against the USD on the back of a Global sell-off in markets. The dollar fell 0.7%, its lowest since mid-December. The yen shot higher in early New York session as a sharp fall in US stock prices upon opening caused some investors to buy back Japanese currency that had borrowed to finance bets on risky assets. The dollar has dived almost 3 % against the yen this week, on track for its worst weekly performance in around 14 months. Overall the JPY traded with a low of 116.96 and a high of 118.87 before closing at 117.58 in the New York session. Looking ahead Core CPI is set for release with expectations being 0.0% down on the previous 0.1% rise. UPDATE: CPI at 0.0%

• The Sterling (GBP) bounced back from early losses against the Euro and the Dollar as British manufacturing (Actual: 55.4, forecasted: 53) data came in stronger than expected increasing the likelihood an interest rate rise by the BoE. Overall, the GBP traded within a range of a low 1.9555 and a high of 1.9652 before closing the day at 1.9601 in the New York session.

• The Australian Dollar (AUD) eased against the USD trading within a range of a low 0.7841 and a high of 0.7888 before closing the day at 0.7853. Looking ahead, Friday will prove to be volatile day for the AUD with key event risks in the form of Retail sales (expected: 0.5%, previous: 0.3%) and Current Account Balance (expected -14 bln, previous: -12.08

• Gold (XAU) continued to surrender gains, dropping by US$6.00 an ounce to US$666.50 largely on the back of investors taking profit in volatile environment.

• The Czech Crown (CZK) Czech central bank policymakers held interest rates steady for the fifth month running on Thursday and reinforced market impressions that benign price pressures require no urgent policy tightening. The crown firmed 0.3% to a one-week high around 28.14 against the Euro.