Australian FOREX Daily Outlook 04/09/2008

Dollar surges again before taking breath ahead of ECB, BOE

CURRENCY TRADING SUMMARY – 4th September 2008 (00:30GMT)

·U.S. Dollar Trading (USD) traded higher as commodities took another belting before paring its gains. US equities were mixed as cheaper oil was offset by economic downturn fears. US economic data was stronger than expected with July factory Orders +1.3% (1.0% expected). In the U.S. share markets, the NASDAQ was down 15 points (-0.66%) and the Dow Jones was up 15 points (-0.14%). Crude Oil closed down $0.36 ending the New York session at $109.35 per barrel. Looking ahead, August ADP Employment is expected at -30K down from 9K in July.Weekly Jobless Claims are forecast 425K. August Non-Manufacturing PMI is expected at 49.4.

·The Euro (EUR) poor data out of the Eurozone made sure that the downside continued with year lows tested just under the 1.44 level. July Retail sales fell more than expected at -0.4% which combined with revised lower June sales left the Euro on the back foot. Failure to break the year lows resulted in a recovery towards opening levels. Overall the EUR/USD traded with a low of 1.4385 and a high of 1.4532 before closing the day at 1.4490 in the New York session. Looking ahead, July German Industrial Orders are seen rebounding after falling -2.9% in June. The ECB September Rate decision widely expected to remain at 4.25%. Attention will be on President Trichet statement after the decision.

·The Japanese Yen (JPY) traded in a fairly tight range as weakness in crosses were offset by USD strength. AUD/JPY traded briefly below the Key 90 level before recovering well. Overall the USDJPY traded with a low of 108.11 and a high of 109.09 before closing the day around 108.70 in the New York session.

·The Sterling (GBP) continued to weaken on USD strength, testing the downside. Reports that UK banks may have used more than twice the emergency funding as previously thought also weighed on the pound. The August Services PMI jumped to 49.2 from 47.4 in July. Overall the GDP/USD traded with a low of 1.7667 and a high of 1.7839 before closing the day at 1.7770 in the New York session. Looking ahead, Bank of England is expected to hold at 5.00%. Also released is the Halifax House Price Index forecast to fall -1.8%.

·The Australian Dollar (AUD) After weaker than expected Q2 GDP at 0.3% the Aussie experienced new year lows after experiencing substantial downside pressure. A broad based recovery was able to be initiated as Gold crept higher and Oil bounced off lows. Overall the AUD/USD traded with a low of 0.8233 and a high of 0.8404 before closing the US session at 0.8350. UPDATE AUSTRALIAN JULY TRADE BALANCE -717 Million vs. +108 Million expected.

·Gold (XAU) came under pressure again at USD strengthened early in the day breaking below $800 before recovering to close above $800 an ounce. Overall trading with a low of USD$790.05 and high of USD$808.10 before ending the New York session at USD$801 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.4495

Initial support at 1.4385 (Sept 3 low) followed by 1.4366 (Jan 22 low). Initial resistance is now located at 1.4531 (Sept 3 high) at followed by 1.4599 (Sept 2 high).

·Yen – 108.15

Initial support is located at 107.63 (Sept 3 low) followed by 107.29 (Aug 1 low). Initial resistance is now at 109.18 (Sep 2 high) followed by 110.29 (Aug 25 high).

·Pound – 1.7740

Initial support at 1.7668 (Sep 3 low) followed by 1.7523 (Apr 17, 2006 low). Initial resistance is now at 1.7841 (Sep 3 high) followed by 1.8003 (Sept 3 high).

·Australian Dollar – 0.8340

Initial support at 0.8234 (Sept 3 low) followed by 0.8173 (Sep 10 2007 low). Initial resistance is now at 0.8535 (Sept 2 High) followed by 0.8586 (Sept 1 high).

·Gold – 802

Initial support at 789.74 (Sept 3 low) followed by 783.35 (Aug 15 low). Initial resistance is now at 808.9 (Sep 3 high) followed by 817.7 (Sep 2 high).