Australian FOREX Daily Outlook 05/12/2007

Bank of Canada cut rates by 25 basis points, as RBA hold

CURRENCY TRADING SUMMARY –05 DECEMBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) was mixed against a number of majors on Tuesday, trading on the back of other currencies, due to little data released out of the U.S. In share market news the NASDAQ was down by -17.3 points (-0.66%) whilst the Dow Jones also fell by -65.84 points (-0.49%). Crude oil eased by US$0.95 a barrel to US$88.36 ahead of an OPEC meeting Wednesday. Key data out of the U.S. on Wednesday includes Services ISM and the ADP employment report.

·The Euro (EUR) broke through key levels of 1.4700 on Tuesday. In data news, PPI for the month of October was above expectations coming in at 0.6%/3.3% for the m/m and y/y. Overall the EURUSD traded with a low of 1.4635 and a high of 1.4767 before closing the day at 1.4764 in the New York session. A heavy slate of data is scheduled for the Eurozone with PMI services, Retail Sales and President Trichet scheduled to speak.

·The Japanese Yen (JPY) was able to gain as the carry trades continued to look less attractive. Overall the USDJPY traded with a low of 109.56 and a high of 110.53 before closed the day at 109.90 in the New York session.

·The Sterling (GBP) fell the most in almost three weeks against the Euro on speculation that the Bank of England will cut interest rates on Thursday. GBPUSD traded with a low of 2.0561 and a high of 2.0673 before closing the day at 2.0570 in the New York session. Consumer confidence and PMI Services are set for release out of the UK on Wednesday.

·The Australian Dollar (AUD) was range bound for much of the session weighed upon by poor retail sales figures for the month of October. Overall the AUDUSD traded with a low of 0.8711 and a high of 0.8812 before closing the day at 0.8737 at the end of the New York session. The RBA chose to keep rates on hold at 6.75% on Wednesday morning.

·The Canadian Dollar (CAD) saw the BoC surprise the market by cutting rates by 25 basis points. Overall the USDCAD traded with a low of 0.9990 and a high of 1.0152 before closing the day at 1.0145 in the New York session.

·Gold (XAU) traded higher for the second consecutive session on views that the Federal Reserve would be inclined to cut rates next week. XAU traded with a low of 787.30 and a high of 805.50

TECHNICAL COMMENTARY

·Euro – 1.4760

Initial support at 1.4617 (Nov 19 low) followed by 1.4602 (61.8% retracement of the 1.4010 to 1.4968 advance). Initial resistance is now located at 1.4859 (Nov 28 high) followed by 1.4908 (Nov 27 high).

·Yen – 109.85

Initial support is located at 109.48 (Nov 28 low) followed by 108.27 (Nov 26 low). Initial resistance is now at 111.33 (38.2% retracement of the 117.95 to 107.23 decline) followed by 111.14 (Nov 14 high)

·Pound – 2.0565

Initial support at 2.0534 (Nov 30 low) followed by 2.0519 (Nov 23 low). Initial resistance is now at 2.0833 (Nov 28 high) followed by 2.0846 (Nov 14 high)

·Australian Dollar – 0.8725

Initial support a 0.8776 (Nov 29 low) followed by 0.8720 (Nov 28 low). Initial resistance is now at 0.8921 (Nov 28 high) followed by 0.8939 (38.2% retracement of the 0.9400 to 0.8654 decline)

·Gold – 803.80

Initial support at 778.90 (Nov 30 low) followed by 773.0 (Nov 20 low). Initial resistance is now at 808.05 (Nov 29 high) followed by 815.70 (November 27 high)