Australian FOREX Daily Outlook 06/09/2007

US Shares fall, USD weakens as pending home sales disappoints.

CURRENCY TRADING SUMMARY –06 SEPTEMBER 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was generally weaker against major currencies as pending home sales disappointed posting a -12.2% result compared to a -2% estimate. ADP payrolls came in at +38k the smallest increase since June 2003. The US Beige Book was somewhat more upbeat noting the tightening of credit conditions but the limited spill-over effect into other sectors. In the US share markets, the NASDAQ fell by 24pts (-0.9%), whilst the Dow Jones gave up 143pts (-1.1%). Crude oil rose by US65c to US$75.73 a barrel on fears that US inventories have fallen. Looking ahead, non-manufacturing ISM data is due out later today.

• The Euro (EUR) strengthened against the USD on the back of the weak data releases from the US. PMI services for the Eurozone came in almost on expectation but retail sales were disappointing falling to a 0.1% rise from a 0.3% estimate. Overall, the EURUSD traded with a range of a low of 1.3569 and a high of 1.3672 before closing the day at 1.3653 in the New York session. Looking ahead, The ECB will announce interest rates today, with the market expecting rates steady at 4.0%.

• The Japanese Yen (JPY) strengthened against the greenback, benefiting from weak US data and taking its cue from other majors. Overall the USDJPY traded with a range of a low 114.99 and a high of 116.48 before closing the day at 115.13 in the New York session.

• The Sterling (GBP) was also a beneficiary of US weakness edging up higher against the US dollar. PMI services in the UK came in at 57.6 compared to a forecast of 56.5. Overall the GBPUSD traded with a low 2.0045 and a high of 2.0225 before closing the day at 2.0203 in the New York session. Looking ahead, Manufacturing production and the BoE interest rate decision are due out today.

• The Australian Dollar (AUD) was stronger in trading yesterday, initially receiving a boost from an unchanged interest rate policy from the RBA. The central bank kept rates on hold at 6.5% as expected. Overall, the AUDUSD traded with a low of 0.8186 and a high of 0.8286 before closing the day at 0.8224 in the New York session. Looking ahead, Aussie unemployment is due out today.

• Gold (XAU) fell by US80c an ounce to US$680.70 as investors sought safe haven assets such as government bonds amid the weak US data releases.

TECHNICAL COMMENTARY

• Euro 1.3640

Initial support at 1.3552 (Sep 4 low) followed by 1.3534 (Aug 23 low). Initial resistance is now located at 1.3719 (Aug 31 high) followed by 1.3842 (Aug 6 reaction high).

• Yen 115.00

Initial support is located at 115.00 (Sep 5 low) followed by 113.85 (Aug 29 low). Initial resistance is now at 116.75 (Aug 27 high) followed by 117.15 (Aug 23 high and key near-term resistance).

• Pound – 2.0190

Initial support at 2.0044 (Sep 5 low) followed by 2.0 (Psychological round number). Initial resistance is now at 2.0233 (Aug 31 high) followed by 2.0272 (61.8% retracement of the 2.0656 to 1.9652 decline)

• Australian Dollar – 0.8200

Initial support a 0.8106 (Aug 31 low) followed by 0.8051 (Aug 29 low). Initial resistance is now at 0.8288 (Aug 28 high) followed by 0.8300 (Round number resistance).

• Gold – 682.50

Initial support at 661.70 (Aug 29 low) followed by 657.70 (Aug 24 low). Initial resistance is now at 683.4 (Sep 4 high) followed by 687.8 (Jul 24 high)