Australian FOREX Daily Outlook 07/03/2008

XAU and Oil at record highs, Non Farm Payrolls due for release

CURRENCY TRADING SUMMARY – 07 MARCH 2008 (00:30GMT)

·U.S. Dollar Trading (USD) was mixed against a number of majors the market is expecting the Federal Reserve to cut interest rates by at least 50 basis points at this month’s FOMC meeting due to data pointing to a deteriorating economy. In U.S. share markets the NASDAQ was down by 52.31 points (-2.3%) whilst Dow Jones fell to -214.60 points (-1.75%). Crude oil traded at record highs of US$105.97, before ending at US$105.48. Non Farm Payrolls is the key piece of data on Friday.

·The Euro (EUR) The Euro rose to an all-time high against the US dollar after hawkish comments from the European Central Bank as they left rates unchanged at 4.0 percent, as expected. Although record oil prices, higher credit costs, and the Euro’s 17% gain versus the greenback in the past year has slowed economic growth in the Euro region, inflation is running at 3.2%, the fastest pace since the Euro’s debut in 1999. Overall the EURUSD traded with a low of 1.5263 and a high of 1.5379 before closing the day at 1.5376 in the New York session.

·The Japanese Yen (JPY) extended gains against the US dollar after US pending home sales were unchanged in January, doing little to alleviate investors’ worries over the slumping US economy. Overall the USDJPY traded with a low of 102.57 and a high of 104.00 before closing the day at 102.73 in the New York session

·The Sterling (GBP) hit the year’s high versus the dollar and eased from a record low against the Euro after the Bank of England kept its key interest rate at 5.25%. Like the US, however, the UK has begun showing signs of recession with a slowdown in household spending to 0.2%, the weakest in more than a year, and declining consumer confidence. Overall the GBPUSD traded with low 1.9896 and high of 2.0116 before closing the day at 2.0104 in the New York session.

·The Australian Dollar (AUD) was sold off against the USD as risk aversion, overall the AUDUSD traded with a low of 0.9244 and a high of 0.9378 before closing the day at 0.9253 in the New York session.

·The Canadian Dollar (CAD) rose against the greenback as oil and gold prices shot to record highs, supporting the commodity-linked currency, even though economic data showed domestic building permits fell in January. Overall the USDCAD traded with a low of 0.9813 and a high of 0.9885 before closing the day at 0.9869 in the New York session

·Gold (XAU) failed to follow above its latest record highs as power supply to Gold mines in South Africa was reinstated. Gold experienced a minor sell-off. XAU traded with a low of 965.50 and a high of 992.00

TECHNICAL COMMENTARY

·Euro – 1.5375

Initial support at 1.5146 (Feb 5 low) followed by 1.5074 (Feb 28 low). Initial resistance is now located at 1.5302 (Mar 5 high) followed by 1.5382 (1.4311 plus 0.618 of 1.3361 to 1.4967).

·Yen – 102.75

Initial support is located at 102.61 (Mar 3 low) followed by 101.67 (Jan 1995 reaction low). Initial resistance is now at 104.97 (Jan 23 high) followed by 105.39 (Feb 29 high)

·Pound – 2.0115

Initial support at 1.9722 (Feb 28 low) followed by 1.9644 (Feb 22 low). Initial resistance is now at 1.9975 (Feb 27 high) followed by 2.0000 (Round Number)

·Australian Dollar – 0.9305

Initial support a 0.9219 (Mar 4 low) followed by 0.9122 (38.2% retracement of the 0.8513 to 0.9499 advance). Initial resistance is now at 0.9421 (Mar 3 high) followed by 0.9499 (Feb 28 high)

·Gold – 982.40

Initial support at 957.20 (Mar 4 low) followed by 949.00 (Feb 27 low). Initial resistance is now at 991.00 (Mar 5 high) followed by 1000.00 (Round Number)