Australian FOREX Daily Outlook 07/12/2007

BoE cut rates as ECB hold. Non-Farm Payrolls scheduled for release.

CURRENCY TRADING SUMMARY –07 DECEMBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) was mixed versus a number of majors, in what proved to be a volatile session. In U.S share markets the NASDAQ was up 42.67 points (+1.6%) whilst the Dow Jones was also up by 174.93 points (+1.3%). Crude oil gained considerably to close higher at US$90.63, up by US$3.14. Looking ahead, plenty of attention being placed on Non Farm Payrolls.

·The Euro (EUR) rallied as the ECB held rates at 4.00%, whilst Trichet mentioned “strong short-term upward pressure on inflation”. EURUSD traded with a low of 1.4520 and a high of 1.4652 before closing the day at 1.4631 in the New York session.

·The Japanese Yen (JPY) fell as investors returned to the carry trade on expectations a U.S. government plan to stem sub-prime mortgage defaults will boost bank profits. USDJPY traded with a low of 110.64 and a high of 111.46 before closing the day at 111.43.

·The Sterling (GBP) reversed its decline against the dollar as investors judged it had fallen too far, after the Bank of England cut interest rates for the first time in more than two years. Policy makers lowered the U.K. lending rate by a quarter-point to 5.5 percent. Britain’s nine-member Monetary Policy Committee, led by Governor Mervyn King, said inflation is likely to slow as higher credit costs hurt economic growth. GBPUSD traded with a low of 2.0183 and a high of 2.0311 before closing the day at 2.0276.

·The Australian Dollar (AUD) was range bound during the Asian session, before sturdy stock prices prompted investors to return to carry trades. Overall the USDJPY traded with a low of 0.8693 and a high of 0.8780 before closing the day at 0.8774.

·Gold (XAU) rose touching a week high. XAU traded with a low of 785.70 and a high of 805.35.

TECHNICAL COMMENTARY

·Euro – 1.4640

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 – 111.40

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 – 2.0260

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 – 0.8780

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 – 802.60

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)