Australian FOREX Daily Outlook 09/10/2007

EU officials watch USD attentively. Minutes of the September 18 FOMC meeting released

CURRENCY TRADING SUMMARY –09 OCTOBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) advanced against a basket of currencies as speculators trimmed bets on the Federal Reserve reducing borrowing costs at the end of the month. With a number of markets closed the USD gained mainly on the back of other majors. In U.S. share markets the NASDAQ was up by 7.05 points (+0.25%) whilst the Dow Jones fell -22.28 points (-0.16%). Crude oil fell substantially by US$2.20 a barrel to US$79.02. Looking ahead, much emphasis will be placed on the FOMC minutes for the September 18 meeting, in which the Central Bank cut rates aggressively by 0.50 points.

·The Euro (EUR) was one of the worst performing currencies on Monday following ongoing rhetoric from EU officials regarding recent strength in the currency. Although no determined course of action was addressed on Tuesday, general consensus shows that Euro resembling economic fundamentals of the bloc of nations, whilst reference to the dollars weakness was also made a mention. Overall the EURUSD traded with a range of a low 1.4045 and a high of 1.4153 before closing the day at 1.4050 in the New York session.

·The Japanese Yen (JPY) eased by 0.50% against the USD on Monday despite both respective markets being closed due to market holidays as speculators had recovered their appetite for risky carry trades. Overall the USDJPY traded with a range of a low 116.95 and a high of 117.61 before closing the day at 117.36 in the New York session.

·The Sterling (GBP) fell against the dollar on speculation slowing economic growth will prompt the Bank of England to lower interest rates early next year. Overall the GBPUSD traded with a low of 2.0342 and a high of 2.0426 before closing the day at 2.0350 in the New York session. Looking ahead, key data out of the UK will be released in the form of Trade Balance with forecasts that the figure will narrow from -7.06 bln to -6.80 bln for the month of August.

·The Australian Dollar (AUD) paired its gains overnight in which the Aussie was well supported as high yielding currency in a low liquidity Asian session of trading. Overall the AUDUSD traded with a low of 0.8938 and a high of 0.9033 before closing the day at 0.8944 in the New York session.

·The Norwegian Krone (NOK) stayed near a 4 1/2- year high against the Euro after posting a seventh week of gains. The USDNOK traded with a low of 5.3952 and a high of 5.4715.

·Gold (XAU) fell after the dollar advanced against the Euro, reducing the appeal of the precious metals as alternative investments. XAU traded with a low of 731.85 before and 742.30.

TECHNICAL COMMENTARY

·Euro 1.4035

Initial support at 1.4033 (Oct 5 low) followed by 1.3963 (Sep 20 low). Initial resistance is now located at 1.4160 (Oct 5 high) followed by 1.4200 (61.8% retracement 1.4282 to 1.4068 &amp Oct 3 high at 1.4201)

·Yen 117.15

Initial support is located at 116.28 (Oct 5 low) followed by 115.29 (Oct 2 low). Initial resistance is now at 117.44 (Oct 8 high) followed by 117.88 (50% retracement 124.15 to 111.61 decline).

• Pound – 2.0345

Initial support at 2.0279 (Oct 4 low) followed by 2.0260 (38.2% retracement of the 1.9880 to 2.0495 advance). Initial resistance is now at 2.0444 (Oct 3 high) followed by 2.0495 (Oct 1 high)

• Australian Dollar – 0.8950

Initial support a 0.8866 (Oct 5 low) followed by 0.8795 (Oct 4 low). Initial resistance is now at 0.9034 (Oct 8 trend high) followed by 0.9052 (June 1984 high).

• Gold – 730.70

Initial support at 727.50 (Oct 5 low) followed by 721.30 (Oct 4 low). Initial resistance is now at 744.07 (Oct 5 high) followed by 747.85 (Oct 1 trend high)