Australian FOREX Daily Outlook 11/10/2007

USD weakness with focus on BoJ rate announcement.

CURRENCY TRADING SUMMARY –11 OCTOBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) eased once again for the second consecutive session although plenty of market movements traded in a technical range. In what was otherwise a quiet data day, U.S. share markets the NASDAQ was up 7.7 points (+0.27%) whilst the Dow Jones dropped by 85.94 points (-0.61%). Crude oil rose by US$1.04 a barrel to US$81.30. Looking ahead key data out of the U.S. is in the form of Trade Balance in which markets forecast the deficit to narrow from the previous -59.25 bln, to -59 billion for the month of August.

·The Euro (EUR) gained as industrial growth in both France and Italy reduced speculation the currency’s strength will be singled out at the Group of Seven meeting next week. Overall the EURUSD traded with a range of a low 1.4094 and a high of 1.4172 before closing the day at 1.4132 in the New York session. GDP (Q2) data is released out of the Euro zone on Thursday with forecast at 0.2%/3.2% for the m/m and y/y respectively.

·The Japanese Yen (JPY) was up 0.2% during the session against the USD despite falling against the Euro, in which the EURJPY cross traded at a 2 ½ month high at 166.25. Overall the USDJPY traded with a low of 116.97 and a high of 117.54 before closing the day at 117.26 in the New York session. Looking ahead, plenty of focus will surround today’s BoJ rate announcement in which the expectations that borrowing costs will remain at the lowest level of all industrialized nations at 0.5%

·The Sterling (GBP) was volatile on Wednesday as BoE Governor Mervyn King indicated the Central Banks reluctance to lower interest rates to shield lenders from increased credit costs, and pledged to fight inflation, despite predicted more turmoil in financial markets. Overall the GBPUSD traded with a range of a low 2.0368 and a high of 2.0476 before closing the day at 2.0411 in the New York session.

·The Australian Dollar (AUD) eased from highs just above the key 90 cent levels in technical market. Overall the AUDUSD traded with a range of a low 0.8941 and a high of 0.9011 before closing the day at 0.8968 in the New York session. Looking ahead, plenty of emphasis will be placed on Labor force data on Thursday in which forecast are at unemployment to come in unchanged from the previous at 4.3% for the month of September.

·Gold (XAU) rose as a decline in the value of the dollar boosted the appeal of the precious metals as alternative investments. XAU traded with a low of 737.80 and a high of 745.80.

TECHNICAL COMMENTARY

·Euro 1.4140

Initial support at 1.4015 (Oct 9 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 117.61 (Oct 8 high) followed by 117.88 (50% retracement 124.15 to 111.61 decline).

• Pound – 2.0375

Initial support at 2.0257 (Oct 9 low) followed by 2.0188 (50% 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 – 0.8990

Initial support a 0.8914 (Oct 9 low) followed by 0.8866 (Oct 5 low). Initial resistance is now at 0.9034 (Oct 8 trend high) followed by 0.9052 (June 1984 high).

• Gold – 741.60

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)