Australian FOREX Daily Outlook 12/06/2007

RBNZ intervene to sell off the Kiwi Dollar, causing a 1.8% drop. Heavy data day for UK with CPI, Trade Balance and Retail Sales.

CURRENCY TRADING SUMMARY –12 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) continued to rally for the fourth consecutive session against the Euro, with the benchmark 10 year Treasury note extending its biggest weekly climb in almost two years. With little data out most other majors trade in a tight range for most of the session. In U.S. share markets, the NASDAQ fell by -1.39 (-0.05%) whilst the Dow Jones was relatively unchanged only up by 0.57 points (0.00%). Crude oil rose by US$1.21 a barrel to US$65.97.

• The Euro (EUR) eased once again against the USD on the back of a broadly stronger dollar. Overall, the EURUSD traded with a low of 1.3332 and a high of 1.3375 before closing the day at 1.3356 in the New York session. In data news, the Eurozone industrial production figures are scheduled for release with market expectations at 0.2% for the month April (Previous: 0.4%)

• The Japanese Yen (JPY) was relatively flat against the USD. The Japanese Yen did however benefit from the NZD sell off yesterday, gaining 1.5% down to 91.30. In data news, GDP came in on consensus. Overall, the USDJPY traded with a range of a low 121.52 and a high of 121.84 before closing the day at 121.79 in the New York session.

• The Sterling (GBP) eased against the dollar on Monday, extending looses seen last week after a surge in US government bond yields boosted the greenback broadly. Overall the GBP traded with a range of a low 1.9654 and a high of 1.9702 before closing the day at 1.9694 in the New York session. Looking ahead, key CPI figures are due on Tuesday, as investors look for consolidation in inflation levels in line with BoE projections (Forecast: 2.6%, Previous: 2.8% for the year on year. In other data news the UK Trade Balance is also scheduled for release along with Retail Sales.

• The Australian Dollar (AUD) was largely range bound for much of Monday’s session, as markets were closed for public holiday. Overall the AUDUSD traded with a range of a low 0.8394 and a high of 0.8446 before closing the day 0.8435 in the New York session.

• The New Zealand Dollar (NZD) posted its largest decline in more than a year after the RBNZ sold its own currency, but the impact on carry trades was limited. The NZDUSD fell 1.8% to $0.7500, well off highs of $0.7640 reached on Friday, the strongest level since the currency was floated in 1985. Analyst say the intervention increased the risk of popular carry trades, but the limited effect on funding currencies suggested it was insufficient to dampen investor risk appetite.

• Gold (XAU) rebounded on Monday gaining US$8.70 an ounce to US$659.00