Australian FOREX Daily Outlook 13/02/2008

UK inflation at seven month high, as US shares buoyed by Buffet offer.

CURRENCY TRADING SUMMARY – 13 FEBRUARY 2008 (00:30GMT)

·U.S. Dollar Trading (USD) was subject to moves in stock prices as growing confidence and reports billionaire investor Warren Buffet offered to assume troubled bond insurers’ liabilities, encouraged investors to buy risky assets. In what was otherwise a quiet day in terms of data, the USD was mixed against a number of majors. In U.S. share markets the NASDAQ was up by 97.07 points (+1.09%) whilst the Dow Jones was also higher by 133.40 points (+1.09%). Crude oil eased on hopes that oil supplies would not cease to the US from Venezuela, falling by US$0.69 a barrel to US$92.90. Looking ahead, Core Retail Sales out of the US will prove key to today’s market, with forecast lying at 0.2%, above the previous figures of -0.3% for the month of January.

·The Euro (EUR) rose to its highest level during the month, on the back of the German ZEW survey, which indicated that consumer confidence unexpectedly strengthened in the month of February, prompting the belief that the Eurozone economy would weather the effects of a U.S. economic slow down. The EURUSD traded with a low of 1.4497 and a high of 1.4615 before closing the day at 1.4591 in the New York session. Looking ahead, the EU industrial Production is expected to show a rebound of 0.6% for the month of December, from the previous -0.5%.

·The Japanese Yen (JPY) was sold off on comments made by Warren Buffet on bailing out bond insurers, spurring a rally in stocks. Overall the USDJPY traded with a low of 106.79 and a high of 107.53 before closing the day at 107.35 in the New York session. Heavy data day is scheduled for Japan, with corporate goods, Consumer confidence and Current Account all scheduled for release.

·The Sterling (GBP) U.K. inflation accelerated to a seven-month high in January on the back of soaring gasoline and food prices. Although the Sterling pound fell by 0.3% prior to the data release, it rallied shortly after, rebounding by 0.5%. Overall the GBPUSD traded with a low of 1.9446 and a high of 1.9633 before closing the day at 1.9620 in the New York session.

·The Australian Dollar (AUD) traded in a tight range, remaining firm above key 90 cent levels throughout the day. Overall the AUDUSD traded with a low of 0.9027 and a high of 0.9086 before closing the day at 0.9043 in the New York session.

·Gold (XAU) US gold futures fell 2 percent and were below $910 an ounce hurt by a sharp decline in bullion demand from top consumer India and profit-taking amid lower crude oil prices. XAU traded with a low of 904.60 and a high of 924.60.

TECHNICAL COMMENTARY

·Euro – 1.4585

Initial support at 1.4440 (Feb 7 low) followed by 1.4366 (Jan 22 reaction low). Initial resistance is now located at 1.4615 (Feb 12 high) followed by 1.4637 (38.2% retracement of the 1.4956 to 1.4440 decline).

·Yen – 107.35

Initial support is located at 105.71 (Jan 31 low) followed by 104.97 (Jan 23 low). Initial resistance is now at 107.66 (Feb 11 high) followed by 107.89 (Jan 28 high)

·Pound – 1.9595

Initial support at 1.9403 (Feb 11 low) followed by 1.9389 (Feb 7 low). Initial resistance is now at 1.9643 (Feb 12 high) followed by 1.9763 (Feb 5 high)

·Australian Dollar – 0.9035

Initial support a 0.8916 (Feb 8 low) followed by 0.8875 (Feb 7 low). Initial resistance is now at 0.9086 (Feb 12 high) followed by 0.9102 (Feb 4 high)

·Gold – 906.30

Initial support at 904.54 (Feb 12 low) followed by 897.00 (Feb 7 low). Initial resistance is now at 927.31 (Feb 11 high) followed by 936.80 (Feb 1 trend high)