Australian FOREX Daily Outlook 13/07/2007

EURUSD reaches another record high of 1.3799. BoJ hold rates giving the all clear for carry trades and Japanese crosses.

CURRENCY TRADING SUMMARY –13 JULY 2007 (00:30GMT)

• U.S. Dollar Trading (USD) continued to be exposed to bearish sentiment as further discomfort in the US Sub-Prime Mortgage and Credit Markets continue to dampen the currency’s outlook. In U.S. share markets, the NASDAQ was up by 49.94 points (+1.88%) whilst the Dow Jones jumped to 283.86 points (+2.09%). Crude oil ended the day up by US$0.14 a barrel to US$72.64. Looking ahead, the week in the US markets will end with the release of June Retail Sales (Forecast: 0.2%, Previous: 1.3%). Other key data out of the U.S. will be in the shape of Michigan Sentiment survey (Forecast: 86, Previous: 85.3)

• The Euro (EUR) reached a fresh all time high for the third successive session on the back of a broadly weaker dollar. In data specific news GDP (Q1) out of the EU came in slightly lower than expectations, yet did little to persuade markets otherwise. Industrial Production for the month of May had come in slightly higher than consensus at 1.00% (Forecast: 0.9%). Overall the EURUSD traded with a range of a low 1.3742 and a high of 1.3799 before closing the day at 1.3786 in the New York session.

• The Japanese Yen (JPY) saw plenty of focus surround the BoJ interest rate announcement, which failed to surprise anyone as the central bank kept the rate on hold at 0.5%. Although reports suggested that the 9 member’s voters voted for an 8 to 1 vote to sustain the cash rate, with one member voting for a rate hike. The Japanese Yen continued to fell pressure with ongoing desire for risky one way bets, highlighted by EURJPY reaching a fresh new high of 168.87 and GBPJPY at 248.76. Overall the USDJPY traded with a range of a low 121.83 and a high of 122.60 before closing the day at 122.43 in the New York session.

• The Sterling (GBP) eased slightly from recent 26 year highs amidst investor profit taking. Overall the GBPUSD traded with a low of 2.0270 and a high of 2.0366 before closing the day at 2.0296 in the New York session.

• The Australian Dollar (AUD) remained steady despite an increase in Unemployment Rate to 4.3% (June) from the previous 4.2%. Although subject to an initial sell off, the AUD was quick to receive support above key levels of 0.8600 to continue its bullish outlook. Overall the AUDUSD traded with a range of a low 0.8604 and a high of 0.8654 before closing the day at 0.8653 in the New York session. The Kiwi Dollar released its Retail Sales early Asian session on Friday, significantly higher than expectations at 1.2% for the month May (Forecast: 0.4%, Previous: -1.2%) causing initial support to the NZDUSD, pushing the currency pair towards key Psychological levels of 0.7900.

• The Canadian Dollar (CAD) saw the USDCAD fall as BoC officials said that parity with the USD was inevitable. Overall, the USDCAD traded with a range of a low 1.0450 and a high of 1.0555 before closing the day at 1.0454 in the New York session.

• Gold (XAU) rallied to a month high following a weaker USD. Gold traded with a low of 661.25 and a high of 669.25

CURRENCY PAIR IN FOCUS

• GBP/JPY Correction in GBP was absorbed by the push to record highs in EURJPY, resulting in keeping the GBPJPY steady at highs. Overall the GBPJPY traded with a range of a low 247.74 and a high of 248.76 before closing the day at 248.49.

TECHNICAL COMMENTARY

• Euro 1.3785

Initial support at 1.3741 (July 12 low) followed by 1.3592 (Jul 10 low). Initial resistance is now located at 1.3799 (Jul 12 trend high) followed by 1.3852 (Open + (Last weeks range * 1.618).

• Yen 122.55

Initial support is located at 120.76 (Jun 8 reaction low) followed by 120.15 (May 16 low). Initial resistance is now at 123.68 (Jul 7 high) followed by 123.96 (Jun 25 high)

• Pound – 2.0285

Initial support at 2.0243 (Jul 11 low) followed by 2.0120 (Jul 10 low). Initial resistance is now at 2.0365 (Jul 11 trend high) followed by 2.0367 (Jul open + (Jun range *0.618)

• Australian Dollar – 0.8665

Initial support a 0.8565 (Jul 10 low) followed by 0.8487 (Jul 2 low). Initial resistance is now at 0.8700 (Round number resistance) followed by 0.8731 (0.8163 plus 0.7414-0.7982)

• Gold – 666.60

Initial support at 658.90 (Jul 10 low) followed by 653.80 (Jul 9 low). Initial resistance is now at 669.40 (Jul 12 high) followed by 674.19 (Jun 4 low)