Australian FOREX Daily Outlook 19/02/2007

CURRENCY TRADING SUMMARY –19 FEBRUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) continued its wave of poor economic data on Friday with Housing Starts weaker than expected coming in at 1.408 mln significantly lower than the 1.6 mln forecasted, whilst Core PPI was unchanged at 0.2%. Furthermore, it was a considerably poor figure in Consumer Confidence (Michigan Preliminary) that generated most interest, advancing the case for the Federal Reserve to cut interest rates later this year. Regardless the greenback firmed on profit-taking ahead of a long U.S. holiday weekend, reversing the losses it suffered earlier after poor data. In other markets, the NASDAQ dropped by 0.79 points (-0.03%) whilst the Dow Jones was up 2.56 points (0.02%). Crude oil rose on Friday by US$1.18 a barrel to US$59.17. Looking ahead, the Monday sees US markets closed for Presidents Day.

• The Euro (EUR) edged slightly down on Friday, with the Trade Balance coming in as expected at 2.5 bln for the month of December. The Previous month was revised higher at 5.1 bln. Overall the Euro traded within a range of a low 1.3094 and a high of 1.3146 before closing at 1.3134 in the New York session.

• The Japanese Yen (JPY) dropped against the USD on Friday however ended the week 2% higher overall, with the dollar set to record its biggest one-week drop since May against the Japanese currency. Plenty of the Yen strength was attributed to strong economic growth for the fourth quarter increasing speculation of a BoJ rate hike later on this week. Overall, the Yen traded within a range of a low 118.98 and a high 119.58 before closing 119.25 (New York).

• The Sterling (GBP) dropped on Friday following, as investors changed their approach on the future of a BoE rate hike with further poor economic data released out of the UK. Overall, the GBP traded within a range of 1.9464 as the low and a high of 1.9540 before closing at 1.9503. Looking ahead, in a quiet data day for all markets, Rightmove house prices (Jan) are out of the UK. Markets expecting a figure of 0.2% down on the previous 0.5%.

• The Australian Dollar (AUD) strengthened against the USD, trading within a range of a low 0.7836 and a high 0.7868 before closing at near day highs of 0.7866 in the New York session.

• Gold (XAU) rose by US$1.40 an ounce to US$672.80 on the back of a weaker dollar and a rise in oil.

TECHNICAL COMMENTARY

• Euro 1.3155

Initial support at 1.3024 (Feb 14 low) followed by 1.2940 (Feb 12 low). Initial resistance is now located at 1.3176 (61.8% retracement of 1.3368-1.2865 decline) followed by 1.3196 (76.4% retracement of 1.3298 to 1.2865 decline).

• Yen 119.35

Initial support is located at 118.98 (Feb 16 low) followed by 118.32 (50% retracement of the 114.43 to 122.20 advance). Initial resistance is now at 120.79 (Feb 15 high) followed by 121.37 (Feb 14 high).

• Pound – 1.9540

Initial support at 1.9402 (Feb 13 low) followed by 1.9317 (Jan 11 corrective low/ 1.9295 trendline). Initial resistance is now at 1.9679 (Feb 15 high) followed by 1.9751 (61.8% of 1.9917-1.9482, 1.9749 id Feb 2 high).

• Australian Dollar – 0.7875

Initial support at 0.7784 (Feb 14 low) followed by 0.7707 (Feb 12 low). Initial resistance is now at 0.7874 (Feb 16 high) followed by 0.7883 (76.4% retracement of the 0.7940 to 0.7697 decline).

• Gold – 668.85

Initial support at 657.30 (Feb 9 low) followed by 648.00 (Feb 8 low). Initial resistance is now at 672.00 (Feb 14 high) followed by 676.35 (Jul 17 reaction high)