Australian FOREX Daily Outlook 21/12/2007

GBP continues to slide. BoJ unanimous in holding rates

CURRENCY TRADING SUMMARY –21 DECEMBER 2007 (00:30GMT)

·U.S. Dollar Trading (USD) was range bound on Thursday, supported by sturdy GDP data, released above expectations at 4.9% fort the third quarter. In other news Core PCE was released at 2% (Forecast: 1.8%), whilst the Philly Fed survey was seen at -5.7 for the month of December. In U.S. share markets the NASDAQ was up 39.85 points (+1.53%) whilst the Dow Jones was also up 38.37 points (+0.29%). Crude oil rose by US$0.49 a barrel to US$91.73 following an incident involving two oil tankers in the Suez Canal. Looking ahead, the Michigan sentiment survey will round up a data filled week for the US economy.

·The Euro (EUR) eased further against a broadly stronger dollar. The EURUSD traded with a low of 1.4333 and a high of 1.4392 before closing the day at 1.4356 in the New York session.

·The Japanese Yen (JPY) remained relatively steady against the dollar and Euro, as the BoJ kept rates on hold at 0.5%, the main surprise was the unanimous 9 to 0 vote, in which recognized dissenter Mizuno also agreed that the Japanese economy does not warrant a rate hike. Overall the USDJPY traded with a low of 113.38 and a high of 112.14 before closing the day at 113.00 in the New York session.

·The Sterling (GBP) continued its dramatic slide versus the dollar and dropped to a four-month low against the dollar, as traders increased bets the Bank of England will keep lowering interest rates to shore up the economy. The BoE votes for the last rate cut were 9 out of 9. Whilst analyst are expecting strong technical support level to be seen at 1.9750. Overall the GBPUSD traded with a low of 1.9877 and a high of 1.9985 before closing the day at 1.9923 in the New York session. UK Retail Sales will end the week for a volatile pound in which markets are expecting a rise of 0.2% for the month of November.

·The Australian Dollar (AUD) also traded in tight range against the USD, as did a number of currencies. The AUDUSD traded with a low of 0.8571 and a high of0.8607 before closing the day at 0.8600 in the New York session.

·Gold (XAU) was range bound once again. Trading with a low of 793.75 and a high of 803.20

TECHNICAL COMMENTARY

·Euro – 1.4330

Initial support at 1.4307 (Dec 19 low) followed by 1.4307 (1.4751 minus 1.4968 – 1.4528). Initial resistance is now located at 1.4527 (Dec 6 low) followed by 1.4658 (Dec 14 high).

·Yen – 113.30

Initial support is located at 112.75 (Dec 19 low) followed by 112.20 (Dec 14 low). Initial resistance is now at 113.59 (Dec 14 high) followed by 113.85 (61.8% retracement of the 117.95 to 107.23 decline)

·Pound – 1.9980

Initial support at 1.9929 (Dec 19 low) followed by 1.9877 (Sep 18 low). Initial resistance is now at 2.0196 (Dec 19 high) followed by 2.0228 (Dec 17 high)

·Australian Dollar – 0.8595

Initial support a 0.8553 (Dec 18 low) followed by 0.8538 (38.2% retracement of the 0.7676 to 0.9400 advance). Initial resistance is now at 0.8654 (Nov 21 low and former rang low) followed by 0.8795 (Dec 14 high)

·Gold – 803.00

Initial support at 785.66 (Dec 17 low) followed by 777.20 (Dec 3 low). Initial resistance is now at 806.55 (Dec 18 high) followed by 812.20 (December 13 high)