Australian FOREX Daily Outlook 22/02/2008

Manufacturing slows in the US, as UK Retail Sales soar.

CURRENCY TRADING SUMMARY – 22 FEBRUARY 2008 (00:30GMT)

·U.S. Dollar Trading (USD) eased slightly against a number of majors in a follow through from FOMC minutes on Wednesday, which prompted traders to anticipate further rate cuts from the Fed in the coming meeting (March 18^th), as the central bank lowered its 2008 growth forecasts. In data specific news, the Philly Fed survey was lower than forecasts coming in at -24.In US share markets, the NASDAQ was down by -96.23 points (-1.06%) whilst the Dow Jones was lower by 142.96 points (-1.15%). Crude oil eased from it record highs seen in the previous session. Crude dropped by US$2.71 a barrel to US$98.03.

·The Euro (EUR) gained broadly versus the dollar as output of the US came in on the weaker side. Despite the views that economic growth is expected to slow to 1.8% in 2008 from the previous 2.7%, inflation is expected to remain above the ECB comfort band. Overall the EURUSD traded with a low of 1.4703 and a high of 1.4838 before closing the day at 1.4815 in the New York session. PMI services and manufacturing surveys are released out of the Eurozone on Friday, and will hold interest amongst investors in identifying the extent of an economic slowdown

·The Japanese Yen (JPY) once again in a defined range tracking equity prices, despite coming under pressure in the early part of the trading day as appeal for risky trades were boosted by growing expectations of another rate cut out of the U.S. Overall the USDJPY traded with a low of 107.15 and a high of 108.33 before closing the day at 107.31 in the New York session.

·The Sterling (GBP) surged after much stronger than expected UK retail sales data. Sales grew 0.8 % in January recuperating from a 0.2 % fall in December, which was their strongest growth in almost a year. This prompted investors to scale back expectations of rate cuts by the BoE. Overall the GBPUSD traded with a low of 1.9489 and a high of 1.9627 before closing the day at 1.9618 in the New York session.

·The Australian Dollar (AUD) was timid, with little data out of Australia for the remaining part of the month. The AUD continued to test key levels above 92 cents, but failed to sustain any gains. Overall the AUDUSD traded with a low of 0.9167 and a high of 0.9209 before closing the day at 0.9191 in the New York session.

·Gold (XAU) traded once a gain at a fresh all time high despite oil prices heading lower. XAU traded with a low of 938.50 and a high of 953.60.

TECHNICAL COMMENTARY

·Euro – 1.4815

Initial support at 1.4702 (Feb 21 low) followed by 1.4611 (Feb 18 low). Initial resistance is now located at 1.4838 (Feb 21 low) followed by 1.4956 (Feb 1 high).

·Yen – 107.45

Initial support is located at 107.16 (Feb 21 low) followed by 106.35 (Feb 11 low). Initial resistance is now at 108.67 (38.2% retracement of the 114.66 to 104.97 decline) followed by 109.82 (50% retracement of the 114.66 to 104.97 decline)

·Pound – 1.9630

Initial support at 1.9363 (Feb 12 low) followed by 1.9338 (Feb 7 low). Initial resistance is now at 1.9643 (Feb 21 high) followed by 1.9738 (Feb 5 high)

·Australian Dollar – 0.9195

Initial support a 0.9005 (Feb 15 low) followed by 0.8954 (Feb 14 low). Initial resistance is now at 0.9239 (76.4% retracement of 0.9400 to 0.8513) followed by 0.9331 (Nov 9 high)

·Gold – 943.40

Initial support at 906.10 (Feb 19 low) followed by 896.50 (Feb 7 low). Initial resistance is now at 954.60 (Feb 21 high) followed by 970.73 (Bull channel resistance)