Australian FOREX Daily Outlook 24/08/2007

High yielder’s gain before correcting on drop in stock prices. US New Home sales set for release.

CURRENCY TRADING SUMMARY –24 AUGUST 2007 (00:30GMT)

• U.S. Dollar Trading (USD) continued to ease across the board as a statement made by Country Financial CEO raised concerns that the US economy may be confronted with a recession. Following such statements the equity markets opened with a drop causing an early correction on high yielding currencies. In U.S. share markets the NASDAQ was down 11.10 points (-0.43%) whilst the Dow Jones also fell by -0.25%. Crude oil gained on a weaker dollar overnight by US$0.57 a barrel to US$69.83. Looking ahead key data is scheduled for release in the form of Durable goods and most importantly New Home Sales on Friday.

• The Euro (EUR) rallied on the back of markets revived view of a rate hike next month, whilst the Federal Reserve is expected to cut in September. The Euro was also assisted with a return to risky high yielding carry trades following a surge in the EURJPY cross. Overall the EURUSD traded with a range of a low 1.3535 and a high of 1.3588 before closing the day at 1.3557 in the New York session. Key data will be released in the form of PMI Manufacturing and Services.

• The Japanese Yen (JPY) saw the BoJ hold rates on Thursday to no surprise for the market. In an 8 to 1 vote, BoJ officials ruled in favor of holding rates. The Japanese Yen did extend its losses on Thursday as investors rebuilt carry trades, before a correction was experienced late in the session with a drop in U.S. stock prices. Overall the USDJPY traded with a range of a low 115.30 and a high of 117.15 before closing the day at 115.91 in the New York session.

• The Sterling (GBP) surged against the Yen pulling the GBPUSD up for the ride. Overall the GBPUSD traded with a range of a low 1.9920 and a high of 2.0092 before closing the day at 2.0030 in the New York session. Looking ahead second quarter GDP for the UK will be released on Friday.

• The Australian Dollar (AUD) continued to be bought up as a high yielder in return to carry trades. Overall the AUDUSD traded with a range of a low 0.8078 and a high of 0.8208 before closing the day at 0.8173 in the New York session.

• Gold (XAU) steadied on Thursday having risen earlier, taking direction from European stocks that trimmed gains as worries about credit markets due to problems in the US housing market sector persisted. XAU traded with a range of a high 664.90 and a low of 659.00

TECHNICAL COMMENTARY

• Euro 1.3555

Initial support at 1.3534 (Aug 23 low) followed by 1.3449 (Aug 22 low). Initial resistance is now located at 1.3608 (Former support from July 30) followed by 1.3628 (Aug 14 high).

• Yen 116.00

Initial support is located at 115.29 (Aug 23 low) followed by 113.67 (Aug 20 low). Initial resistance is now at 117.15 (Aug 23 high) followed by 117.89 (50.0% retracement of the 124.17 to 111.60 decline).

• Pound – 2.0040

Initial support at 1.9915 (Aug 21 low) followed by 1.9652 (Aug 17 low). Initial resistance is now at 1.9937(Aug 17 high) followed by 1.9974 (Aug 15 high)

• Australian Dollar – 0.8175

Initial support a 0.8064 (Aug 23 low) followed by 0.7955 (Aug 21 low). Initial resistance is now at 0.8210 (Aug 23 high) followed by 0.8275 (50.0% retracement of the 0.8875 to 0.7674 decline)

• Gold – 659.60

Initial support at 654.90 (Aug 22 low) followed by 653.70 (Aug 20 low). Initial resistance is now at 664.93 (Aug 23 high) followed by 668.10 (Aug 16 high)