Australian FOREX Daily Outlook 25/04/2007

Poor Aussie CPI places questions marks over RBA rate hike. UK set to release GDP data, whilst Japan release Trade Balance

CURRENCY TRADING SUMMARY –25 APRIL 07 (23:30GMT)

• U.S. Dollar Trading (USD) having shown previous day gains against most majors, the dollar fell on Tuesday to a 2 year low against a basket of currencies. This was largely attributed to soft data released for the housing sector, with existing home sales coming in weaker than expected at 6.12 mil (Previous: 6.68 mil revised). Furthermore a weak consumer confidence did little to provide the dollar with any form of support. In US share markets the NASDAQ was up by 0.87 points (0.03%) whilst the Dow Jones also rose by 34.54 points (0.27%). Crude Oil fell by nearly 2% to $64.57 a barrel. Looking ahead, Durable Goods is out of the US today with expectations of 2.5% (Previous: 1.7%). In other news, with plenty of attention surrounding the Housing Sector, markets will await New Home Sales as economists 890k (Previous: 848k).

• The Euro (EUR) traded near record highs against the USD as further speculation surrounds the Feds need to cut rates in order to re-ignite the economy. Key data was also released out of the Eurozone in the form of Industrial Production, which came in significantly worse than expected at -0.7% with the previous being revised higher to 0.1%. Overall the Euro traded with a range of low 1.3548 and a high of 1.3636 before closing the day at 1.3625 in the New York session. Looking ahead, the German IFO index is scheduled for release with markets awaiting a fresh record high figure of 107.9 from the previous 107.7.

• The Japanese Yen (JPY) remained relatively unchanged against the greenback for most of the session. Overall the JPY traded with a range of a low 118.24 and a high of 118.95 before closing the day 118.66 in the New York session. Looking ahead Japan is set to release its Trade Balance today, with the previous figure being 979.6 bln. UPDATE: Trade Balance at 1633.5 bln

• The Sterling (GBP) remained near 26 year highs despite pairing its gains in the previous session. With little data out of the UK, the sterling rallied on the back of a broadly weaker dollar. Overall the GBP traded with a range of a low 1.9957 and a high of 2.0045 before closing the day at 1.9999 in the New York session. Looking ahead, key data in the form of GDP is sure to move markets later on today, as markets await any further indication of a rate hike materializing. Analysts predict that the figure will be released at 0.6% softer than the previous figure of 0.7%.

• The Australian Dollar (AUD) saw investors pair their profits following a poor figure in the form of CPI, which hindered the notion of an interest rate hike by the RBA early May. With markets awaiting a figure of 0.6%, the actual number was released significantly lower at 0.1%. Overall the AUD traded with a range of low 0.8233 and a high of 0.8339 before closing at 0.8267 in the New York session. Looking ahead, due to a market holiday, thin trading is expected out of Australia and NZ.

• Gold (XAU) fell on Tuesday by almost US$10 to trade at US$ 681.55 an ounce despite a weaker dollar

TECHNICAL COMMENTARY

• Euro 1.3625

Initial support at 1.3522 (Apr 17 low) followed by 1.3480 (Apr 13 low). Initial resistance is now located at 1.3638 (Apr 20 trend high) followed by 1.3670 (Dec 30, 2004, All time Record High)

• Yen 118.50

Initial support is located at 117.60 (Apr 18 low) followed by 117.52 (50% retracement of the 115.15 to 119.89 advance). Initial resistance is now at 119.04 (Apr 18 high) followed by 119.89 (Apr 16 high)

• Pound – 2.0020

Initial support at 1.9955 (Apr 24 low) followed by 1.9878 (Apr 17 low). Initial resistance is now at 2.0134 (Apr 18 trend high) followed by 2.0200 (Psychological Round Number)

• Australian Dollar – 0.8295

Initial support a 0.8233 (April 24 low) followed by 0.8150 (Apr 9 low). Initial resistance is now at 0.8342 (Apr 24 high) followed by 0.8396 (Apr 19 trend high)

• Gold – 682.60

Initial support at 679.30 (Apr 19 low) followed by 676.80 (Apr 13 low). Initial resistance is now at 694.25 (Apr 23 high) followed by 700.00 (Psychological round number)