Australian FOREX Daily Outlook 25/06/2007

AUD reaches 18 year high as GBP target the $2 level. US Existing Home Sales the key piece of data.

CURRENCY TRADING SUMMARY –25 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was mixed against a basket of currencies as little data was released from U.S. markets to end the week. Despite positive data seen in the previous session, the USD eased against the Euro as investors remained confident that the Federal Reserve will keep rates unchanged at 5.25% for the remainder of the year. Analysts continued with bias towards currencies with the highest probability of a rate hike. In U.S. Share markets the NASDAQ was down by 28 points (-1.07%) whilst the Dow Jones was also down by 185.58 points (-1.37%). Crude oil gained by US$0.43 a barrel to US$69.08. Looking ahead, key data in the form of Existing Home Sales will be sure to generate plenty of interest as further focus will surround the housing sector. Forecasts are at 5.945 mio for the month of May, slightly down from the previous 5.99 mio.

• The Euro (EUR) rallied against the greenback to touch a two-week high, as markets have priced in two more rate hikes by the end of 2007 keeping the Euro as an attractive carry trade destination.. On the data front, a weak release in the German IFO index did little to pressure the Euro which found support on the back of buoyant Industrial Orders. Overall the EURUSD traded with a low of 1.3381 and a high of 1.3469 before closing the day at 1.3365 in the New York session.

• The Japanese Yen (JPY) ended the week depleted funding numerous high yielding currencies. The Japanese Yen funded multi year highs against a basket of currencies, where as the USDJPY broke through key 124 levels bringing into view the 125.00 barrier which may instigate some jawbone tactics and verbal intervention from the BoJ, with indication of being forced to raise rates in order to rattle carry trades. Overall the USDJPY traded with a range of a low 123.70 and a high of 124.14 before closing the day at 123.87 in the New York session.

• The Sterling (GBP) traded on the back of majors, gaining with in sight of the $2 mark as expectations remain prominent that the BoE will look to hike next month. The GBP was also aided by the carry trade making the psychological level attainable. Overall the GBPUSD traded with arrange of a low 1.9914 and a high of 1.9996 before closing the day at 1.9992 in the New York session.

• The Australian Dollar (AUD) touched a fresh 18 year high against the USD during the European session, also benefiting from the carry trade despite the absence of data. Overall the AUDUSD traded with a range of a low 0.8463 and a high of 0.8494 before closing the day at 0.8470 in the New York session.

• Gold (XAU) rebounded on the back of a broadly weaker dollar and higher oil prices. Gold rose by US$2.80 an ounce to US$ 657.00

TECHNICAL COMMENTARY

• Euro 1.3465

Initial support at 1.3371 (June 21 low) followed by 1.3326 (Jun 14 former high). Initial resistance is now located at 1.3514 (Jun 7 high) followed by 1.3556 (Jun 5 reaction high)

• Yen 123.85

Initial support is located at 123.09 (June 20 low) followed by 122.86 (Jun 15 low). Initial resistance is now at 124.17 (Jun 22 trend high) followed by 125.00 (Psychological round number)

• Pound – 1.9990

Initial support at 1.9869 (June 20 low) followed by 1.9824 (Jun 19 low). Initial resistance is now at 2.0000 (Psychological round number) followed by 2.0076 (May 1 reaction high)

• Australian Dollar – 0.8480

Initial support a 0.8428 (June 21 low) followed by 0.8333 (Jun 14 low). Initial resistance is now at 0.8500 (Psychological round number)) followed by 0.8558 (Jan 1989 forwer low)

• Gold – 654.20

Initial support at 646.50 (June 14 low) followed by 643.50 (June 13 low). Initial resistance is now at 662.35 (61.8% retracement 674.00 to 643.50 decline) followed by 674.0 (June 4 high)