Australian FOREX Daily Outlook 25/06/2008

US Consumer confidence falls, Market’s preparing for US FED Rate Announcement

CURRENCY TRADING SUMMARY – 25th June 2008 (00:30GMT)

·U.S. Dollar Trading (USD) gave up some ground yesterday as June Consumer Confidence fell for the 6^th month in a row to 50.4. Most economists were looking for a much milder decline of 56.5. With the markets attention now turned to the FOMC decision, falling stocks and low confidence should limit the hawkishness of the accompanying statement. This paring back of interest rate expectations is being seen through the increased bond prices and falling dollar over the last week. Also released yesterday the April Case-Schiller House Price Index falling to -15.3% Y/Y slightly better than market forecasts of -16%. In US share markets, the NASDAQ was down 17 points (-0.73%) and the Dow Jones was down 35 (-0.3%). Crude Oil closed up $0.31 ending the New York session at $137.05 per barrel. Looking ahead, a very big data day out of the US with the FOMC rate announcement expected to be held at 2.00% accompanied by a moderately hawkish statement on inflation concerns. Released prior to this are two other important pieces of data with Durable Goods for May expected at 0.1% and May New Home Sales forecasted at 515K.

·The Euro (EUR) made gains last night shrugging off poor July German Consumer Confidence of 3.9 vs. 4.6 expected. Crude Oil remained high and weak US data supported allowing Monday’s losses to all but be erased on the Euro. Overall the EUR/USD traded with a low of 1.5493 and a high of 1.5622 before closing the day at 1.5576 in the New York session. Looking ahead, April Euro Zone Industrial Orders predicted at -0.6%.

·The Japanese Yen (JPY) traded in a range with the USD/JPY falling with stocks before recovering as EUR/JPY and AUD/JPY made fresh multi-month highs. Overall the USDJPY traded with a low of 107.36 and a high of 108.23 before closing the day around 107.84 in the New York session. Japanese Trade Balance for May 365 Billion Yen vs. 40 Billion Yen forecast.

·The Sterling (GBP) grinded higher on greenback weakness but gains were hampered by traders trimming their expectations of BoE rate rises as the housing slump deepened. BBA Mortgage approvals fell to 28K in May down from 35K in April and down 56% from last year. Overall the GBP/USD traded with a low of 1.9627 and a high of 1.9723 before closing the day at 1.9695 in the New York session. Looking ahead, CBI Sales for June forecasted to fall to -17 from -14 in May.

·The Australian Dollar (AUD) continued to make gains on strong cross performance and reported M&amp A activity in the energy sector. AUD/NZD made 6 ½ year highs at 1.2620 overnight. Overall the AUD/USD traded with a low of 0.9501 and a high 0.9586 before closing the day at 0.9557.

·Gold (XAU) was able to rebound off Monday’s lows as safe haven flows increased on more Iran/Isreal rumours and broad dollar weakness.Overall trading with a low of USD$883 and high of USD$994 ending the New York session at USD$889 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.5575

Initial support at 1.5461 (June 17 low) followed by 1.5303 (June 13 low). Initial resistance is now located 1.5636 (Jun 20 High) at followed by 1.5844 (Jun 9 high).

·Yen – 107.80

Initial support is located at 107.12 (June 23 low) followed by 106.8 (Jun 12 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).

·Pound – 1.9710

Initial support at 1.9580 (June 20 low) followed by 1.9471 (Jun 17 low). Initial resistance is now at 1.9791 (Jun 20 high) followed by 1.9852 (May 23 high)

·Australian Dollar – 0.9570

Initial support at 0.9491 (June 20 low) followed by 0.9448 (June 19 low). Initial resistance is now at 0.9587 (June 24 high) followed by 0.9648 (Jun 9 high).

·Gold – 888

Initial support at 858 (Jun 12 low) followed by 850 (Psychological Number). Initial resistance is now at 908 (June 20 high) followed by 909 (June 9 high).