Australian FOREX Daily Outlook 25/08/2007

Euro trades at another record high on views of poor US housing data.

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

·U.S. Dollar Trading (USD) fell further on Monday against a basket of majors as U.S. growth appears to be losing momentum, highlighting ongoing expectations that the Federal Reserve will resort to cutting rates again by year end. The USD traded at 15 year lows against a number of the majors, whilst reaching a record low against the Euro on views that housing data on Tuesday will be recorded at its lowest level in five years. In U.S. share markets the NASDAQ was down by 3.27 points (-0.12%) whilst the Dow Jones was also down by -61.13 points (-0.44%). Crude oil continued to ease falling by US$0.57 a barrel to US$80.38. Looking ahead, plenty of focus is placed on Existing Home Sales data which is expected to show a steep decline in the Housing Sector. Figures for the month of August are forecasted to fall from the previous 5.75 mln to 5.49 mln. Figures are expected to confirm that the housing sector is a major problem in the U.S. with further downside expected.

·The Euro (EUR) traded at another record high on Monday as speculators pre-empted poor housing data out of the U.S. throughout the week. Overall the EURUSD traded with a low of 1.4067 and a high of 1.4130 before closing the day at 1.4084 in the New York session. Looking ahead, the German IFO will be made public on Tuesday with views that the figure will depreciate from 105.8 previous to 105.00 for the month of September.

·The Japanese Yen (JPY) rallied, trading on the back of other majors on Monday following. Overall the USDJPY traded with a range of a low 114.72 and a high of 115.42 before closing the day at 114.87 in the New York session. Early Asian session on Tuesday saw the release of the BoJ minutes which confirmed a vote of 8 to 1 for rates to remain on hold.

·The Sterling (GBP) continued on its upside moves, yet well short of its 26 year high of 2.0654 reached on the 24 July. Overall the GBPUSD traded with a low of 2.0201 and a high of 2.0320 before closing the day at 2.0211 near day lows in the New York session.

·The Australian Dollar (AUD) was range bound for much of the session on absence of any data. Overall the AUDUSD traded with a range of a low 0.8657 and a high of 0.8697 before closing the day at 0.8673 in the New York session.

• The Canadian Dollar (CAD) continued to be supported from surging commodity prices trading near $1 levels for much of the day. The currency is up 16.7 percent this year, the most against the U.S. dollar among the 16 most- actively traded currencies. It’s gained 6.4 percent this quarter, and climbed above $1 on Sept. 20. Overall the USDCAD traded with a low of 0.9970 and a high of 1.0026 before closing the day at 1.0013 in the New York session.

·The Norwegian Krone (NOK) advanced to a 26-year high against the dollar as oil traded near record highs and on speculation economic reports will show U.S. growth is slowing. Against the dollar, the krone rose as much as 0.5 percent to 5.5012, the highest since November 1981, and traded at 5.5217, from 5.529 on Sept. 21. It gained to 7.7831 per Euro, from 7.7908 on Sept. 21.

·Gold (XAU) rose throughout the session, yet once again fell short of resistance levels at 740.00 an ounce. XAU traded with a low of 727.10 and a high of 736.10 in the New York session.

TECHNICAL COMMENTARY

·Euro 1.4085

Initial support at 1.4039 (Sep 21 low) followed by 1.3963 (Sep 20 low). Initial resistance is now located at 1.4131 (Sep 24 trend high) followed by 1.4160 (Oct 27, 1995 synthetic high).

·Yen 114.70

Initial support is located at 114.59 (Sep 21 low) followed by 113.39 (Sept 11 low). Initial resistance is now at 116.05 (Sep 20 high) followed by 116.38 (Sep 18 high).

• Pound – 2.0165

Initial support at 2.0127 (Sep 25 low) followed by 2.0081 (Sep 21 low). Initial resistance is now at 2.0321 (September 24 high) followed by 2.0366 (Sep 12 reaction high)

• Australian Dollar – 0.8665

Initial support a 0.8606 (Sep 21 low) followed by 0.8552 (Sep 20 low). Initial resistance is now at 0.8704 (Sep 21 high) followed by 0.8770 (July 27 high).

• Gold – 729.80

Initial support at 726.95 (Sep 21 low) followed by 720.76 (Sep 19 low). Initial resistance is now at 739.42 (Sep 21 trend high) followed by 740.00 (Round number resistance)