Australian FOREX Daily Outlook 26/02/2007

CURRENCY TRADING SUMMARY –26 FEBRUARY 07 (23:30GMT)

• U.S. Dollar Trading (USD) the dollar was mixed against all other majors on Friday to end the week, on the back of weak economic data and a trend in impressive data from other regions especially the Euro zone. In US share markets the NASDAQ fell by 9 points (-0.39%) and the Dow Jones also dropped by 38 points (-0.3%). Crude Oil rose to a nine week high on the back of Iran’s nuclear dispute with the UN causing the US to tighten supplies. As a result Oil was up by US$0.19 a barrel to US$61.14. Looking ahead, Monday will see a quiet start to the week in terms of economic data before the volume increase considerably.

• The Euro (EUR) strengthened against the dollar on the back of German economic data supporting the case for future rate hikes. The German IFO business sentiment survey (for the month of Feb) released on Friday, came in softer than expected but did little to affect the Euro as investors remained confident that an increase in interest rates was imminent. Overall, the Euro traded within a range of a low 1.3102 and a high of 1.3188 before closing at 1.3162 in the New York session.

• The Japanese Yen (JPY) the JPY remained fairly soft against the Dollar but slipped to record low against the Euro reaching 159.63 before surrendering to gains at 159.37. Overall the Euro traded within a range of low 1.3102 and a high of 1.3188 before closing at 1.3162 in the New York session. Looking ahead the BoJ will release the minutes from its meeting last week where an 8 to 1 vote saw interest rates reach a decade high at 0.50%.

• The Sterling (GBP) rose to a week high against the Dollar and the Euro on Friday after a BoE official expressed a concern about inflationary pressures, reigniting talk of a near term interest rate hike. GDP data for the fourth quarter was confirmed at 0.8%. Overall the GBP traded within a range of a low 1.9539 and a high of 1.9652 before closing at 1.9634 by the end of the New York session. Looking ahead, the BoE Blanchflower will be speaking today with markets sure to pay attention on any further indication of future interest rate decisions.

• The Australian Dollar (AUD) strengthened against the Dollar at the end of the week following poor US economic data. Overall the AUD traded within a range of a low 0.7878 and a high 0.7925 before closing at 0.7918 at the New York session. Looking ahead a quiet beginning to the week.

• Gold (XAU) strengthened on the back of higher Oil process. Gold rose by US$3.70 an ounce to US$686.70.

TECHNICAL COMMENTARY

• Euro 1.3180

Initial support at 1.3101 (Feb 23 low) followed by 1.3074 (Former resistance from Feb 2). Initial resistance is now located at 1.3196 (76.4% retracement of 1.3298 to 1.2865 decline) followed by 1.3298 (Jan 2 reaction high).

• Yen 121.05

Initial support is located at 120.82 (Feb 22 low) followed by 119.70 (Feb 21 low). Initial resistance is now at 121.65 (Feb 22 high) followed by 122.10 (Feb 12 reaction high)

• Pound – 1.9655

Initial support at 1.9537 (Feb 23 low) followed by 1.9461 (Feb 22 low). Initial resistance is now at 1.9660 (50% retracement of the 1.9917 to 1.9402 decline) followed by 1.9679 (Feb 15 high)

• Australian Dollar – 0.7920

Initial support at 0.7845 (Feb 19 low) followed by 0.7824 (Feb 15 low). Initial resistance is now at 0.7940 (Jan 23 reaction high) followed by 0.7982 (Jan 3 trend high).

• Gold – 682.30

Initial support at 673.00 (Feb 20 low) followed by 656.40 (Feb 20 low). Initial resistance is now at 688.56 (Feb 23 trend high) followed by 694.70 (May 18 reaction high)