Australian FOREX Daily Outlook 27/06/2007

US New Home Sales further weighs on slowing housing sector, As Federal Reserve begin their two day meeting whilst Japan to release Retail Sales.

CURRENCY TRADING SUMMARY –27 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was mixed against major currencies as a lower than expected reading for US consumer confidence and a larger than expected decline in US new home sales had little impact on foreign exchange markets with investors looking to a two day policy meeting of the Fed Reservewhich concludes on Thursday. In US share markets the NASDAQ was down 2.92 (-0.11%) whilst the Dow Jones was also down by 14.39 points (-0.11%). Crude oil fell by US$0.04 a barrel to US$67.73. Looking ahead, Durable goods for the month of May will be released on Wednesday with expectations that the figure will come in at -1% (Previous: 0.8%). In other news the Fed Reserve will begin its two day meeting, sure to cause plenty of interest.

• The Euro (EUR) was range bound against the greenback despite poor economic data out of the U.S. In other news, the Current Account of the EZ came in significantly worse than expectations, yet did very little to move markets any further. Overall the EURUSD traded with a low of 1.3432 and a high of 1.3480 before closing the day at 1.3468 in the New York session.

• The Japanese Yen (JPY) rose for a second day on Tuesday, rebounding from recent multiyear lows against the Dollar and Euro after Japan’s finance minister cautioned about the weakness of the country’s currency. Overall the USDJPY traded with a range of a low 122.81 and a high of 123.71 before closing the day at 123.25 in the New York session. Looking ahead key data in the form of Retail Sales could cause some further movement on the Yen with expectations that further poor data will be confirmed at -0.4% for the month of May (Previous: -0.6%). UPDATE: Retail Sales at 0.1%

• The Sterling (GBP) once again traded above the $2 mark boosted by expectations of a BoE rate hike as soon as next week, before failing to sustain the levels. With markets pricing rate hikes as far as 6% by year end, helping sterling to its biggest weekly rally versus the dollar in five months last week. Overall, the GBPUSD traded with a range of a low 1.9961 and a high of 2.0017 before closing the day at 1.9992 in the New York session.

• The Australian Dollar (AUD) once again tested levels above 85c, without being able to sustain such levels. Overall, the AUDUSD traded with a range of a low 0.8453 and a high of 0.8511 before closing the day at 0.8464 in the New York session.

• The Turkish Lira (TRY) closed weaker on Tuesday amid political uncertainties and EU related woes. Analysts suggest that Turkey is vulnerable due to concerns over political stability, a wide current account deficit and large public and external financial needs.
• Gold (XAU) fell to its lowest in more than three on Tuesday as softer oil prices and weakness in other metals triggered technical selling. Gold traded with a low of 640.70 and a high of 652.10.