Australian FOREX Daily Outlook 28/02/2008

Bernanke signals further rate cuts, as EURO, AUD, NZD, XAU, and Oil trade at record highs

CURRENCY TRADING SUMMARY – 28 FEBRUARY 2008 (00:30GMT)

·U.S. Dollar Trading (USD) traded at record lows versus a number of majors as Fed Chairman Ben Bernanke signaled his willingness to cut rate again in order to rejuvenate the world’s largest economy. In data news, Durable goods came in well below expectations at -5.3% (Forecast: -4%), and New How Sales fell to 0.588 mln for the month of January, adding to the greenbacks woes. In U.S. share markets the NASDAQ was up by 8.79 points (0.37%) whilst the Dow Jones also rallied by 9.36 points (+0.07%). Crude oil traded at a fresh record high once again, up by US$1.16 a barrel to US$102.08, before ending lower at US$99.72. On Thursday, Fed Chairman Bernanke will continue his two day testimony on Monetary Policy, whilst GDP data will also generate plenty of interest.

·The Euro (EUR) traded at an all time record high following Bernanke comments last night. Overall the EURUSD traded with a low of 1.4973 and a high of 1.5144 before closing the day at 1.5119 in the New York session.

·The Japanese Yen (JPY) rallied against the dollar on further weak economic outlooks. The USDJPY traded at a near month low of 105.96 and a high of 107.39 before closing the day 106.44 on the New York session.

·The Sterling (GBP) fell slightly against the greenback after Britain‘s largest mortgage lender HBOS fell over 8% dragging down other UK banks after it missed forecasts indicating the spillover affects from the sub-prime fallout has not been fully priced in. The GBPUSD traded with a low of 1.9833 and a high of 1.966 before closing the day at 1.9833 in the New York session

·The Australian Dollar (AUD) traded at a 23 low versus the dollar on higher commodities and bearish dollar sentiment. Overall the AUDUSD traded with a low of 0.9318 and a high of 0.9429 before closing the day at 0.9401 in the New York session. Once again the NZD also trade at a record high on Wednesday of 0.8213 on dovish Fed comments.

·Gold (XAU) hit a record $964.50 a troy ounce as the dollar sank to a record lows. XAU traded with a low of 948.50

TECHNICAL COMMENTARY

·Euro – 1.5115

Initial support at 1.4778 (Feb 26 low) followed by 1.4702 (Feb 21 low). Initial resistance is now located at 1.5050 (Feb 27 high) followed by 1.5096 (1.4440 plus 1.4311 to 1.967).

·Yen – 106.30

Initial support is located at 106.73 (Feb 22 low) followed by 106.35 (Feb 11 low). Initial resistance is now at 108.22 (Feb 25 high) followed by 108.67 (38.2% retracement of the 114.66 to 104.97 decline)

·Pound – 1.9830

Initial support at 1.9644 (Feb 26 low) followed by 1.9611 (Feb 22 low). Initial resistance is now at 1.9876 (Feb 26 high) followed by 1.9960 (Jan 30 reaction high)

·Australian Dollar – 0.9425

Initial support a 0.9216 (Feb 25 low) followed by 0.9167 (Feb 21 low). Initial resistance is now at 0.9400 (Round Number) followed by 0.9500 (Round Number)

·Gold – 960.00

Initial support at 906.1 (Feb 19 low) followed by 896.50 (Feb 7 low). Initial resistance is now at 954.60 (Feb 21 high) followed by 970.73 (Bull channel resistance)