Australian FOREX Daily Outlook 29/03/2007

CURRENCY TRADING SUMMARY –29 MARCH 07 (23:30GMT)

• U.S. Dollar Trading (USD) was mixed against all other majors with comments made by Federal Reserve Chairman that the recent slowing of the housing market has clouded the US economic outlook. In his address to a joint economic committee, Bernanke said the central bank has not shifted its bias on monetary policy away from battling inflation. He also said that near-term prospects for the US housing market are uncertain and that the developments in the sub-prime mortgage sector, or those dealing with high-risk borrowers, have raised more questions. In other news, Durable Goods was also released to the public, which came in softer than expected at 2.5% with the previous revised downward to -9.3%. In US share markets, the NASDAQ fell by 20.33 points (-0.83%) whilst the Dow Jones also fell by 96.93 points (-0.78%). Crude Oil fell by US$0.17 a barrel to US$63.91. Looking ahead, the release of GDP (Q4) is expected to be confirmed at 2.2%.

• The Euro (EUR) eased on the back of comments made by the Federal Reserve. This was despite the Eurozone M3 coming in slightly better than expected at 10%. Overall the Euro traded with a low of 1.3309 and a high of 1.3375 before closing at 1.3313 in the New York session.

• The Japanese Yen (JPY) gained 1.0% against the USD due to stock market weakness and comments made by Chairman Bernanke. Initially the JPY strengthened on the back of US-Iran conflict which caused investors to unwind their risky carry trades. Overall, the JPY traded with a range of a low 116.38 and a high of 118.00 before closing at 116.86 in the New York session. Looking ahead Retail sales is due for release with economists expecting a figure of -0.1% better than the previous -0.8%. UPDATE: Retail Sales (m/m) -0.9%

• The Sterling (GBP) reached a one week low following data which showed a record UK current account deficit in the fourth quarter and a surprise downward revision to growth. With markets expecting a figure of -8.5 bln, the figure was released at -12.7 with the previous being revised lower at -10.5. In other news, nationwide house prices came in slightly worse than expected at 0.4% with the previous revised downward to 0.6% and finally the GDP (Q4) was confirmed slightly lower at 0.7% (Forecast: 0.8%). Overall the GBP traded with a range of a low 1.9598 and a high of 1.9682 before closing 1.9617 in the New York session.

• The Australian Dollar (AUD) remained steady trading on technical with little economic data out. Overall the AUD traded with a low 0.8033 and a high of 0.8091 before closing the day at 0.8050 in the New York session.

• The Polish Zloty (PLN) saw the central bank keep interest rates on hold at 4.0%, yet gave a strong indication it would raise the nations borrowing costs in the near future to ensure that inflation stays close to its target. Overall, the EURPLN traded with a range of a low 3.8634 and a high of 3.8885.

• Gold (XAU) climbed to a four-week high as geopolitical jitters in the Middle East boosted safe-haven buying, while strong oil prices lent support. Gold rose by US$4.40 an ounce to US$666.80