Australian FOREX Daily Outlook 29/05/2007

Thin trading across the board as markets absent on holidays. Japan key data releases with Unemployment Rate, Household Spending and Retail Sales

CURRENCY TRADING SUMMARY –29 MAY 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was closed on Monday for Memorial Day. That being said, tight ranges were experienced across the board with the absence of market volatility. U.S. share markets were also closed for trading to begin the week and remained unchanged from Friday’s close. Crude oil fell by US$0.65 a barrel to US$64.55 as Nigerian oil unions ceased there two day strike. Looking ahead, Consumer Confidence for the month of May will be made public on Tuesday. Markets are expecting a figure of 105 up on the previous 104. In other data Midwest manufacturing (April) data is will also be paid attention to with expectations with the previous figure released 104.3

• The Euro (EUR) also saw thin trading due to market holidays. Overall the EURUSD traded with a range of a low 1.3445 and a high of 1.3458 before closing the day at 1.3453. Market activity is set to return on Tuesday as the Current Account for the month of March is expected to be released at 5 Bln, significantly better than the previous -7.2 Bln.

• The Japanese Yen (JPY) trade in a tight range to close the day unchanged from Friday’s session. Overall the USDJPY traded with a low of 121.62 and a high of 121.81 before closing the day at 121.66. Looking ahead a key data day is expected out of Japan with the release of Household Spending (Forecast: 0.2%, Previous: 1.1%), Unemployment Rate (Forecast: 4% Previous: 4%) and finally Retail Sales (Forecast: -0.4% Previous: -0.7%). UPDATE: Household Spending: 1.1%, Unemployment Rate: 3.8% and Retail Sales: -0.6%

• The Sterling (GBP) markets were also closed for a Bank Holiday. Overall the GBPUSD traded in a range of a low 1.9826 and a high of 1.9847 before closing the day at 1.9832.

• The Australian Dollar (AUD) traded in a defined and extremely tight range on Monday. Overall the AUDUSD traded with a low of 0.8184 and a high of 0.8198 before closing the day at 0.8195.

• The Canadian Dollar (CAD) was relatively unchanged to begin the week. Overall the USDCAD traded with a range of a low 1.0794 and a high of 1.0810 before closing the day at 1.0797 in the New York session. Looking ahead with recent multi-year highs on the USDCAD, the BoC is scheduled to make an announcement on interest rates on Tuesday, although many markets are confident the rate will remain unchanged at 4.25%. Although accompanying statements will be eagerly anticipated with markets expecting a Hawkish bias.

• Gold (XAU) remained steady as investors were skeptical in entering on long positions in light of recent USD strength. Gold was unchanged at US$655.30 an ounce