Australian FOREX Daily Outlook 30/05/2007

raises stamp duty on share trading causing market volatility. Current Account out EZ causes significant Euro strength, as Bank of Canada keep rates unchanged

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

• U.S. Dollar Trading (USD) slid against most majors before Consumer Confidence came in better than expectations. With markets forecasting a figure of 105 for the month of May, the figure surprised at 108 with the previous revised higher 106.3. In other data releases, Midwest Manufacturing for April was out higher than the previous 104.3 at 104.9. Both pieces of data gave significant support to the USD as earlier losses were paired. In U.S. share markets, the NASDAQ was up by 14.87 points (+0.58%), whilst the Dow Jones was also up by 14.06 points (+0.10%). Crude oil continued to drop in wake of the end to Nigeria strike activity. Crude fell by US$2.05 a barrel to US$63.15. Looking ahead the FOMC minutes of the May 9 meeting is scheduled for release today.

• The Euro (EUR) gained sharply during the European session of trading as Current Account for the month of March surprised on the upside coming in better than expected at 8.8 bln (Forecasted: 5 bln). The Euro was further supported with comments made by ECB officials suggesting future rate hikes, before profits were squared. Overall the EURUSD traded with a low of 1.3420 and a high of 1.3521 before closing the day at 1.3450 in the New York session. Looking ahead, M3 money supply will be the key release out of the EZ today with expectations of a 10.7% growth for the month of April, down on the previous 10.9%.

• The Japanese Yen (JPY) was volatile during Tuesday session as Unemployment Rate (Actual: 3.8% Forecasted: 4%) and Household Spending (Actual: 1.1% Forecasted: 0.2%) both came in better than expectations, although gains were immediately capped as Retail Sales figures released soon after disappointed with a figure of -0.6% (Forecast: -0.4%). During the Asian session the USDJPY pair continued to slide with revelations that 2 year bonds were at a 10 year high which added to JPY strength. In related news, China lifted stamp duties from 0.1% to 0.3% on share trades added to further JPY strength. Overall the USDJPY fluctuated between a low of 121.18 and a high of 121.82 before closing the day at 121.55 in the New York session. Looking ahead, Industrial Production is set for release out of Japan with expectations of a figure at 0.5% growth for the month of April better than the previous -0.3%. UPDATE: Industrial Production -0.1% for April.

• The Sterling (GBP) was range bound for much of Tuesday’s session before losing slight ground against the USD. Overall the GBPUSD traded with a range of a low 1.9793 and a high of 1.9900 before closing the day at 1.9800 in the New York session.

• The Australian Dollar (AUD) traded in a tight range on Tuesday with little data out of Australian markets. Overall the AUD traded with a range of a low 0.8175 and a high of 0.8215 before closing the day at 0.8185 in the New York session. Looking ahead, Key data is scheduled for release out of Australia with Retail Sales for the month of April expected to be out at 0.4% down on the previous number of 1.1%. UPDATE: Retail Sales at 0.1%

• The Canadian Dollar (CAD) stormed to 30 year high against USD after BoC said rates may rise further to control inflation following there decision to keep rates unchanged at 4.25%. Overall the USDCAD traded with a low of 1.0712 and a high of 1.0836 before closing the day at 1.0734 in the New York session.

• Gold (XAU) rose by US$1.50 an ounce to US$656.80 on the back of investor uncertainty in the Chinese Stock Markets, and its affect on global markets.