Australian FOREX Daily Outlook 30/06/2008

Record high Crude Oil and increasing risk aversion hurt Dollar.

CURRENCY TRADING SUMMARY – 30th June 2008 (00:30GMT)

·U.S. Dollar Trading (USD) continued it’s downward decent as Equities made new yearly lows and Crude Oil scaled new highs. US data was mixed with May Core PCE Price index increasing only 0.1% vs. expectations of 0.2% negated by Personal Income up 1.9% m/m on the back of US Government stimulus cheques. June Michigan Consumer Sentiment was revised down to 56.4 from 56.7. In U.S. share markets, the NASDAQ was down 5.74 points (-0.25%) and the Dow Jones was down 106 points (-0.93%). Crude Oil closed up $0.57 ending the New York session at $140.21 per barrel. Looking ahead, June Chicago PMI expected to dip to 48.0 from 49.1 in May.

·The Euro (EUR) found Dollar weakness was hard to capitalize on today as 1.5800 option barriers were protected and heavy EUR/JPY selling weighed on the major. EUR/JPY retreated further from record highs testing 167 before a minor recovery into the US close. June Eurozone Economic Sentiment fell to 94.9 vs 97.6 in May. Overall the EUR/USD traded with a low of 1.5720 and a high of 1.5790 before closing the day at 1.5773 in the New York session. Looking ahead, the critical Eurozone June Inflation Report expected to rise to 3.9% (3.7% May) cementing Thursday’s predicted interest rate rise.

·The Japanese Yen (JPY) increasing risk aversion accelerated the Yen’s gains on Friday with USD/JPY testing the key 106 level. The yen also made good ground against all the crosses. June manufacturing PMI came in at 46 vs. 47.7 in May. Overall the USDJPY traded with a low of 105.86 and a high of 107.21 before closing the day around 106.23 in the New York session. Looking ahead, May construction (-8.4% April) and Housing starts (-3.8% expected, -8.7 April) are scheduled for release.

·The Sterling (GBP) broke above 1.99 on the back of record Oil and aggressive cable buying. UK Q1 GDP was revised lower from 0.4% to 0.3%. The current account came in sharply higher than expected at -8.4Bln vs. -12Bln forecasted as capital flows out of the UK slowed on falling incomes. Overall the GBP/USD traded with a low of 1.9807 and a high of 1.9952 before closing the day at 1.9927 in the New York session. Looking ahead, May Consumer Credit seen at 1 Bln up from Aprils .94 Bln, May Mortgage Approvals seen at 51K down from Aprils 58K and May lending down to 6 Bln from Aprils 6.35Bln.

·The Australian Dollar (AUD) traded at day’s lows after heavy AUD/JPY sales pressured the Aussie lower but was able to bounce strongly as Gold rallied to $930. AUD/NZD traded in a volatile fashion as NZD/USD pivoted the .7600 level. Overall the AUD/USD traded with a low of 0.9542 and a high 0.9633 before closing the day at 0.9601. Looking ahead, Private Sector Credit expected to rise 0.6% in May.

·Gold (XAU) rallied on record Crude Oil with Gold seen as an inflation hedge. Dampening US interest rate speculation and the weakening greenback also supported. Overall trading with a low of USD$910.50 and high of USD$931 ending the New York session at USD$928.10 an ounce.

TECHNICAL COMMENTARY

·Euro – 1.5795

Initial support at 1.5628 (June 26 low) followed by 1.5537 (June 25 low). Initial resistance is now located 1.5844 (Jun 9 High) at followed by 1.6018 (April 22 high).

·Yen – 106.40

Initial support is located at 105.87 (June 27 low) followed by 104.42 (Jun 9 low). Initial resistance is now at 108.61 (Feb 14 high) followed by 108.98 (Jan 14 high).

·Pound – 1.9945

Initial support at 1.9715 (June 26 low) followed by 1.9580 (Jun 20 low). Initial resistance is now at 1.9966 (April 28 high) followed by 2.0027 (Apr 21 high)

·Australian Dollar – 0.9625

Initial support at 0.9542 (June 27 low) followed by 0.9491 (June 20 low). Initial resistance is now at 0.9634 (June 27 high) followed by 0.9648 (Jun 9 high).

·Gold – 927

Initial support at 885.1 (Jun 26 low) followed by 874.5 (Jun 25 low). Initial resistance is now at 930.8 (June 27 high) followed by 935.4 (May 22 high).