Australian FOREX Weekly Outlook 01/09/2008

Euro taking it’s cue from Oil, waiting for Gustav and Non-Farm

01/09/08

last week’s currency trading review

The Dollar gained against most of the majors as US data surprised to the upside while most other economies data continued to detract. Large volatility in Oil continued to direct the majors. Housing Data was mixed with July Existing Home Sales gaining to 5.00M but New Home Sales falling to 515K. Durable Goods Orders gained impressively to 1.3% vs. 0.1% expected in the month of July. Q2 GDP gave the dollar a major boost as it surged to 3.3% from 1.9% in Q1.Finally Consumer survey continued to recover with the CB Consumer confidence Index gaining to 56.9 in August and the UoM Consumer sentiment gaining to 63.0 from 61.7 previously. The Euro was under sever pressure after the German IFO Business Climate Index fell more than expected to 94.8 vs. 97.1 expected. A retracement of Oil back up above $120 allowed the Euro to bounce back to the 1.48 level where it again found selling pressure on the back of US GDP. German CPI fell 0.3% in August as Energy prices fell. German August Unemployment Change showed some improvement falling to -40K from -20K July. The EUR/USD fell -0.82% closing at 1.4671 after opening at 1.4791. The Japanese Yen was the week’s biggest gainer as heavy cross sales finally weighed on the USD/JPY which broke and ended the week below 109. EUR/JPY fell below 160 and GBP/JPY 200. On the Data front July CPI showed a 2.4% rise from a year ago the fastest pace in 11 years. July Retail Sales up 1.9% from 0.3% in June. The USD/JPY fell 1.22% closing at 108.77, after opening the week at 110.10. The GBP was the week’s weakest currency as the market turned decidedly bearish and data continued to indicate a steep economic slowdown. BBA Mortgage Approvals remained at 22.4K along with a falling in Nationwide House Prices of 1.9% in August. CBI Distributive Trades blew out to -46 in August from -30 expected and -36 in July. The GBP/USD lost 1.74% closing at 1.8208 after opening at 1.8524. The AUD traded in a new range as markets awaited the next move from the RBA and Commodities found support especially Gold. Australian Data supported with the Q2 CAPEX bouncing to 5.7% from -2.5% in Q1 which was also revised up to 1.0%. General USD capped gains with most bulls happy not to lose substantial ground. Heavy AUD/JPY sales emerged as the Yen gained strength and momentum. The AUD/USD closed down at 0.8586 after opening at 0.8660.

The forex trading week preview

In the States The weeks Begins with a Public Holiday on Monday for Labor Day. Tuesday we have the Manufacturing ISM for August expected to dip slightly to 49.7 from 50 in July. On Wednesday Factory Orders are seen down slightly at 0.7% from 1.7%. Also on Wednesday the FED releases the Beige Book Economic Report. On Thursday we have the ADP employment report seen at -20K after a 9K increase last month. Weekly Jobless claims are seen rising to 430K from 425K last week. Aug Non-manufacturing is seen unchanged at 49.5. The big data this week will be Friday’s August Nonfarm Payroll’s forecast at -71K along with an Unemployment rate of 5.7%. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone Big data week headlined by the ECB rate announcement on Thursday. Monday we have the German Retail Sales forecast to fall -0.5%. Final Eurozone Manufacturing seen unchanged at 47.5. On Tuesday we have July PPI seen at 1.3% up slightly from 0.9%. Wednesday we have the Final PMI Services seen unchanged at 48.2. Q2 GDP is seen provisionally down at -0.2%. Also on Wednesday July Retail Sales are forecast to fall -0.1% slightly better than -0.5% in June. Thursday the ECB interest Rate announcement is widely expected to remain at 4.25. Finally on Friday we have German July Industrial Production expected at -0.30%. In the UK On Monday we have Aug PMI Manufacturing is forecast at 44.1 down from 44.3 in July. On Tuesday Nationwide Consumer Confidence is released. On Thursday the Bank of England is expected to hold rates at 5.00%. We will provide our previews and reviews of these data releases in the daily summary.

In Japan very light data week with Bank of Japan’s Governor Shirakawa speaking on Tuesday. On Friday we have Q2 Capital spending falling -1.0% recovering from -5.3% in Q1. We will provide our previews and reviews of these data releases in the daily summary.

In Australia The much Anticipated RBA Rate Announcement on Tuesday where a cut to 7.00% is widely expected with a slight risk of 6.75%. Also on Tuesday we also have July Building Approvals. On Thursday Q2 GDP is seen falling to 0.4% from 0.6%. Finally on Thursday we have the August Trade Balance forecast to trim the Surplus to 100 Million from 400 million in July. We will provide our previews and reviews of these data releases in the daily summary.

·Euro – 1.4700

Initial support at 1.4654 (Aug 29 low) followed by 1.4634 (Aug 27 low). Initial resistance is now located at 1.4811 (Aug 28 high) at followed by 1.4908 (Aug 21 high).

·Yen – 108.45

Initial support is located at 108.42 (Aug 29 low) followed by 108.3 (Aug 21 low). Initial resistance is now at 109.89 (Aug 27 high) followed by 110.29 (Aug 25 high).

·Pound – 1.8120

Initial support at 1.8091 (Jun 29 2006 low) followed by 1.8000 (Big Number). Initial resistance is now at 1.8187 (Aug 29 high) followed by 1.8344 (Aug 27 high).

·Australian Dollar – 0.8575

Initial support at 0.8555 (Aug 29 low) followed by 0.8532 (Aug 27 low). Initial resistance is now at 0.8694 (Aug 28 High) followed by 0.8814 (Aug 25 high).

·Gold – 834

Initial support at 807.40 (Aug 22 low) followed by 801 (Aug 20 low). Initial resistance is now at 844.0 (Aug 28 high) followed by 846 (Former May 2 support).