Australian FOREX Weekly Outlook 08/06/2007

Four Central Bank announcements, and only one hike. AUD reaches 18 year high while the NZD touches record high since floating. BoJ meeting this week

08/06/07

last week’s currency trading review

The Dollar rebounded to end the week as a surge in treasury bonds gave significant support to the greenback, despite a mediocre start to the week following the recent robust jobs data in the form of non-farm payrolls. Further more the Dollar continued to suffer as Federal Reserve Chairman Bernanke commented on the fact that the slowing Housing Sector would continue to weigh heavy on the economy as a whole. In data specific news the USD was also aided with a narrowing of the trade gap on Friday. The Euro eased throughout the week as the much anticipated June rate hike materialized on Wednesday. The ECB increased rates to 4% yet gave no indication of future hikes causing investors to square off profits. The Euro closed the week at near a two month low at 1.3362. The Japanese Yen began the week battered testing 122.00 levels against the USD and reaching a record high against the EURO on Tuesday 164.62 whilst reaching multi year highs against other high yielding currencies. The Japanese Yen did find support mid week on softer global equity prices caused a slight unwinding of carry trades. The JPY closed last week at 121.68. The GBP was heavily sold off during the week as the BoE decision to keep rates on hold prompted investors to exit long sterling positions. Although widely expected recent BoE minutes of the May meeting had indicated that some officials had looked to 50 basis point hike causing some investors to second guess the BoE rate announcement. The GBP closed last week battered at 1.9667. The AUD was extremely volatile throughout the week with a heavy data slate. Despite the RBA once again keeping rates on hold, the AUD was immediately supported by strong GDP data and better than expected unemployment rate in the following session indicating that inflationary pressures remain prominent. As a result the AUD reached 18 year high breaking key levels on the way to close at 0.8430 by the end of the week. In other news, the NZD also reached record highs since the currency first floated following second successive RBNZ rate hike for the nations call rate to sit at 8%

The forex trading week preview

In the States a heavy week is expected with retail Sales released on Wednesday followed by Thursday’s Core PPI. Friday seems to be the highlight for all markets with the US scheduled to release Core CPI, NY Fed manufacturing survey, Current Account, TIC flows, Industrial Production and the Michigan Sentiment survey. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone will also see a busy week scheduled beginning with Tuesday Industrial Production, Wednesday Unemployment Rate and Core CPI on Thursday, with plenty of talks by ECB officials in between. In the UK PPI begins the week for the UK before Tuesday sees the release of May’s CPI and Wednesday’s Retail Sales figure. We will provide our previews and reviews of these data releases in the daily summary.

In Japan GDP headlines the week for Japan, before Wednesday takes over with key data releases in the form of Consumer Confidence, Current Account and Trade balance. However the number one piece of event risk surrounds the BoJ rate announcement on Thursday followed by the monthly report. We will provide our previews and reviews of these data releases in the daily summary.

In Australia markets will be closed to begin the week on Monday in what is otherwise a relatively quiet week for Australia. Consumer Confidence will be released on Wednesday whilst RBA Governor Stevens will speak on Thursday. We will provide our previews and reviews of these data releases in the daily summary.