Australian FOREX Weekly Outlook 19/03/2007

19/03/07

last week’s currency trading review

The Dollar had a relatively interesting week with plenty of the focus attended to the default crisis in the sub-prime mortgage market. With the number of defaults increasing substantially added to the concerns of former Federal Reserve chairman Greenspan echoing thoughts of a spread to the wider economy. In key data release Tuesday saw the release of Retail sales coming in significantly worse than expected at -0.1. The current account balance on Wednesday indicated a narrowing to 195.7 bln whilst the Thursday experienced some further weak data in terms of manufacturing (NY Fed Survey) and a strong TIC flows figure. Finally, on Friday the CPI figure came in as expected indicating that an FOMC rate cut was an unlikely outcome in the future. The Euro strengthened throughout the week as demand for the currency saw the Euro break levels of 1.3300 by the end of the week. Although the Eurozone was initially thin on data, except for a positive German ZEW survey (Tuesday), and Core CPI coming in as expected at 1.8% on Thursday, the Euro strengthened on the back of a bleak economic outlook for the US. The Euro closed last week at 1.3304 having started the week at 1.3113. The Japanese Yen had a most volatile week with further uncertainty in global stocks once again leading to investors taking a risk-averse mentality causing a further unwinding of carry trades. In terms of economic data, Monday was the most active day for Japan with strong Current Account and an as expected GDP. The JPY closed last week at 116.74 having opened at 118.08. The GBP was the biggest sufferer of the unwinding of carry trades as investors sought to exit sterling supportive investments before rebounding towards the end of the week as markets lost confidence in the US economy. Overall the GBP ended last week at 1.9400 after opening at 1.9318. The AUD continued to look bullish all week despite shrugging off a poor unemployment rate on Thursday. The AUD closed last week at 0.7917 having opened at 0.7797

The forex trading week preview

In the States will hold key importance in terms of data beginning with Housing Market Index on Monday, whilst Housing Starts is set for released on Tuesday. Wednesday proves to be the most important with the FOMC interest rate announcement expected. Finally with plenty of focus surrounding the housing sector, Existing Home sales on Friday is sure to receive plenty of attention. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone will have a quiet week, with only Trade balance (Tuesday) and the Current Account (Friday), expected to generate any interest. In the UK CPI for the month of February (Tuesday), and Retail Sales (Thursday) prove to be the key events. We will provide our previews and reviews of these data releases in the daily summary.

In Japan finds the BoJ interest rate announcement out on Tuesday. As always it will be accompanying statements by Gov Fukui that will generate most interest. On Wednesday the Merchandise trade balance could prove to be a point of significance. We will provide our previews and reviews of these data releases in the daily summary.

In Australia a very quiet week is expected with only Housing Starts on the Tuesday holding any importance. We will provide our previews and reviews of these data releases in the daily summary.