Australian FOREX Weekly Outlook 26/03/2007

26/03/07

last week’s currency trading review

The Dollar experienced a volatile week with the threat of the sub-prime mortgage market still overshadowing the US economy. As a result the USD began the week reaching three-month lows against a basket of currencies. Undoubtedly the highlight on the economic calendar for the US was the FOMC interest rate announcement which was left unchanged on Wednesday. Yet it was accompanying statements that generated most interest with speculation rife that a cut could be likely in the near term. The Dollar recovered on Friday on the back of strong Existing Home sales figure coming in at 6.69mil with markets expecting a weaker figure of 6.31mil. The Euro experienced a relatively quiet week yet did not hamper in its strength against the USD, reaching two year highs on Wednesday breaking through 1.3300 levels. In terms of specific data for the Euro Zone, the Current Account was released on Friday which was shrugged off by markets despite coming in better than expected at 2.7 bln for the month of January. Overall the Euro closed last week at 1.3290 having opened at 1.3299. The Japanese Yen experienced a relatively quiet week in terms of data despite the BoJ leaving interest rates unchanged on Tuesday. Japan also released the Trade Balance for the month of February coming in better than expected at 979 bln. Land prices released on Friday caused the biggest surprise with the data recording a rise for the first time in 16 years assisting a slight Yen rally. Overall, the JPY closed last week at 118.05 having opened at 117.77 at the beginning of the week. The GBP was the biggest mover last week with positive data on Tuesday in the form of a strong CPI number. This was added to a positive retail sales figure released on Thursday which gave notion to a possible rate hike by the BoE in the near future. Overall, the sterling gained almost 1% over the week closing at 1.9614 having opened at 1.9438. The AUD continued to look bullish all week despite minimal data release. The Aussie dollar broke through key resistance levels of 0.8000 on Monday and continued to climb on the back of speculation that the RBA would look to hike rates in the near future. Overall, the AUD closed at 0.8057 having opened the week at 0.7993.

The forex trading week preview

In the States begins its data week on Monday with the release of New Home sales. Durable goods are also sure to generate interest as Bernanke is scheduled to testify in front of a joint economic committee (Wednesday). The final release of the GDP (Q4) is released on Thursday. While a heavy data day is anticipated for Friday with the release of Core PCE, Michigan Sentiment Survey, and President Bernanke scheduled to speak once more. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone starts its data week on Tuesday, with the publication of the German IFO survey. The Eurozone M3 money supply may cause some movement on Wednesday. Before a heavy data day is expected on Friday in the form of CPI, Unemployment Rate and consumer confidence all scheduled for release. In the UK has a quiet week scheduled with only Wednesday generating any activity. Nationwide House prices, GDP (Q4, Final) and the Current Account all made public. We will provide our previews and reviews of these data releases in the daily summary.

In Japan has a heavy data week scheduled with the release of BoJ minutes for the Feb 21 meeting being watched for any indication of future policies that the BoJ may take (Monday). On Wednesday, Retail Sales for the month of February will be made public. Whilst Thursday will see a very heavy data day in the shape of Unemployment rate, Household Spending, Tokyo core CPI, Nationwide core CPI and Industrial Production all scheduled for release. We will provide our previews and reviews of these data releases in the daily summary.

In Australia has minimal data released with keen investors finding New Home Sales (Tuesday) holding any significance. We will provide our previews and reviews of these data releases in the daily summary.