Australian FOREX Weekly Outlook 30/04/2007

Poor US GDP causes the Euro to reach all-time highs of 1.3683. Poor CPI out of Australia causes sell-off ahead of this week RBA cash rate.

30/04/07

last week’s currency trading review

The Dollar remained bearish for most of the week as further negative data hindered on the outlook of the dollar. Housing sector showed further slowing of the US economy. More importantly weak GDP data on Friday further weighed on the US economy. Although strong consumer confidence gave some support to end the week. The Euro began the week with ECB vice-president hinting at a possible rate hike sometime June. As markets confidence in tightening a possibility, the EUR remained bullish for much of the week, breaking record highs against the USD trading at 1.3683 and against the JPY reaching levels of 163.25 on Friday. The EUR closed last week at 1.3641 having opened at 1.3572. The Japanese Yen traded for much of the week on technical’s before Fridays heavy slate of data saw significant JPY weakness. Investor’s interpreted data as future BoJ tightening a distant possibility, the JPY suffered as a low interest bearing currency reaching record lows against the Euro. The JPY closed last at 119.64 having opened at 118.59. The GBP broadly eased from 26 year highs trading under the $2 level. On the data front UK GDP was released higher than consensus gave further indication of a possible tightening by the BoE. The GBP closed last week at 1.9967 having opened at 2.0009. The AUD began the week with a poor PPI data release on Monday which had little impact on the currency as markets seemed more concerned with CPI the following day. The figure came in significantly worse as investors began to second guess an RBA rate hike later on this week, causing an immediate sell of in the Aussie Dollar. The AUD closed last week at 0.8301 slightly down on its open of 0.8333.

The forex trading week preview

In the States once again plenty of focus will revolve around the US markets, as Monday begins with the release of Core PCE and Chicago PMI. Manufacturing ISM (Monday) and Non- Manufacturing ISM will be paid attention as markets await any further indication on the pace of US economic activity. Non-Farm Payrolls will much anticipated on Friday. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone is scheduled for a heavy data week with Consumer Confidence and CPI sure to start the proceedings on Monday. Furthermore, Manufacturing PMI, Unemployment rate (Wednesday) and PPI (Thursday) are all sure to generate market movement. To end the week Services PMI and Retail Sales are both out on Friday. In the UK plenty of attention will be directed to the UK markets for any further indication and a possible rate hike by the BoE, with Governor King scheduled to talk (Wednesday). On the data front, Consumer confidence and Manufacturing PMI are out early in the week. Services PMI will close the week released on Thursday. We will provide our previews and reviews of these data releases in the daily summary.

In Japan will be very quiet as market holidays are expected for much of the week. . We will provide our previews and reviews of these data releases in the daily summary.

In Australia many investors will await the RBA rate decision expected on Thursday. Friday the release of the RBA Quarterly Monetary Policy Statement will also cause plenty of interest. We will provide our previews and reviews of these data releases in the daily summary.