Australian FOREX Daily Outlook 22/06/2007

Kiwi Dollar touches a record high since floating 22 years ago. High-yielder’s continue to be point of interest as Philly Fed gives initial support to USD.

CURRENCY TRADING SUMMARY –  22 JUNE 2007 (00:30GMT)

• U.S. Dollar Trading (USD) was mixed across the board as an unexpectedly large gain in Philadelphia area factory output in June provided a momentary boost to the dollar, which has closely tracked bond yields in recent weeks, but the greenback eased as U.S. Treasury yields failed to hold gains. The dollar did end the session relatively unchanged as it surrendered its gains following the highest reading of growth on a regional U.S. economic indicator since April 2005. In U.S. share markets the NASDAQ was up 17 points (+0.65%) whilst the Dow Jones was also up by 56.42 points (+0.42%). Crude oil fell by US$0.26 a barrel to $68.60.    

• The Euro (EUR) was flat against the USD with the absence of data rebounding from early session losses. Overall the Euro was trapped in a narrow range for the fourth consecutive session as the pair traded with a low 1.3372 and a high of 1.3409 before closing the day at 1.3387 in the New York session. Looking ahead, the German IFO will be made public today with analysts expecting the figure to be released at 108.4 down from the previous 108.6.      

• The Japanese Yen (JPY) was up 0.2% against the USD reaching a near 4.5 year high of 123.70 as investors continue to source the low yielding currency. Overall the USDJPY traded with a range of a low 123.40 and a high of 123.75 before closing the day at 123.67 in the New York session.          

• The Sterling (GBP) traded on the back of majors on Thursday stuck in a tight range. Overall the GBPUSD traded with a range of a low 1.9889 and a high of 1.9941 before closing the day 1.9921 in the New York session.

• The Australian Dollar (AUD) was one of the biggest movers on Thursday, benefiting from the carry trade phenomena, as strong economic growth has placed upward pressure on interest rates. Overall the AUD traded with a range of a low 0.8430 and a high of 0.8472 before closing the day at 0.8454 in the New York session.

• The Kiwi Dollar (NZD) was also a big mover on Thursday due the nations current call rate being an attractive 8%, the highest of the G10 nations. Attempts by New Zealand's central bank to intervene in the market this month have failed to limit the kiwi's gains, as investors flock to the highest interest rates in the industrialized world. The Kiwi yesterday traded at a 22 year high, above 0.7640 for the first time since the currency floated in 1985.

• The Swiss Franc (CHF) eased against the USD as investors continued to search for the low yielding currencies in order to fund carry trades. Overall the USDCHF traded with a low 1.2372 and a high of 1.2428 before closing the day at 1.2416.

• Gold (XAU) tumbled on Thursday by US$5.80 an ounce to US$654.20 on the back of easing oil prices and a firmer dollar.