Australian FOREX Daily Outlook 22/08/2007

China increase interest rates as markets remain composed. BoJ rate announcement nearing  

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

• U.S. Dollar Trading (USD) eased further on Mondays trading on further expectations that the Federal Reserve may be inclined to take further measures to ease U.S. credit and liquidity conditions. With the expectation that the central bank could cut rates by 0.50% in the next FOMC meeting continued to gain momentum, many analyst are of the view that short USD positions will be most favorable. In U.S. share markets the NASDAQ was up 12.71 (0.51%) whilst the Dow Jones was down 30.49 points (-0.23%). Crude oil fell by US$1.74 a barrel to US$69.38.          

• The Euro (EUR) continued edge higher against the USD, following market expectations the Federal Reserve may move to ease policy. Overall the EURUSD traded with a range of a low 1.3457 and a high of 1.3521 before closing the day in the New York session at 1.3468. Looking ahead, key data will be released in the form of Current Account (June) with forecasts at -2 bln (Prior: -8.6 bln).          

• The Japanese Yen (JPY) gave up most of its gains against high yielder’s. The yen gained in volatile trading as nervous investors continued to move away from risky carry trades. However, earlier in the session, the Japanese currency cut some gains after the People's Bank of China raised interest rates, with some traders saying it showed the Chinese economy continues to boom and tempted investors back into high-yielding assets. Overall, the USDJPY traded with a range of a low 114.01 and a high of 115.24 before closing the day at 114.20 in the New York session.

• The Sterling (GBP) bounced around throughout the session to fall by 0.1% on the day. Overall the GBPUSD traded with a range of a low 1.9746 and a high of 1.9908 before closing the day at 1.9823 in the New York session.

• The Australian Dollar (AUD) was range bound for much of the session trading between key levels. Overall the AUDUSD traded with a low 0.7958 and a high of 0.8080 before closing the day at 0.8004 in the New York session.

• The South African Rand (ZAR) firmed against the dollar tale today after it was traded in a wide range. At the end of the day in Johannesburg the Rand was traded at 7.3620 to the dollar

• Gold (XAU) was flat for most of the day trading between 654.60 and a high of 660.50.   

• Euro 1.3455

Initial support at 1.3360 (Aug 16 low) followed by 1.3305 (Jun 15 low). Initial resistance is now located at 1.3548 (Aug 17 high & 38.2% retracement of the 1.3853 to 1.3360) followed by 1.3628 (Aug 14 high).

• Yen 114.40

Initial support is located at 113.67 (Aug 20 low) followed by 111.60 (Aug 17 low). Initial resistance is now at 115.52 (Aug 21 high) followed by 116.40 (38.2% retracement of the 124.17 to 111.60 decline).

• Pound – 1.9825

Initial support at 1.9741 (Aug 21 low) followed by 1.9652 (Aug 17 low). Initial resistance is now at 1.9937(Aug 17 high) followed by 1.9974 (Aug 15 high)

• Australian Dollar – 0.8000

Initial support a 0.7955 (Aug 21 low) followed by 0.7891 (Aug 20 low). Initial resistance is now at 0.8095 (Aug 20 high) followed by 0.8133 (38.2% retracement of the 0.8875 to 0.7674 decline)

• Gold – 656.40

Initial support at 642.45 (Aug 16 low) followed by 640.00 (Jun 26 low). Initial resistance is now at 668.90 (Aug 16 high) followed by 676.80 (Aug 8 high)

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