Australian FOREX Daily Outlook 30/08/2007

Rebounding Global equities support high Yielder’s. Bernanke further indicates of rate cuts.

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

• U.S. Dollar Trading (USD) gave up most of its previous session gains against a bulk of majors following rebounds in global stock prices. Markets were buoyed by a letter from the Federal Chairman, in which he stated that the central bank was “prepared to act as needed” in order to stabilize the effect of the economy from further fall out in the credit woes, in which traders interpreted as further speculation for a much needed interest rate cut. U.S. share markets tracked gains of the European equities, with the NASDAQ ending up 62.52 (+2.50%) whilst the Dow Jones also surged, up 247.44 points (+1.90%). Crude oil surged overnight by 2% on reports that U.S. supplies fell, up US$1.78 a barrel to $US73.51. Looking ahead, GDP out of the US will cause plenty of interest, ahead of further key data on Friday.              

• The Euro (EUR) rallied on the back of a broadly weaker dollar, as confidence returned to the market in rebounding U.S. and European equities. Overall the EURUSD traded with a low 1.3563 and a high of 1.3676 before closing the day at 1.3672 in the New York session.   

• The Japanese Yen (JPY) fell by 1% against the USD on Wednesday following rebounding stock prices. Overall the USDJPY traded with a range of a low 113.86 and a high of 116.22 before closing the day at 116.15 in the New York session. In data news Retail Sales out of Japan for the month July were released worse than expected at -2.2 (Forecast: -0.8).     

• The Sterling (GBP) gained on Wednesday and was able trade comfortably over 2.0000 levels, in returning carry trade market. Overall the GBPUSD with a low 1.9964 and a high of 2.0181 before closing the day at 2.0180 in the New York session. 

• The Australian Dollar (AUD) rallied to trade above key 82 cent levels on rebounding market. With little data out, the Aussie dollar traded on the back of other majors, supported by its role as a high yielding currency.  Overall the AUDUSD traded with a low 0.8053 and a high of 0.8233 before closing the day at 0.8223 in the New York session.

• Gold (XAU) rebounded on a weaker dollar rising by US$1.50 an ounce to US$675.40

CURRENCY PAIR IN FOCUS

• EURJPY recorded its biggest gain in a session since June 2004, trading with a low of 154.53 and a high of 158.85 to close near day highs of 158.80 in the New York sessio

• Euro 1.3655

Initial support at 1.3562 (38.2% retracement of the 1.3360 to 1.3687 advance) followed by 1.3534 (Aug 23 low). Initial resistance is now located at 1.3687 (Aug 27 high) followed by 1.3711 (Aug 13 high).

• Yen 115.65

Initial support is located at 113.85 (Aug 29 low) followed by 113.67 (Aug 20 low (113.72 is the 61.8% retracement)). Initial resistance is now at 116.25 (Aug 29 high) followed by 116.75 (Aug 27 high).

• Pound – 2.0145

Initial support at 1.9961 (Aug 29 low) followed by 1.9859 (61.8% retracement of the 1.9652 to 2.0195 advance). Initial resistance is now at 2.0195 (Aug 27 high) followed by 2.0272 (61.8% retracement of the 2.0656 to 1.9652 decline)

• Australian Dollar – 0.8185

Initial support a 0.8051 (Aug 29 low) followed by 0.8005 (50% retracement of the 0.7674 to 0.8336 advance). Initial resistance is now at 0.8234 (Aug 29 high) followed by 0.8288 (Aug 28 high)

• Gold – 666.60Initial support at 657.70 (Aug 24 low) followed by 653.70 (Aug 20 low). Initial resistance is now at 669.00 (Aug 29 high) followed by 676.80 (Aug 8 high)

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