Australian FOREX Daily Outlook 05/10/2007

USD three day rally snapped as markets await Non Farm Payrolls data.  

CURRENCY TRADING SUMMARY –  05 OCTOBER 2007 (00:30GMT)

·                U.S. Dollar Trading (USD) eased on Thursday ceasing a three day rally as traders wait in anticipation of Fridays Non Farm Payrolls data, which may indicate further rate cuts from the Federal Reserve. In U.S. share markets the NASDAQ was up by 4.14 points (+0.15%) whilst the Dow Jones was also up by 6.26 points (+0.04%). Crude oil rose by US$1.55 a barrel to sit at $US81.50 on speculation of buying dips below $80 a barrel. Looking ahead, Jobs data takes center stage, with Unemployment rate for the month of September expected to come in at 4.7%, up from the previous 4.6%. However most attention will be placed on Septembers Non Farm Payrolls data. With last month figures showing a decline by -4k (the first since 2003), speculators will await the data eagerly to see if the US economy as a whole is indeed heading towards a recession, fuelling further Fed cuts.                

·                The Euro (EUR) failed to surprise by keeping rates on hold overnight. Much of the market had priced in the borrowing rate remaining at 4.00%, yet the Euro suffered on President Trichet dovish post commentary in which he highlighted downside risk to growth. However any further losses were capped as Traders reviewed the ECB had not changed its approach to inflation. Overall the EURUSD traded with a low of 1.4068 and a high of 1.4149 before closing the day at 1.4119 in the New York session.

·                The Japanese Yen (JPY) traded in a narrow range for much of the session as global stock did little to entice ongoing rebuilding of carry trades. Overall the USDJPY once again traded with a low of 116.28 and a high of 116.76 before closing the day at 116.47 in the New York session.

·                The Sterling (GBP) saw it respective central bank keep rates unchanged at 5.75%, despite a small minority of the market pricing a rate cut by 25 basis points. The Sterling Pound gained initially on the back of the announcement in light of recent liquidity concerns. However housing sector suffered once again as data (September Halifax house price index) confirmed a drop of 0.6% for the month. Overall the GBPUSD traded with a range of a low 2.0279 and a high of 2.0428 before closing the day at 2.0373 in the New York session.  

·                The Australian Dollar (AUD) rebounded well, following an initial sell of during the late Asian Session. On the back of a broadly US dollar the Aussie was able to return to its bullish support as traders pre-empt Non Farm Payrolls data on Friday. Overall the AUDUSD traded with a low of 0.8796 and a high of 0.8901 before closing the day at 0.8868 in the New York session.  

·                The South African Rand (ZAR) held steady against the greenback while South African mining stocks pushed the local bourse to yet another record high close on Thursday as commodities gained renewed appeal. The USDZAR traded with a low of 6.8700 and a high of 6.9651.  

·                Gold (XAU) futures erased initial losses to rise in choppy trade. XAU traded with a low of 721.25 and a high 738.35.

·                Euro 1.4135

Initial support at 1.4062 (Sep 25 low) followed by 1.3930 (38.2% retracement of the 1.3361 to 1.4282 advance). Initial resistance is now located at 1.4201 (Oct 3 high) followed by 1.4240 (Oct 2 high)

·                Yen 116.45

Initial support is located at 115.29 (Oct 2 low) followed by 114.54 (Sept 27 low). Initial resistance is now at 117.13 (Aug 23 high) followed by 117.88 (50% retracement of the 124.15 to 111.61 decline).

• Pound – 2.0395

Initial support at 2.0279 (Oct 4 low) followed by 2.0260 (38.2% retracement of the 1.9880 to 2.0495 advance). Initial resistance is now at 2.0444 (Oct 3 high) followed by 2.0495 (Oct 1 high)

• Australian Dollar – 0.8885

Initial support a 0.8786 (Sep 28 low) followed by 0.8748 (Sep 27 low). Initial resistance is now at 0.8916 (Oct 3 trend high) followed by 0.8952 (Oct 2 trend high).

• Gold – 736.40

        Initial support at 722.70 (Sep 25 low) followed by 712.30 (Sep 18 low). Initial resistance is now at 736.20 (Oct 3 high) followed by 747.85 (Oct 1 trend high)