Australian FOREX Daily Outlook 22/11/2007

Oil closes in on $100 a barrel trading with a record high of US$99.29. Lower stock prices cause market volatility.  

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

·                U.S. Dollar Trading (USD) the dollar was mixed against a basket currency on Wednesday on a broadly bearish sentiment that credit woes will slow U.S. Economic growth, prompting the Federal Reserve to lower interest rates once more this year. In a delayed reaction to the Fed minutes released on Wednesday, expectations that Economic growth will slow considerably, caused investors towards a risk averse sentiment, relieving the dollar against a number of the high yielding currency. In U.S. share markets, the NASDAQ was down -34.66 points (-1.33%) whilst the Dow Jones was also down by -211.1 points (-1.62%). Crude oil traded at record high on Wednesday $99.29, just shy of the key $100 level, before closing the day at US$97.74 a barrel.    

·                The Euro (EUR) traded at a fresh record high overnight, as ongoing concerns in the US economy prompted investors to source alternative currencies. In what was otherwise a quite session on the data front, the Euro did lose ground against the low yielding Japanese Yen as a drop in stock prices provided strength in the JPY. Overall the EURUSD treaded with a low of 1.4776 and a high of 1.4870 before closing the day at 1.4864 in the New York session. Looking ahead, German GDP will be released to the public with little data prominent.        

·                The Japanese Yen (JPY) traded at 2 year high versus the dollar as sharp falls in equity markets triggered Yen cross sell off. Overall the USDJPY traded with a low of 108.26 and a high of 109.97 before closing the day at 108.58 in the New York session.

·                The Sterling (GBP) capped its gains as the BoE minutes confirming a 7 – 2 vote during the recent rate announcement, for keeping rates unchanged, with 2 MPC members calling for a rate cut in light of recent liquidity issues. Overall the GBPUSD traded with a low of 2.0529 and a high of 2.0697 before closing the day at 2.0665 in the New York session.  

·                The Australian Dollar (AUD) was well supported through out the day before pairing its gains as a drop in US share prices prompted investors to avoid high yielding carry trades. Overall the AUDUSD traded with a low of 0.8655 and a high of 0.8654 before closing the day at 0.8720 in the New York session.

·                Gold (XAU) traded higher as oil prices surged to new record highs just short of the US$100 levels. XAU traded with a low of 794.90 and a high of 807.15.   

TECHNICAL COMMENTARY

·                Euro – 1.4855

Initial support at 1.4582 (Nov 16 low) followed by 1.4521 (Nov 13 low). Initial resistance is now located at 1.4856 (Nov 21 trend high) followed by 1.4858 (1.4518 plus 1.4010 - 1.4350).

·                Yen – 108.45

Initial support is located at 108.81 (Nov 21 trend low) followed by 108.76 (Sep 5, 2005 reaction low). Initial resistance is now at 111.76 (Nov 14 high) followed by 112.88 (Nov 8 high)

·                Pound – 2.0625

Initial support at 2.0354 (Nov 16 low) followed by 2.0243 (Oct 12 low). Initial resistance is now at 2.0698 (Nov 21 high) followed by 2.0846 (Nov 14 high)

·                Australian Dollar – 0.8715

Initial support a 0.8760 (Nov 20 low) followed by 0.8754 (Nov 13 low). Initial resistance is now at 0.8997 (Nov 19 high) followed by 0.9073 (Nov 14 high)

·                Gold – 801.80

          Initial support at 773.00 (Nov 20 low) followed by 771.50 (Oct 19 low). Initial resistance is now at 818.30 (Nov 15 high) followed by 845.80 (Nov 7 trend high)