Australian FOREX Daily Outlook 05/12/2007

Bank of Canada cut rates by 25 basis points, as RBA hold

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

·                U.S. Dollar Trading (USD) was mixed against a number of majors on Tuesday, trading on the back of other currencies, due to little data released out of the U.S. In share market news the NASDAQ was down by -17.3 points (-0.66%) whilst the Dow Jones also fell by -65.84 points (-0.49%). Crude oil eased by US$0.95 a barrel to US$88.36 ahead of an OPEC meeting Wednesday. Key data out of the U.S. on Wednesday includes Services ISM and the ADP employment report.        

·                The Euro (EUR) broke through key levels of 1.4700 on Tuesday. In data news, PPI for the month of October was above expectations coming in at 0.6%/3.3% for the m/m and y/y. Overall the EURUSD traded with a low of 1.4635 and a high of 1.4767 before closing the day at 1.4764 in the New York session. A heavy slate of data is scheduled for the Eurozone with PMI services, Retail Sales and President Trichet scheduled to speak.

·                The Japanese Yen (JPY) was able to gain as the carry trades continued to look less attractive. Overall the USDJPY traded with a low of 109.56 and a high of 110.53 before closed the day at 109.90 in the New York session.

·                The Sterling (GBP) fell the most in almost three weeks against the Euro on speculation that the Bank of England will cut interest rates on Thursday. GBPUSD traded with a low of 2.0561 and a high of 2.0673 before closing the day at 2.0570 in the New York session. Consumer confidence and PMI Services are set for release out of the UK on Wednesday.  

·                The Australian Dollar (AUD) was range bound for much of the session weighed upon by poor retail sales figures for the month of October. Overall the AUDUSD traded with a low of 0.8711 and a high of 0.8812 before closing the day at 0.8737 at the end of the New York session. The RBA chose to keep rates on hold at 6.75% on Wednesday morning.  

·                The Canadian Dollar (CAD) saw the BoC surprise the market by cutting rates by 25 basis points. Overall the USDCAD traded with a low of 0.9990 and a high of 1.0152 before closing the day at 1.0145 in the New York session.

·                Gold (XAU) traded higher for the second consecutive session on views that the Federal Reserve would be inclined to cut rates next week. XAU traded with a low of 787.30 and a high of 805.50