Australian FOREX Daily Outlook 07/05/2008

OIL trades at a fresh record high boosting XAU

CURRENCY TRADING SUMMARY – 07 MAY 2008 (00:30GMT)

·                U.S. Dollar Trading (USD) eased further against a number of majors as market sentiment surrounding the manufacturing and services remain gloomy for the remaining part of 2008. In what was an otherwise quiet day in US markets, share markets saw the NASDAQ rise by 19.19 points (+0.78%) whilst the Dow Jones was also higher by 51.29 points (+0.40%). Crude oil traded once again at a fresh record high for the second straight day reaching US$122.73 a barrel, before ending the session higher at US$1.87 to end at US$121.84. Looking ahead, focus shifts towards the housing sector with pending home sales for the month of March expected to decline by -1% less than the previous of -1.9%.          

·                The Euro (EURO) was buoyed by strong PPI figures on Tuesday, adding to pressure that the ECB will need to maintain interest rates on hold. Overall the EURUSD traded with a low of 1.5453 and a high of 1.5595 before closing the day at 1.5528 in the New York session. Looking Ahead, ECB officials are scheduled to speak whilst attention will also be placed on Retail Sales figures for the month March. Forecasts lie at 0.2%, better then previous figures of -0.5%.    

·                The Japanese Yen (JPY) once again was subject to other majors due to closed markets as analysts say Asian liquidity is lower than average. Overall the USDJPY traded with a low of 104.02 and a high of 105.12 before closing the day at 104.73 in the New York session.

·                The Sterling (GBP) saw PM services fall to 50.4 (its lowest reading since March 2003) from the previous 52.1 adding to concerns in UK growth. Overall the GBPUSD traded with a low of 1.9637 and a high of 1.9772 before closing the day at 1.9729 in the New York session. An interesting data day is scheduled for the pound, with production data taking center stage.

·                The Australian Dollar (AUD) saw the RBA hold rates as expected at 7.25%, although accompanying statements signaled that current monetary policy remains adequate for the time being, on expectations that domestic demand will slow. The Aussie Dollar was later boosted by surging commodity and energy prices. Overall the AUDUSD traded with a low of 0.9436 and a high of 0.9501 before closing the day at 0.9797 in the New York session.

·                Gold (XAU) hit a one-week high as crude oil traded record high. Overall the XAU traded with a low of 872.60 and a high of 882.70