Australian FOREX Weekly Outlook 2/04/2007

02/04/07                                                                                                                                           

last week’s currency trading review

The Dollar experienced a volatile week with the threat of the sub-prime mortgage market still overshadowing the US economy. With New Home Sales coming in weaker than expected, the housing sector continued to be a point of issue. Federal Reserve Chairman Bernanke made mention that the slowing housing sector was beginning to effect the broader economy. Bernanke did also make mention that the Central Bank had not shifted its focus from battling inflation, which gave some support to the Dollar despite a poor durable goods figure. The US dollar took a tumble on Friday with comments made by Government officials that the US may impose duties on subsidized goods from China. The Euro strengthened against the USD for much of the week largely on the back of poor US data. The German IFO released on Tuesday reached a record high of 107.7 adding cause to future rate hikes. The Euro closed last week at 1.3354 having opened at 1.3347. The Japanese Yen experienced a heavy data week. Yet most movement on the Yen was attributed to the US-Iran conflict with investors taking a risk-averse type of approach and unwinding their carry trades. Overall the JPY opened last week at 118.07 and closed at 117.78.  The GBP experienced a volatile week with talk circulating that the BoE could look to hike rates in early April. Following admissions by BoE Governor King that the housing sector was slowing contradicted the notion of a rate hike which caused investor to pair profits. The GBP closed last week at 1.9672 having opened at 1.9697. The AUD continued to look bullish all week despite a fortnight of minimal data release. The Aussie dollar reached decade highs early in the week sustaining those levels for much of the week. The AUD closed last week at 0.8093 having opened at 0.8103.

The forex trading week preview

In the States the data week begins on Monday with the release of Manufacturing ISM, Non Manufacturing ISM is set to follow suit on Wednesday followed by Initial Jobless Claims (Thursday). The always anticipated Non-Farm Payrolls is set for release on Friday along with Unemployment rate. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone a busy week is expected starting with Manufacturing PMI on Monday. PPI is also set for release this week (Tuesday) whilst Services PMI and Retail Sales are both set for release on Wednesday. Markets will pay key attention to data out of the Eurozone for any further indication of a rate hike by the ECB. In the UK much of the focus will surround the BoE interest rate announcement scheduled for Thursday. Key Manufacturing data is also set for release this week in the form of Manufacturing PMI (Monday) and Manufacturing Production (Thursday). We will provide our previews and reviews of these data releases in the daily summary.

In Japan the First release of the Tankan survey for 2007 is scheduled for release on Monday in otherwise a quiet week for Japan. We will provide our previews and reviews of these data releases in the daily summary.

In Australia following a fortnight of no data out of Australia, volume increases substantially this week starting with Retail Sales (Monday). On Tuesday the Trade Balance is also scheduled for release, and finally the much anticipated RBA interest rate announcement (Wednesday). We will provide our previews and reviews of these data releases in the daily summary.