Australian FOREX Weekly Outlook 23/04/2007

USD weakens against all majors  with multi year highs are seen across the board, as inflationary pressures point of concern for ECB and BoE. Heavy data week for Japan in light of future policies.  

23/04/07                                                                                                                                           

last week’s currency trading review

The Dollar was soft against most majors for much of the week, as comments made by the G7 summit made reference to the trade imbalance seen in the US could eventuate in a rate cut. Poor data in the form of Industrial Production and CPI gave further indication of a slowing US economy. With reference that weakness on the USD will remain the dominant theme for much of the week, caused the greenback to slide further. Overall, with speculation rife that the US will have to loosen inflationary pressures, many majors reached multi-year highs against the Dollar.     The Euro remained bullish all week as the high yielding currency continued to benefit from carry trades. On the back of a narrowing Trade balance, the Euro reached two year highs on Tuesday before breaking key levels of 1.3600 the following day to record fresh 2 year highs and trade slightly under all time record high since the inception of the currency. Furthermore the EURJPY pair reached record highs on Monday trading at 162.43. Overall the Euro closed last week at 1.3630 having opened at 1.3531. The Japanese Yen had little data released, yet experienced plenty of volatility. With the green light given to carry trades by the G7 summit, the JPY immediately suffered reaching a record low against the Euro on Monday of 162.43. The JPY did find significant strength amidst market volatility, with the overheating of the Chinese markets (strong GDP and CPI) added to a possible interest rate hike, caused a significant sell off in Asian Stock markets, prompting investors to unwind carry trades, causing significant Yen strength. Overall the JPY closed last week at 118.63 having opened at 119.14.The GBP was the biggest mover last week as strong inflation data saw the sterling reach a 26 year high breaking key levels of 2.0000 and 2.0100 on the way. The GBP closed last week at 2.0036 having opened at 1.9863 at the beginning of the week. The AUD was subject to technical trading as little economic data was made public. The AUD closed last week at 0.8348 having opened at 0.8321

The forex trading week preview

In the States plenty of emphasis will surround the housing sector with Existing home sales and New home sales out on Tuesday and Wednesday respectively. Further more, Durable Goods (Wednesday) and Initial jobless Claims (Thursday) will give a fair indication on the state of the US economy. Finally, Friday sees key data in the form of GDP for the first quarter and to a lesser extent Michigan Sentiment being made public. We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone although a relatively busy data week is expected, the key releases will be in the form of Current account and Industrial Production expected on Tuesday. The German IFO survey will be made public on Wednesday. In the UK following last weeks heavy data slate, minimal data is expected out of the UK with only GDP (Wednesday) and Nationwide House Prices (Thursday) expected to generation. We will provide our previews and reviews of these data releases in the daily summary.

In Japan begins a very quiet week on Wednesday with Trade Balance, before the sheer volume of economic data is scheduled to increase substantially on Friday with the release of: Unemployment Rate, Household Spending, Manufacturing PMI, Tokyo CPI, Nationwide CPI, Industrial Production, as well as BoJ interest rate announcement all destined to generate market movement. We will provide our previews and reviews of these data releases in the daily summary.

In Australia will have key importance early on in the week with PPI (Monday) and CPI (Tuesday) being made public, before New Home Sales is scheduled for release on Thursday. In Other news the RBNZ cash rate is scheduled on Wednesday. We will provide our previews and reviews of these data releases in the daily summary.