Australian FOREX Weekly Outlook 21/05/2007

Central Bank of China causes volatility with the widening of trading bands between the Yuan-USD. Focus on U.S. housing sector.

21/05/07                                                                                                                                                                                                                 

last week’s currency trading review

The Dollar began the week sliding on the back of some poor CPI data, which weighed heavy on the USD, before rebounding in the middle of the week boosted by buoyant housing data. Markets have recently changed their focus on the Federal Reserve policy outlook as ambiguous data out of the U.S. has caused investors to second guess monetary loosening.   The Euro had a quiet start to the week before Tuesday’s GDP and Wednesday’s CPI data came in better than expected adding significant support to the EURUSD pair, before trading on technical’s for the remainder of the week. The Euro closed last week at 1.3505 having opened at 1.3540. The Japanese Yen began the week with little focus as Wednesday saw the currency hit a three-month low against the USD. GDP data came in weaker than expectations on Thursday morning, giving an early indication of a unanimous decision by BoJ members to keep the call rate unchanged at 0.50% later on that afternoon. Plenty of volatility was seen on the USDJPY pair, as reports on Friday circulated that the People’s Bank of China will widen the Yuan-USD bands and raise interest rates, causing initial Yen strength before markets had a change of heart, interpreting such actions may not necessarily have a positive effect on the CYN. The USDJPY closed last week 121.39 having opened at 120.29. The GBP began the week negatively as poor PPI figures ensured investors looked for short sterling positions, before regaining some of its losses on Tuesday as CPI came in on consensus and a broadly weaker USD. The GBP failed to sustain its strength as Retail Sales (Friday) disappointed, released at -0.1% (Forecast: 0.5%). The GBPUSD ended the week at 1.9743 having opened at 1.9783.   The AUD was range bound and traded on technical’s for much of the week largely attributed to the lack of economic data. However the AUD did find support early on the week by robust NZ Retail Sales figures. The AUDUSD ended the week at 0.8237 having opened at 0.8323.  

The forex trading week preview

In the States a relatively slow start to the week is expected before volume in key data increases significantly on Thursday with the release of Durable Goods, Initial Jobless Claims, and housing data (Both New Home Sales and Existing Home Sales). We will provide our previews and reviews of these data releases in the daily summary.

In the Eurozone sees the German ZEW survey out on Tuesday. Otherwise little data is out of the EZ, up until Thursday’s German IFO survey. In the UK also has a minimal data week scheduled with the BoE minutes for the May 10 meeting and GDP (Q1) out on Friday? We will provide our previews and reviews of these data releases in the daily summary.

In Japan Merchandise Trade Balance for the month of April is out on Thursday before Nationwide and Tokyo (Both headline and core) are made public on Friday. We will provide our previews and reviews of these data releases in the daily summary.

In Australia is expected to trade on technical’s with no Tier 1 data out of the Nation. We will provide our previews and reviews of these data releases in the daily summary.