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Australian FOREX Daily Outlook 11/04/2007

 

CURRENCY TRADING SUMMARY –  11 APRIL 07 (23:30GMT)
                                                                     

  • U.S. Dollar Trading (USD) slumped during Tuesday trading, as further indication of protectionism between China and the US was on the rise following revelations that the United States had questioned piracy issues at the World Trade Organization, preventing key industries in film, literature and software. In other news, the USD suffered on the back further uncertainty in the Housing sector, as shares in a leading mortgage organization, American Home Mortgage Investment Corp took a tumble following a downward revision of the forecasted profits. Markets interpreted this as the recent defaults in the Sub-prime mortgage markets may be affecting the higher-quality loans sector. Overall, concerns over the slowing housing sector and the rising tension of a trade dispute between two of the worlds largest economies weighed heavy on the greenback. In US share markets, the NASDAQ was up 8.43 points (0.34%) whilst the Dow Jones 4.71 points (0.03%). Crude oil was dropped slightly by US$0.02 to US$61.87 a barrel. Looking ahead, markets will be awaiting the minutes of the FOMC March 21 meeting for any indication on future policies.          

 

  • The Euro (EUR) hit fresh 2 year highs against the greenback on Tuesday, following further uncertainty over the slowing US economy (housing) and the imminent trade war with China which attributed to dollar weakness. Overall, the Euro traded with a low of 1.3350 and a high of 1.3457 before closing the day at 1.3425 in the New York session.            

 

  • The Japanese Yen (JPY) saw the BoJ surprise no one by keeping interest rates unchanged at 0.50% (lowest of the industrialized nations) with carry trades increasing pushing the EURJPY to an all time high of 160.16. As always statements made by the BoJ generated market interest with Governor Fukui stating that it was time for the Central Bank to examine how the recent rate hike (February) had affected the Japanese economy. It was also mentioned that Consumer Prices were likely to stay flat with long term uptrend, as Fukui indicated that rates will be need to be adjusted accordingly. Economists remained confident that comments made by Governor Fukui had not shifted the focus of rate hike to 0.75% during the second half of 2007. Overall, the JPY traded with a range of a low 118.76 and a high of 119.36 before closing the day at 119.11 in the New York session. Looking ahead, Wednesday continues the trend of data with Machinery orders (Previous: 3.9%) and Current Account (Previous: 49.8%) for the month of February released. UPDATE: Machinery Orders: -5.2% Current Account: 4.9%      

 

  • The Sterling (GBP) strengthened on the back of a weaker dollar, yet reached a three-week low against the Euro pressured by residual disappointment in the market that the Bank of England did not raise interest rates last week. Overall, the GBP traded with a range of a low 1.9672 and a high of 1.9750 before closing the day at 1.9717 in the New York session.

 

  • The Australian Dollar (AUD) broke through key resistance levels of 0.8212 during the Asian session on Tuesday as investors remained ‘bullish’ on the Aussie Dollar. As a result the Aussie Dollar reached 16 year highs. Overall, the AUD traded with a low of 0.8160 and a high of 0.8260 before closing near day highs of 0.8257 in the New York session.

 

  • The Czech Crown (CZK) saw inflation edge up in line with market expectations in March, but remained below the central banks target, bolstering expectations of flat interest rates in the near term. CPI rose 0.3 % in March from February to take the annual inflation rate to 1.9 percent. Record highs at the end of last year has kept a lid on price pressures in the booming economy, yet most analysts are confident a rise in interest rates by the summer will materialize as the crown has steadied at weaker levels. Economists expect CPI to exceed 2 percent in April or May. Overall the CZK traded with a low 20.756 and a high of 20.870.  

 

  • Gold (XAU) reached six week highs on the back of a weaker dollar rising by US$4.60 an ounce to US$681.50   

TECHNICAL COMMENTARY                                                     

 

                                                                                                                                         

                                                                                                                     

                     

Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3288 1.3339 1.3420 1.3481 1.3582
USD/JPY 117.20 118.43 119.10 119.51 120.00
GBP/USD 1.9579 1.9591 1.9715 1.9768 1.9823
AUD/USD 0.8064 0.8150 0.8250 0.8300 0.8350
XAU/USD 652.40 663.85 676.90 681.51 682.82

                     

 

  • Euro 1.3420

Initial support at 1.3339 (Apr 9 low) followed by 1.3288 (Mar 30 low). Initial resistance is now located at 1.3481 (Mar 11, 2005 high) followed by 1.3582 (Jan 3, 2005 high)

                                                                               

  • Yen 119.10

Initial support is located at 118.43 (Apr 5 low) followed by 117.20 (Mar 30 low). Initial resistance is now at 119.51 (61.8% retracement of the 122.20 to 115.15 decline) followed by 120.00 (Psychological round number resistance)

 

  • Pound – 1.9715

Initial support at 1.9591 (Apr 9 low) followed by 1.9579 (38.2% retracement of the 1.9184 to 1.9823 advance). Initial resistance is now at 1.9768 (76.4% retracement of the 1.9823 to 1.9591 decline) followed by 1.9823 (Apr 3 high)

 

  • Australian Dollar – 0.8195

Initial support a 0.8150 (April 9 low) followed by 0.8064 (Apr 4 low). Initial resistance is now at 0.8300 (Psychological round number) followed by 0.8350 (Psychological round number)

 

  • Gold – 676.90

Initial support at 663.85 (Apr 4 low) followed by 652.40 (Mar 19 low). Initial resistance is now at 681.51 (Apr 10 high) followed by 682.82 (Trend-Line resistance)

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