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Australian FOREX Daily Outlook 19/04/2007

GBP reaches a 26 year high on the back of speculation of further tightening. Euro breaks key levels of 1.3600 to trade near 2 year highs, AUD reaches a fresh 16 ½ year highs

                                                                                                                                                                                                                                   

CURRENCY TRADING SUMMARY –  19 APRIL 07 (23:30GMT)
                                                                     

  • U.S. Dollar Trading (USD) slid on Wednesday against all other majors, as market sentiment remained skeptical on the Dollar. As there is little fundamental data for the rest of the week out of the US, many analysts have indicated that the weakness weighed on the greenback should remain to be the dominant theme. In US share markets, the NASDAQ fell by 6.45 points (-0.26%) whilst the 30.80 points (0.24%). Crude oil fell US$0.12 a barrel US$63.01. Looking ahead, the Philly Fed survey is scheduled for release today with markets expecting a figure of 2.0, higher than the previous 0.2 for the month of April.                    

 

  • The Euro (EUR) traded near record highs against the USD, as further prospects of monetary tightening by the EU emanated. The Euro broke through key levels of 1.3600 for the first time in 2 years almost reaching record highs reached in December 2004. Overall the Euro traded with a range of a low 1.3557 and a high of 1.3617 before closing the day at 1.3579 by the end of the New York session.      

 

  • The Japanese Yen (JPY) strengthened on Wednesday despite recent trends in Carry trades, which may indicate some rebalancing of risky trades. Further more the EURJPY pulled back from recent record highs as investors sought to take profits. Overall, the JPY traded with a range of a low 118.11 and a high of 119.03 before closing at 118.61 in the New York session. 

 

  • The Sterling (GBP) was the most significant mover reaching a 26 year high against the USD as further indication of a future rate hike was endorsed by the MPC minutes release. With the Sterling break through key resistance levels of 2.0000 on Tuesday, the GBP then tested and broke through further levels of 2.0100 on Wednesday to reach highs last seen in June 1981. The GBPUSD reached a high of 2.0133 as expectations the BoE will hike by at least 25 basis points to 5.5% in May were further supported with the BoE minutes showing a 7-2 vote to sustain rates at 5.25%. It was further highlighted that the 2 votes were supportive of an increase. GBP fell later on as investors sought to pair their gains. In other news Unemployment came in on consensus at 5.5%.   Overall the GBP traded with a range of a low 2.0016 and a high of 2.0133 before closing the day at 2.0056 in the New York session.            

 

  • The Australian Dollar (AUD) was subject to plenty of technical trading last night with little data released to move the currency pair. However the AUD did reach a fresh 16 and a half year high against the greenback. Overall the traded with a range a low of 0.8315 and a high of 0.8389 before closing the day at 0.8387 near day highs in the New York session.

 

  • The Czech Krown     saw central bank has reduced US dollar holdings from 47.2% of its foreign exchange reserves at the end of 2005 to 34.6% now. The reduction in the reserves, which amount to $32b, has been mainly in favor of the British pound and Japanese yen

 

  • Gold (XAU) rose on the back of a broadly weaker dollar. Gold rose by US$0.80 an ounce to US$693.30.

TECHNICAL COMMENTARY                                                     

 

                                                                                                                                         

                                                                                                                     

                     

Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3480 1.3556 1.3605 1.3616 1.3637
USD/JPY 117.52 118.11 118.25 119.89 120.00
GBP/USD 1.9878 2.0013 2.0070 2.0134 2.0200
AUD/USD 0.8233 0.8286 0.8350 0.8390 0.8431
XAU/USD 676.80 683.55 690.70 691.20 700.00

                     

 

  • Euro 1.3605

Initial support at 1.3556 (Apr 18 low) followed by 1.3480 (Apr 13 low). Initial resistance is now located at 1.3616 (Apr 18 high) followed by 1.3637 (High Close Dec 30, 2004)

                                                                               

  • Yen 118.25

Initial support is located at 118.11 (Apr 18 low) followed by 117.52 (50% retracement of the 115.15 to 119.89 advance). Initial resistance is now at 119.89 (Apr 16 high) followed by 120.00 (Psychological round number resistance)

 

  • Pound – 2.0070

Initial support at 2.0013 (Apr 18 low) followed by 1.9878 (Apr 17 low). Initial resistance is now at 2.0134 (Apr 18 trend high) followed by 2.0200 (Psychological Round Number)

 

  • Australian Dollar – 0.8350

Initial support a 0.8286 (April 16 low) followed by 0.8233 (Apr 11 low). Initial resistance is now at 0.8390 (Apr open + Mar range * 0.618) followed by 0.8431 (Dec 1988 former low)

 

  • Gold – 690.70

Initial support at 683.55 (Apr 16 low) followed by 676.80 (Apr 13 low). Initial resistance is now at 691.18 (Apr 16 high) followed by 700.00 (Psychological round number)

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