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Australian FOREX Daily Outlook 18/04/2007

Poor US CPI data causes the greenback to slide against all other majors, as UK CPI helps break the 2.0000 level. BoE minutes scheduled for release along with UK unemployment rate.  

                                                                                                                                                                                                                                     

CURRENCY TRADING SUMMARY –  18 APRIL 07 (23:30GMT)
                                                                     

  • U.S. Dollar Trading (USD) slid against all majors on Wednesday as markets interpreted further poor economic data as a rate cut materializing. CPI seemed to be the biggest contributor as Core CPI came in softer than the expected 0.2% at 0.1%. Industrial Production also weighed on the Dollar as markets expectations of 0.1% were nullified by an actual figure -0.2% despite a downward revision of the previous number to 0.8%. The data added notion to a slowing US economy, as markets remained bearish on the greenback. With plenty of emphasis on the slowing housing sector, House Starts came in better than expected at 1518k yet gave little support to the USD. In US share markets, the NASDAQ fell by -1.38 points (-0.55%) whilst the Dow Jones 52.58 points (0.42%). Crude oil rose by US$0.15 a barrel US$63.25 due to a softer dollar.             

 

  • The Euro (EUR) rose to a fresh two year high on the back of weak CPI data out of the US. The Euro also found some support on the back of a positive trade balance coming in at -1.7 bln (Forecast: -5 bln) even though the previous was revised higher at -7 bln. In other data, the German ZEW survey also came in stronger than expected at 16.5 yet did little to move the currency any higher. Overall the Euro traded with a range of low 1.3525 and a high of 1.3595 before closing at 1.3564 in the New York session.        

 

  • The Japanese Yen (JPY) strengthened broadly against all other majors, with a correction against the EUR lent some support to the USDJPY pair late on Wednesday. Furthermore, US Treasury officials urged Japan to revive its economic growth in order to comprise another economic global power. Overall, the USDJPY traded with a low 118.82 and a high 119.82 before closing the 119.93.     

 

  • The Sterling (GBP) broke through key resistance levels of 2.0000 (15 year high) on the back of broadly weak US data, and a strengthening domestic economy. UK CPI data fueled future rate hikes as with a sturdy figure released 3.1% for (Forecast: 2.8%). Overall, the GBP traded with a range of a low of 1.9883 and a high of 2.0075 before closing the day at 2.0060 in the New York session. Looking ahead the BoE is scheduled to release the BoE minutes of the April 15th meeting whilst Unemployment Rate, although expected to remain unchanged at 5.5% may generate movement on the currency.         

 

  • The Australian Dollar (AUD) was subject to plenty technical trading with little data domestically. Yet strengthened on the back of poor US data to reach sixteen and a half year highs of 0.8385 on Tuesday. Overall, the AUD traded in range of a low 0.8316 and a high of 0.8385 before closing at 0.8362 in the New York session.

 

  • The Turkish Lira (TRY) strengthened on appetite for risky higher yielding assets as the USD slipped yesterday, despite political election events in Turkey.  

 

  • Gold (XAU) fell by US$2.00 an ounce to $692.50 despite a broadly weaker dollar. 

TECHNICAL COMMENTARY                                                   

 

                                                                                                                                         

                                                                                                                     

                     

Currency Sup 2 Sup 1 Spot Res 1 Res 2
EUR/USD 1.3407 1.3480 1.3590 1.3637 1.3670
USD/JPY 117.87 118.21 118.75 119.89 120.00
GBP/USD 1.9854 1.9878 2.0085 2.0100 2.0442
AUD/USD 0.8233 0.8286 0.8360 0.8376 0.8385
XAU/USD 676.80 683.55 688.50 691.18 700.00

                     

 

  • Euro 1.3590

Initial support at 1.3480 (Apr 13 low) followed by 1.3407 (Apr 11 low). Initial resistance is now located at 1.3637 (Apr 16 trend high) followed by 1.3637 (High Close Dec 30, 2004)

                                                                               

  • Yen 118.75

Initial support is located at 118.21 (Apr 13 low) followed by 117.87 (38.2% retracement of the 115.15 to 119.55 advance). Initial resistance is now at 119.89 (Apr 16 high) followed by 120.00 (Psychological round number resistance)

 

  • Pound – 2.0085

Initial support at 1.9878 (Apr 17 low) followed by 1.9854 (Apr 16 low). Initial resistance is now at 2.0100 (Sep 1992 high) followed by 2.0442 (Apr open + (Mar Range*1.382)

 

  • Australian Dollar – 0.8360

Initial support a 0.8286 (April 16 low) followed by 0.8233 (Apr 11 low). Initial resistance is now at 0.8376 (Apr open + Mar range * 0.618) followed by 0.8385 (Oct 1, 1990 high)

 

  • Gold – 688.50

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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