FED Deliver a 50 Basis Point Cut, With Room To Move

CURRENCY TRADING SUMMARY – 31 JANUARY 2008 (00:30GMT)

· U.S. Dollar Trading (USD) saw the Federal Reserve cut rates by 50 basis points as widely expected as growing fears regarding a US recession remains. As a result the USD was pressured versus a number of majors as the lending rate now sits at 3%, confirming the fasting easing of monetary policy since 1990, totaling 1.25%. In U.S. share markets the NASDAQ was lower by -51.57 points (-0.57%) whilst the Dow Jones also closed lower by -37.47 points (-0.30%). Crude oil rose by US$0.43 a barrel to US$92.43. Looking ahead, Initial Jobless claims, and Core PCE the key pieces of data today.

· The Euro (EUR) traded at a two week high versus the dollar following the rate cut be the Fed. Overall the EURUSD traded with a low of 1.4755 and a high 1.4910 before closing the night 1.4880 in the New York session. Key data on Thursday includes the harmonized CPI and the Unemployment rate for the Euro zone.

· The Japanese Yen (JPY) was buoyed by views that the Carry trade is a thing of the past, with reports suggesting that investors should revert from using the Japanese Yen to fund High yielding Currencies. The yen has been the best-performing major currency this year, gaining 4 percent against the Dollar and 2.7 percent versus the Euro. Overall the USDJPY traded with a low of 106.30 and a high of 107.46 before closing the day at 106.39 in the New York session.

· The Sterling (GBP) lost ground as more dire news from the UK housing sector put a halt to the rally in the pound that started at the end of last week. However the Fed 50bp cut caused the sterling to rally to 1.9940. Overall the GBPUSD traded with a low of 1.9850 and a high of 1.9960 before closing the day at 1.9914 in the New York session.

· The Australian Dollar (AUD) rallied on the back of the Fed rate cut, as the RBA is expected to hike 25 bps next week, further widening the gap between the two currencies. Overall the AUDUSD traded with a low of 0.8862 and a high of 0.9014 before closing the day at 0.8958 in the New York session.

· Gold (XAU) rose 1.8 per cent to a record $929.20 a troy ounce in late London trading, however was unable to break records reached on Monday. XAU traded with a low of 917.10 and a high of 927.70 during the New York session.

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4661	1.4755	1.4835	1.4818	1.4859
USD/JPY	104.97	106.01	106.05	107.89	107.95
GBP/USD	1.9731	1.9814	1.9865	2.0034	2.0102
AUD/USD	0.8691	0.8768	0.8865	0.9016	0.9022
XAU/USD	908.10	916.20	926.00	936.95	950.00

· Euro – 1.4835

Initial support at 1.4661 (Jan 25 low) followed by 1.4592 (Jan 24 low). Initial resistance is now located at 1.4799 (Jan 28 high) followed by 1.4859 (Jan 16 high).

· Yen – 106.05

Initial support is located at 106.01 (Jan 28 low) followed by 104.97 (Jan 23 low). Initial resistance is now at 107.89 (Jan 25 high) followed by 107.95 (Jan 16 high)

· Pound – 1.9865

Initial support at 1.9814 (Jan 29 low) followed by 1.9731 (Jan 28 low). Initial resistance is now at 1.9929 (Jan 29 high) followed by 2.0034 (38.2% retracement of 2.1161 to 1.9338 decline)

· Australian Dollar – 0.8865

Initial support a 0.8768 (Jan 28 low) followed by 0.8691 (Jan 24 low). Initial resistance is now at 0.8907 (Jan 29 high) followed by 0.9022 (Jan 15 reaction high)

· Gold – 926.00

Initial support at 908.10 (Jan 23 low) followed by 876.80 (Jan 23 high). Initial resistance is now at 933.30 (Jan 29 high) followed by 950.0 (Psychological round number)

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US Fiscal Stimulus Gets The Green Light. High Yielder’s Back In Demand

CURRENCY TRADING SUMMARY – 25 JANUARY 2008 (00:30GMT)

· U.S. Dollar Trading (USD) fell against a number of majors as sales of Existing Homes in the U.S. fell more than forecast in December, capping the biggest annual slump in 25 years and the first decline in prices since the Great Depression. In other news, the US congress approved 150 billion fiscal stimulus package in an attempt to stem credit woes. In U.S. share markets the NASDAQ was up by 136.57 points (+1.55%) whilst the Dow Jones was also up by +108.44 points (+0.88%). Crude oil rose by US$2.44 a barrel to US$89.43.

· The Euro (EUR) rose against the Dollar and the Yen after European Central Bank council member Axel Weber dismissed speculation of an interest-rate cut by the European Central Bank as “wishful thinking”. Weber's comments helped the European currency erase its losses as investors reduced bets the ECB will follow the Federal Reserve in lowering borrowing costs. Overall the EURUSD traded with a low of 1.4592 and a high of 1.4779 before closing the day at 1.4752 in the New York session.

· The Japanese Yen (JPY) dropped against dollar and most major currencies as investors resumed borrowing in Japan to buy higher-yielding assets elsewhere. Overall the USDJPY traded with a low of 105.95 and a high of 107.03 before closing the day at 106.80 in the New York session.

· The Sterling (GBP) rose against dollar and the yen, as investors became less risk averse and had more confidence to put on so- called carry trades, or purchases of high-yielding assets financed in countries where borrowing costs are lower. Overall the GBPUSD traded with a low of 1.9502 and a high of 1.9743 before closing the day at 1.9741 in the New York session

· The Australian Dollar (AUD) was also buoyed by a return to high-yielding carry trades. Overall the AUDUSD traded with a low of 0.8693 and a high of 0.8798 before closing the day at 0.8794 in the New York session.

· Gold (XAU) topped $900 an ounce for the first time in a week after global equities rallied on speculation the Federal Reserve will further reduce U.S. borrowing costs to avoid a recession. XAU traded with a low of 889.75 and a high of 910.50

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4507	1.4588	1.4765	1.4790	1.4859
USD/JPY	104.91	104.97	107.25	107.38	107.59
GBP/USD	1.9338	1.9462	1.9756	1.9850	1.9898
AUD/USD	0.8513	0.8612	0.8840	0.8852	0.8881
XAU/USD	849.50	876.80	910.20	914.20	914.30

· Euro – 1.4765

Initial support at 1.4588 (Jan 23 low) followed by 1.4507 (61.8% retracement of the 1.4366 to 1.4685 advance). Initial resistance is now located at 1.4790 (Jan 23 high) followed by 1.4859 (61.8% retracement of the 1.4922 to 1.4366 decline).

· Yen – 107.25

Initial support is located at 104.97 (Jan 23 low) followed by 104.91 (May 11, 2005 low). Initial resistance is now at 107.38 (Jan 18 high) followed by 107.59 (Jan 16 high)

· Pound – 1.9756

Initial support at 1.9462 (61.8% retracement of the 1.9338 to 1.9645 advance) followed by 1.9338 (Jan 22 low). Initial resistance is now at 1.9850 (Jan 23 high) followed by 1.9898 (Jan 18 high)

· Australian Dollar – 0.8725

Initial support a 0.8513 (Jan 22 low) followed by 0.8488 (Sep 19, 2007 low). Initial resistance is now at 0.8748 (Jan 23 high) followed by 0.8768 (50% retracement of the 0.9022 to 0.8513 decline)

· Gold – 910.20

Initial support at 876.80 (Jan 22 low) followed by 849.50 (61.8% retracement of 775.50 to 914.30 advance). Initial resistance is now at 914.20 (Jan 23 high) followed by 914.30 (Jan 16 high)

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ECB Officials Hint At Slowing Growth, As US CPI Figures Remain Stable

CURRENCY TRADING SUMMARY – 17 JANUARY 2008 (00:30GMT)

· U.S. Dollar Trading (USD) saw key inflationary measures released on expectations, with Core CPI coming in at 0.2%, whilst headline figures were released at 0.3% (Forecast: 0.2%). In other data news TIC Flows increased to 150 billion. In U.S. share markets the NASDAQ was down -98.74 points (-1.08%) whilst the Dow Jones -34.95 points (-0.28%). Crude oil fell by US$1.04 a barrel to US$ 90.86 as data revealed a large rise US inventory stocks. A heavy data day is expected from the US tonight as Housing Starts, Philly Fed and Fed reserve Bernanke, Fischer and Lockhart are scheduled to discuss the economic outlook. In key profit earnings releases, Merrill Lynch proves to be the largest bank scheduled on Thursday.

· The Euro (EUR) was volatile as ECB officials warned that growth could be slower than expected. CPI figures out of the Eurozone were flat on yearly expectations whilst the monthly figures grew a faster pace. Overall the EURUSD traded with a low of 1.4594 and a high of 1.4860 before closing the day at 1.4647 in the New York session. Trade Balance data as well as comments from Trichet and Almunia in Cyprus will prove key to the Euro in Thursday’s session of trading.

· The Japanese Yen (JPY) returned to its pressured nature as carry trades were rebuilt. Overall the USDJPY traded with a low of 105.93 and a high of 107.93 before closing the day at 107.80 in the New York session.

· The Sterling (GBP) saw unemployment figures come in at an expected 5.3%. Overall the GBPUSD traded with a low of 1.9533 and a high of 1.9709 before closing the day at 1.9634 in the New York session.

· The Australian Dollar (AUD) eased from highs after rebounding in the Asian session, following the previous days sell off. The AUDUSD traded with a low of 0.8761 and a high of 0.8848 before closing the day at 0.8807 in the New York session. Unemployment rate for December was released at 4.3% on Thursday morning.

· Gold (XAU) fell for its second consecutive session, as prices tumbled by US$16.10 an ounce to US$886.50 in response to lower oil prices and sturdy dollar

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4544	1.4570	1.4675	1.4859	1.4922
USD/JPY	105.00	105.92	106.65	107.95	108.52
GBP/USD	1.9432	1.9484	1.9630	1.9720	1.9742
AUD/USD	0.8684	0.8732	0.8820	0.8869	0.9022
XAU/USD	866.50	874.85	881.80	899.75	914.27

· Euro – 1.4675

Initial support at 1.4570 (Dec 31 reaction low) followed by 1.4544 (61.8% retracement of the 1.4311 to 1.4922 advance). Initial resistance is now located at 1.4859 (Jan 16 high) followed by 1.4922 (Jan 14 high).

· Yen – 106.65

Initial support is located at 105.92 (Jan 16 low) followed by 105.00 (Round Number Support). Initial resistance is now at 107.95 (Jan 16 high) followed by 108.52 (61.8% retracement of the 110.12 to 105.92 decline)

· Pound – 1.9630

Initial support at 1.9484 (Jan 11 low) followed by 1.9432 (Mar 20 low). Initial resistance is now at 1.9720 (Jan 16 high) followed by 1.9742 (Jan 15 high)

· Australian Dollar – 0.8820

Initial support a 0.8732 (61.8% retracement of the 0.8553 0.9022 advance) followed by 0.8684 (Jan 7 reaction low). Initial resistance is now at 0.9022 (Jan 15 high) followed by 0.9076 (61.8% retracement of the 0.9400 to 0.8553 decline)

· Gold – 896.60

Initial support at 874.85 (Jan 16 low) followed by 866.5 (Jan 10 low). Initial resistance is now at 899.75 (Jan 16 high) followed by 914.27 (Jan 14 high)

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Growing Concerns In Financial Markets Cause Risk Aversion As U.S. Trade Deficit Widens

CURRENCY TRADING SUMMARY – 11 JANUARY 2008 (00:30GMT)

· U.S. Dollar Trading (USD) was battered against a number of majors last night as Ben Bernanke signaled the central bank may cut borrowing costs at the next meeting to counter “downside risks to growth”, increasing expectations that the result may show a 50 basis point cut. The NASDAQ was up 13.97 points (+0.56%) whilst the Dow Jones was also up by 117.78 points (+0.92%). Crude oil eased by US$1.65 a barrel to US$94.02.

· The Euro (EUR) surged versus the dollar following Bernanke stating that the Fed was ready to take “Substantive additional action”. In other news, the ECB surprised little by keeping the interest rates on hold at 4%. Overall the EURUSD traded with a low of 1.4643 and high of 1.4813 before closing the day at 1.4791 in the New York session.

· The Japanese Yen (JPY) saw BoJ Muto speak on the state of the Economy, undertaking a dovish tone. Muto indicated that the Economy will remain pressured for some time. USDJPY traded with a low of 109.12 and a high of 110.11 in the New York session.

· The Sterling (GBP) kept it rates on hold at the MPC meeting as policy makers assessed the effects of last month's reduction on the economy. Economists now expect the BoE to will wait until next month before lowering rates again as banks rein in lending, damping consumer spending and deepening a slowdown in the housing market. The GBPUSD traded with a low of 1.9543 and a high of 1.9668 before closing the day at 1.9603 in the New York session.

· The Australian Dollar (AUD) saw the release of Trade Balance for November narrow from -2983 mln to -2254 mln. The Aussie Dollar in turn rallied versus the USD upon Ben Bernanke comments overnight. Overall the AUDUSD traded with a low of 0.8812 and a high of 0.8962 before closing the day at 0.8955 in the New York session.

· Gold (XAU) rose, erasing earlier losses, as the dollar fell against the Euro, boosting the investment appeal of the precious metal. XAU traded with a low of 866.80 and a high of 894.90

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4588	1.4640	1.4795	1.4825	1.4968
USD/JPY	108.40	108.80	109.65	110.12	110.49
GBP/USD	1.9500	1.9542	1.9610	1.9669	1.9763
AUD/USD	0.8784	0.8812	0.8960	0.8977	0.9073
XAU/USD	853.60	866.40	891.50	897.70	899.35

· Euro – 1.4795

Initial support at 1.4659 (Jan 7 low) followed by 1.4570 (Dec 31 low). Initial resistance is now located at 1.4825 (Jan 4 high) followed by 1.4859 (Nov 28 high).

· Yen – 109.65

Initial support is located at 108.80 (Jan 9 low) followed by 108.40 (Jan 7 low). Initial resistance is now at 109.83 (Jan 8 high) followed by 110.49 (38.2% retracement of the 114.66 to 107.91 decline)

· Pound – 1.9610

Initial support at 1.9653 (Aug 17 reaction low) followed by 1.9623 (Jun 8 reaction low). Initial resistance is now at 1.985 (Jan 4 high) followed by 1.9898 (Jan 2 high)

· Australian Dollar – 0.8960

Initial support a 0.8705 (Jan 8 low) followed by 0.8667 (61.8% retracement of the 0.8553 to 0.8852 advance). Initial resistance is now at 0.8859 (Jan 9 high) followed by 0.8877 (38.2% retracement of the 0.9400 to 0.8553 decline)

· Gold – 891.80

Initial support at 853.60 (Jan 3 low) followed by 833.90 (Jan 2 low). Initial resistance is now at 891.47 (Jan 9 high) followed by 899.35 (Jan open + Dec range)

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Bernanke Hints At Further Easing, Possibly 50 Bp Cut

CURRENCY TRADING SUMMARY – 11 JANUARY 2008 (00:30GMT)

· U.S. Dollar Trading (USD) was battered against a number of majors last night as Ben Bernanke signaled the central bank may cut borrowing costs at the next meeting to counter “downside risks to growth”, increasing expectations that the result may show a 50 basis point cut. The NASDAQ was up 13.97 points (+0.56%) whilst the Dow Jones was also up by 117.78 points (+0.92%). Crude oil eased by US$1.65 a barrel to US$94.02.

· The Euro (EUR) surged versus the dollar following Bernanke stating that the Fed was ready to take “Substantive additional action”. In other news, the ECB surprised little by keeping the interest rates on hold at 4%. Overall the EURUSD traded with a low of 1.4643 and high of 1.4813 before closing the day at 1.4791 in the New York session.

· The Japanese Yen (JPY) saw BoJ Muto speak on the state of the Economy, undertaking a dovish tone. Muto indicated that the Economy will remain pressured for some time. USDJPY traded with a low of 109.12 and a high of 110.11 in the New York session.

· The Sterling (GBP) kept it rates on hold at the MPC meeting as policy makers assessed the effects of last month's reduction on the economy. Economists now expect the BoE to will wait until next month before lowering rates again as banks rein in lending, damping consumer spending and deepening a slowdown in the housing market. The GBPUSD traded with a low of 1.9543 and a high of 1.9668 before closing the day at 1.9603 in the New York session.

· The Australian Dollar (AUD) saw the release of Trade Balance for November narrow from -2983 mln to -2254 mln. The Aussie Dollar in turn rallied versus the USD upon Ben Bernanke comments overnight. Overall the AUDUSD traded with a low of 0.8812 and a high of 0.8962 before closing the day at 0.8955 in the New York session.

· Gold (XAU) rose, erasing earlier losses, as the dollar fell against the Euro, boosting the investment appeal of the precious metal. XAU traded with a low of 866.80 and a high of 894.90

TECHNICAL COMMENTARY

Currency	Sup 2	Sup 1	Spot	Res 1	Res 2
EUR/USD	1.4588	1.4640	1.4795	1.4825	1.4968
USD/JPY	108.40	108.80	109.65	110.12	110.49
GBP/USD	1.9500	1.9542	1.9610	1.9669	1.9763
AUD/USD	0.8784	0.8812	0.8960	0.8977	0.9073
XAU/USD	853.60	866.40	891.50	897.70	899.35

· Euro – 1.4795

Initial support at 1.4659 (Jan 7 low) followed by 1.4570 (Dec 31 low). Initial resistance is now located at 1.4825 (Jan 4 high) followed by 1.4859 (Nov 28 high).

· Yen – 109.65

Initial support is located at 108.80 (Jan 9 low) followed by 108.40 (Jan 7 low). Initial resistance is now at 109.83 (Jan 8 high) followed by 110.49 (38.2% retracement of the 114.66 to 107.91 decline)

· Pound – 1.9610

Initial support at 1.9653 (Aug 17 reaction low) followed by 1.9623 (Jun 8 reaction low). Initial resistance is now at 1.985 (Jan 4 high) followed by 1.9898 (Jan 2 high)

· Australian Dollar – 0.8960

Initial support a 0.8705 (Jan 8 low) followed by 0.8667 (61.8% retracement of the 0.8553 to 0.8852 advance). Initial resistance is now at 0.8859 (Jan 9 high) followed by 0.8877 (38.2% retracement of the 0.9400 to 0.8553 decline)

· Gold – 891.80

Initial support at 853.60 (Jan 3 low) followed by 833.90 (Jan 2 low). Initial resistance is now at 891.47 (Jan 9 high) followed by 899.35 (Jan open + Dec range)

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