Forex Trading Log

The Australian dollar has finished the final trading day of 2006 on a high note. The Aussie held onto a the recently broken resistance level of 79 US cents today even with a thinly traded market which lacked momentum. “There is demand for the Aussie out there but it feels like month, quarter or year-end demand rather than genuine demand,” said Robert Rennie, currency strategist at Westpac Bank in Sydney. The Australian dollar hit a high of US$0.7915 in New York trade with the aussie maintaining its strength in the New York session. The Aussie was weaker against the New Zealand dollar falling from NZ$1.1219 to NZ$1.204. The Australian closed the final trading day at 79.12 US cents up from 78.69 US cents yesterday. The Aussie was also stronger against the Japanese yen from Y93.39 to Y94.10. Locally, the forex market ignored private sector credit numbers showing credit to the Australian private sector rose seasonally adjusted 1.1 percent in November. There is no local data in the first week of 2007, until January 8 when building approvals, retail sales, trade balance, consumer sentiment and employment figures are due in the same week. Interest rates the main focus, with the heavy economic data flow during January 2007 will build momentum ahead of the Reserve Bank of Australia’s (RBA) board meeting in Sydney, February 6, 2006. In the US next week ISM December manufacturing index is due on Tuesday, November construction spending on Wednesday and December non-farm payrolls on Friday.

Some traders are tipping a take profit position on the Australian dollar. With the Aussie hitting highs. The dollar may hit 80 cents in the coming weeks, but for wary traders, perhaps now is the time to take profits with the Australian dollar moving strongly from 78.40 cent level to just above 79 cents in the last week. Note the strong resistance for the AUD/USD currency pair around the highs of 79.33 cents. Any break against the stubborn resistance level would show a upward break toward the highs seen in February 2004. Any hold below the resistance would mean the dollar to hold the trading range all the way to the lows of 77.82 US cents. A downside break below that level may reveal lows to levels of 76.30 US cents.