Australian FOREX Daily Outlook 20/04/2006

20APRIL06 (05:00GMT)MARKET SUMMARY –

• The Dollar failed to make any significant headway against the major currencies, despite better than expected CPI data. The core consumer price index (ex food and oil) rose 0.3% in March, the highest rise in a year and slightly above market expectation of a 0.2% rise. The greenback continued to trade lower versus all the majors with the exception of the Japanese yen. In other markets, US shares were stable holding onto its strong gains from the previous session. The Dow Jones index rose by 10pts while the NASDAQ was up 15pts. Crude oil continued to make record highs, up by US82c to US$72.17 a barrel.
  

• The Euro traded in a range of 1.2286 to 1.2395, before closing near its highs in the New York session. The main focus in Europe this week is today’s Eurozone CPI for March, with market expectation centered on 1.2% y/y which would be unchanged from February.
  

• The Japanese yen traded in a range of 116.82 to 117.97 versus the dollar, before closing at 117.30 in the New York session.
  

• The Sterling rallied from a low of 1.7795 to as high as 1.7937, before closing near its highs in the New York session. In the UK yesterday, the Bank of England MPC voted 7-1 in favor of retaining interest rates at 4.5% on April 6. Stephen Nickell was again the only one in favor of a rate cut.
  
• The Aussie traded in a range of 0.7419 to a high of 0.7483, before closing at 0.7465 in the New York session.

• Gold hit a fresh 25-year high after oil hit another record high, and core inflation rose more than expected. Gold rose by US$12.70 an ounce to US$636.00.

Initial support at 0.7366 (Apr 18 low) followed by 0.7270 (Apr 17 low). Initial resistance is now at 0.7488 (Mar 2 reaction high) followed by 0.7502 (13 – month trendline resistance).