Australian FOREX Daily Outlook 07/08/2006

CURRENCY TRADING SUMMARY –23 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) rose against the majors currencies in the overnight forex session as weak German economic data and comments from Fed officials helped to strengthen the greenback. The ZEW index, a measure of economic expectations, fell to five-year lows. Chicago Federal Reserve President Michael Moskow said that further interest rate hikes may be necessary if inflation remains high. In other markets, the Dow Jones index retreated 5pts and the NASDAQ gained 2pts as any market advances were capped by Federal President Moskow and his remarks on inflation. Crude oil rose US18c to USD$72.63 a barrel as Iran requested more dialogue with Western nations concerning its nuclear program. Looking ahead, US existing home sales is due out later today.
  

• The Euro (EUR) traded within a low of 1.2788 and a high of 1.2887, before closing at 1.2803 in the New York session. On the data front, current account came in better than expected, posting a -5.5Bln deficit compared to a -6Bln estimate. The German ZEW survey came in at its lowest level in five years at -5.6 from a 12 estimate.
  

• The Japanese Yen (JPY) traded within a low of 116 and a high of 116.83 versus the dollar, before closing at 116.54 in the New York session. On the data front, trade balance came in at 860Bln surplus less than the forecasted 984Bln however, it was better than previously reported at 808Bln.
  

• The Sterling (GBP) traded within a low of 1.8856 and a high of 1.8949, before closing at 1.8880 in the New York session.
  

• The Australian Dollar (AUD) traded within a low of 0.7610 and a high of 0.7635, before closing at 0.7620 in the New York session.
  
• Gold (XAU) fell by US$1.20 to US$624.00 an ounce on the back of a stronger USD.

TECHNICAL COMMENTARY

• Euro 1.2815

Initial support at 1.2781 (Aug 18 low) followed by 1.2695 (Aug 15 low). Initial resistance is now located at 1.2941 (Aug 21 high) followed by 1.298 (Jun 5 trend high).

• Yen 116.45

Initial support is located at 115.18 (Aug 17 low and near 61.8% retracement of the 113.97 to 116.76 advance) followed by 114.63 (76.4% retracement of the 113.97 to 116.76 advance). Initial resistance is now at 116.85 (Aug 22 high) followed by 117.41 (Jul 25 high).

• Pound – 1.8885

Initial support at 1.8807 (Aug 21 low) followed by 1.8775 (Aug 18 low). Initial resistance is now at 1.8999 (Aug 21 high) followed by 1.9026 (Aug 16 high).

• Australian Dollar – 0.7620

Initial support at 0.7562 (Aug 17 low) followed by 0.7546 (38.2% retracement of the 0.7269 to 0.7717 advance). Initial resistance is now at 0.7649 (61.8% retracement of the 0.7702 to 0.7562 decline) followed by 0.7702 (Aug 16 high).

• Gold – 624

Initial support at 607.67 (Aug 18 low) followed by 602.99 (Jul 24 low). Initial resistance is now at 633.1 (Aug 14 high) followed by 645 (Aug 11 high).