Australian FOREX Daily Outlook 13/11/2006

Dollar slides as Feds deliver dovish tone after interest rate decision. US trade balance and German ZEW come in better than expected.

CURRENCY TRADING SUMMARY –13 DECEMBER 06 (23:30GMT)

• U.S. Dollar Trading (USD) was weaker against the majors in the overnight forex session as the US Federal Reserve left rates unchanged and the trade balance came in better than expected. The Federal Reserve maintained rates at 5.25% as expected and signaled that inflation was likely to moderate over time and that US economic growth has slowed over the course of the year, partly mirroring the “substantial” cooling of the housing market. US trade balance posted a USD$58.87bln deficit, beating expectations of a deficit around USD$63bln. In other markets, the Dow Jones index fell by 12pts and the NASDAQ gave up 11pts as the markets reacted to the dovish statement from the Federal Reserve. Crude oil fell by US22c to US$61.00 a barrel as warmer weather is expected to offset potential output cuts by OPEC. Looking ahead, US retail sales are due out tonight.
  

• The Euro (EUR) traded within a low of 1.3214 and a high of 1.3274, before closing at 1.3274 in the New York session. On the data front, the ZEW survey came in at -19 compared to a -25 estimate.
  

• The Japanese Yen (JPY) traded within a low of 116.71 and a high of 117.22 versus the dollar, before closing at 116.92 in the New York session. On the data front, current account came in at 5.2% compared to a -4.5% estimate.
  

• The Sterling (GBP) traded within a low of 1.9579 and a high of 1.9697, before closing at 1.9698 in the New York session. On the data front, CPI for November came in at 0.3% compared to a 0.1% forecast, and the retail price index came in as expected at 0.3%. Looking ahead, unemployment is due out today.
  

• The Australian Dollar (AUD) traded within a low of 0.7834 and a high of 0.7876, before closing at 0.7861 in the New York session. On the data front, consumer confidence came in at 11.8% from a previous result of -9.7%.
  

• Gold (XAU) dropped by US$2.30 to US$631.50 an ounce following the dip in oil.

TECHNICAL COMMENTARY

• Euro 1.3275

Initial support at 1.313 (Dec 11 low) followed by 1.303 (38.2% retracement of the 1.2483 to 1.3368 advance). Initial resistance is now located at 1.3293 (Dec 12 high) followed by 1.3368 (Dec 4 trend high).

• Yen 116.80

Initial support is located at 116.17 (Dec 11 low) followed by 114.89 (Dec 8 low). Initial resistance is now at 117.26 (Dec 11 high) followed by 117.62 (76.4% retracement of the 118.61 to 114.43 decline).

• Pound – 1.9700

Initial support at 1.9463 (38.2% retracement of the 1.8838 to 1.9849 advance) followed by 1.9434 (Nov 29 reaction low). Initial resistance is now at 1.9729 (Dec 8 high) followed by 1.9849 (Dec 1 high).

• Australian Dollar – 0.7870

Initial support at 0.7811 (38.2% retracement of the 0.7614 to 0.7933 advance) followed by 0.7769 (Former resistance from Nov 1). Initial resistance is now at 0.7933 (Dec 8 trend high) followed by 0.799 (Mar 8, 2005 high).

• Gold – 629

Initial support at 623.4 (Dec 11 low) followed by 614.8 (Nov 17 reaction low). Initial resistance is now at 638.1 (Dec 8 high) followed by 650.2 (Dec 1 high).