Australian FOREX Daily Outlook 01/05/2006

MARKET SUMMARY –01MAY06 (05:00GMT)

• The Dollar continued to weaken against the major currencies on Friday, still stung by Bernanke’s comments the previous night when he raised the possibility of a pause in the rate hiking cycle. On the data front, US Q1 GDP comes in at 4.8%, just shy of 4.9% forecasts. The core PCE deflator eased to 2.0% from 2.4%. The employment cost index rose 0.6% in the March quarter the market expected a 0.9% rise. The University of Michigan consumer confidence was down slightly at 87.7, compared to expectations of 89.0. The Chicago PMI fell to 57.2 from 60.4 versus the expectation of 58.0. In other markets, US shares were slightly down with the Dow Jones index falling 15pts and the NASDAQ fell by 22pts. Crude oil rose on Friday after four consecutive days of decline and was up by US91c to US$71.88 a barrel. Looking ahead, manufacturing ISM for April is due out later today in the States with the market forecasting a reading of 55 versus 55.2 in March.
  

• The Euro traded up from 1.2530 to a high of 1.2639, before closing near its highs in the New York session. On the data front, Eurozone inflation data showed that April jumped to 2.4% from 2.2%in March. German retail sales dropped 2.7% in March, against expectations for a pick up.
  

• The Japanese yen traded in a range of 113.66 to 114.39 versus the dollar, before closing at 113.85 in the New York session.

• The Sterling rallied strongly from 1.8014 to a high of 1.8265, before closing near its highs in the New York session.

• The Aussie traded in a range of 0.7541 to 0.7606, before closing near its highs in the New York session.

• Gold soared on Friday to a fresh 25 year peak of US$654.50 following more concerns over Iran and a weaker greenback.

TECHNICAL COMMENTARY

• Euro 1.2630

Initial support at 1.2520 (Apr 28 low) followed by 1.2403 (Apr 27 low). Initial resistance is now located at 1.2651 (50% retracement of the 1.3663 to 1.1638 decline) followed by 1.2731 (Former support from Feb8, 2005).

• Yen 113.10

Initial support is located at 112.66 (Sept 29, corrective low) followed by 111.54 (50% retracement of the 101.67 to 121.41 advance). Initial resistance is now at 113.86 (May 1 high) followed by 114.49 (Apr 28 corrective high).

• Pound – 1.8270

Initial support at 1.8000 (Apr 28 low) followed by 1.7937 (Former resistance from Apr 19). Initial resistance is now at 1.8300 (50% retracement of the 1.9551 to 1.7048 decline) followed by 1.8501 (Sept 5, 2005 high).

• Aussie – 0.7600

Initial support at 0.7535 (Apr 28 low) followed by 0.7492 (Apr 27 low). Initial resistance is now at 0.7618 (61.8% retracement of the .7990 to 0.7015 decline) followed by 0.7647 (Oct 4, 2005 high).