Australian FOREX Daily Outlook 06/01/2006

MARKET SUMMARY – 06/01/06(03.00GMT)

• The Dollar traded largely sideways overnight and finished only mildly stronger against the major currencies despite. Economic adapt released overnight in the States had little impact on the currency market as traders await the Non–farm payrolls data due out later today. The ISM non-manufacturing survey was slightly stronger than expected in December at 59.8, up from 58.5 in November and above consensus of 59.0. The number of US workers seeking new jobless claims fell unexpectedly by 35,000 last week. Jobless claims now stand at the lowest in over 5 years. In the States later today the employment report is expected to show the economy created around 200,000 jobs in December compared with 215,000 jobs in November. This is a notoriously difficult number to predict as highlighted by the wide forecast range of 160k to 330k.

• The Euro traded in a tight range of 1.2067 to 1.2119, before closing the New York session around 1.2100. Eurozone data came out on the firmer side of expectations however it had little impact on the currency. German factory orders for November jumped 1.7% against expectations for a 1% retreat. The Eurozone services PMI rising to 56.8 from 55.2 against a 55.4 consensus and European Commission consumer confidence improving to -9 from -13 against a -12 consensus. The only negative was German retail sales which came in at 1% in November against market expectation of a 0.4% decline.

• The Japanese yen traded in a range of 115.77 to 116.44, before closing the New York session around 116.05. Japan’s top official on currency stated today that the market had recently been volatile and that Japanese authorities would be watching the market with interest – showing his displeasure with the JPY recent rise and triggering a slight fall in the currency against the dollar.

• The Sterling had a wider range than most currencies as it traded from 1.7489 to 1.7587, before closing in New York at 1.7535. The UK CIPS services PMI was a bit firmer than market expectations of 56, rising to 57.9 from 55.8, achieving its highest level sine April 2004.

• The Aussie dollar traded in a tight range of 0.7447 to 0.7480, before closing in New York around 0.7470.

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