Australian FOREX Daily Outlook 09/02/2006

MARKET SUMMARY –09FEB06 (05:00GMT)

• The Dollar was stronger against the major currencies overnight, buoyed by former Federal Reserve chairman Alan Greenspan’s upbeat assessment on the US economy. Greenspan spoke at a private event sponsored by Lehman Brothers and his comments contained little more than what was in the previous FOMC statement. In other markets US shares rose overnight, supported by stronger earnings by Cisco Systems.The Dow Jones was up 109pts while the NASDAQ finished up 22pts. Crude oil prices eased overnight, down US54c a barrel to US$62.55 a barrel. Looking ahead and jobless claims are due out later in the States today.

• The Euro fell from 1.1995 to 1.1940, before closing at 1.1960 in the New York session. The key news overnight was the hawkish comments from ECB council member Liebscher on further ECB tightening. Asked in a Reuters interview whether market pricing of a March rate hike and the possibility of a couple more in 2006 was reasonable, Liebscher sad “yes” though he declined to be specific about dates.

• The Japanese yen fell from JPY117.63 per US dollar to JPY118.77, before recovering to close at JPY118.55. The market is trading USD/JPY cautiously today as they await the conclusion of the two-day BoJ board meeting and BoJ Governors Fukui’s subsequent press conference. The market is nervous about the possibility that the BoJ will provide indications that quantitative easing policy is likely to be dismantled in the near future.

• The Sterling fell to a five-week low of US$1.7379 from US$1.7474 after mixed manufacturing sector data and ahead of a decision on UK interest rate tonight. The UK manufacturing output rose by 0.3 per cent in December which is more than expected, but fell by 2.2 per cent on the year. Markets are expecting the Bank of England will keep interest rate unchanged for the sixth month running. The Sterling finished at US$1.7410/13.

• The Aussie dollar traded in a range of 0.7355 to 0.7411, before closing in New York at 0.7390. Today in Australia, employment rose only marginally for the second straight month in January while the jobless rate hit its highest since late 2004, suggesting the labour market was becoming less of a threat to inflation and interest rates.Today’s figures from the Australian Bureau of Statistics showed employers created a net 1,800 new jobs in January, lower even than December’s modest 2,500 gain and well under market forecasts of a 12,500 rise. The unemployment rate rose to 5.3 percent, from a revised 5.2 percent in December, it’s highest since October 2004 and above median estimates of 5.1 percent. Gold settled overnight after the previous day’s bout of profit-taking. Former Federal Reserve chairman Alan Greenspan was quoted as saying that the high price of gold is due to investor concern about a geopolitical conflict. Gold finished the overnight session at $US$553.80 an ounce.

TECHNICAL COMMENTARY

• Euro 1.1970

Initial support at 1.1945 (Feb 6 low) followed by 1.1900 (61.8% retracement of 1.1638 to 1.2324). Initial resistance is now located at 1.2047 (Feb 6 high) followed by 1.2113 (Feb 2 reaction high).

• Yen 118.60

Initial support is located at 117.39 (38.2% retracement of the 114.17 – 119.38 rally) followed by 116.69 (Jan 31 corrective low). Initial resistance is now at 119.41 (Feb3 high) followed by 121.07 (Dec 12 high).

• Pound – 1.7390

Initial support at 1.7377 (Feb 8 low) followed by 1.7320 (76.4% retracement of the 1.7129 to 1.7937 advance). Initial resistance is now at 1.7578 (38.2% retracement of gains from 1.7860) followed by 1.7643 (Feb 6 high).

• Aussie – 0.7395

Initial support at 0.7369 (61.8 retracement of the 0.7233 to 0.7590 advance) followed by 0.7317 (76.4% retracement of the 0.7233 to 0.7590 advance). Initial resistance at 0.7481 (Jan 30 low) followed by 0.7590 (Feb1 high).