Australian FOREX Daily Outlook 15/03/2006

MARKET SUMMARY –15MAR06 (05:00GMT)

• The Dollar weakened against the major currencies overnight on the back of speculation that the Fed was close to ending its tightening cycle. The dollar suffered from a publication from Medley Global Advisers saying that the Fed might not hike more than once or twice more. Data releases also hurt the dollar with US retail sales falling by 1.3% in January after posting an upwardly revised 2.9% gain in December. Economists had expected a 0.8% decline in sales. The US current account deficit widened to a record US$224.88bn in the December quarter. In other markets, US shares rose with an easing of interest rate concerns offsetting another jump in oil prices. The Dow Jones index closed up by 83pts while the NASDAQ was up 28pts. Crude oil prices rose again by US$1.23 to US$63.00 a barrel. Looking ahead and the NY Fed survey for March is due out later today in the States. The market is expecting a reading of 19.0 compared with 20.31 in February. The Fed Beige Book is also released later on in the day.
  

• The Euro traded up from 1.1941 to a high of 1.2032, before closing at 1.2015 in the New York session. In the Eurozone yesterday, the German ZEW index printed surprisingly sharply lower. It printed 63.4 after February’s 69.8 and expectations of a plus 71 outcome. Hawkish comments supported the Euro though, with ECB’s Trichet and Weber both saying rates are accommodating and still supportive of growth, reiterates that ECB must prevent second round effects. Weber refuses to be drawn on whether current rates are appropriate.

• The Japanese yen lifted from JPY118.64 per US dollar to JPY117.23, before closing near its highs in the New York session.

• The Sterling traded up from 1.7329 to a high of 1.7485, before closing at 1.7460 in the New York session.

• The Aussie traded up from 0.7328 to a high of 0.7372, before closing near its highs in the New York session.
  
• Gold prices and other precious metals posted firm gains overnight, underpinned by a weaker US dollar and higher energy prices. Gold rose by US$5.50 an ounce to US$553.00 an ounce.

TECHNICAL COMMENTARY

• Euro 1.2020

Initial support at 1.1916 (Mar 13 reaction low) followed by 1.1859 (Mar 10 low). Initial resistance is now located at 1.2039 (76.4% retracement of 1.2094 to 1.1859) followed by 1.2094 (Mar 6 high).

• Yen 117.50

Initial support is located at 117.08 (March 9 low) followed by 116.89 (61.8% retracement of 115.45 to 119.21). Initial resistance is now at 119.41 (Feb 3, 2006 high) followed by 119.52 (76.4% retracement of the 121.41 to 113.41 decline).

• Pound – 1.7470

Initial support at 1.7230 (Mar 10 low) followed by 1.7129 (Dec 28 low). Initial resistance is now at 1.7484 (Mar 14 high) followed by 1.7509 (Mar 7 high).

• Aussie – 0.7390

Initial support at 0.7302 (Mar 10 low) followed by 0.7233 (Dec 27, 2005 low). Initial resistance at 0.7378 (Mar 9 high) followed by 0.7406 (Mar 7 high).