Australian FOREX Daily Outlook 05/04/2006

MARKET SUMMARY –05APRIL06 (05:00GMT)

• The Dollar continued its slide against major currencies overnight in the absence of economic data out of the States. Fed’s Fisher said overnight that he wonders how long low US unemployment can last without inducing inflationary pressure, reiterates Fed commitment to ensure inflation remains under control. Lacker sees inflation picture under control and improved on 6 months ago, outlook for US growth quite healthy, believe housing market will remain strong. In other markets, US shares rose overnight with the Dow Jones up 59pts while the NASDAQ rose to fresh 5 ½ year highs (up by just 9 points). Crude oil prices eased on Tuesday on expectations that data will show another increase in US crude inventories in the latest week. Crude oil fell by US 51 cents to US$66.23 a barrel. Looking ahead and the ISM non-manufacturing (or services) index will be released today in the States. It is expected to nudge lower to 59.0 in March, from 60.1 in February.
  

• The Euro rallied from 1.2153 to a high of 1.2277, before closing at 1.2260 in the New York session. There were many factors that influenced the Euro move higher overnight including a report from a European news agency about an ECB source saying “the majority of ECB officials want a rate hike in May”. On the data front, Eurozone PPI boosted by energy prices, running at 5.4% in the year to February. Eurozone unemployment eased slightly to 8.2%.
  
• The Japanese yen traded in a range of 117.23 to 117.80, before closing at 117.60 in the New York session.
  

• The Sterling rallied from 1.7369 to a high of 1.7578, before closing at 1.7550 in the New York session.
  

• The Aussie rallied from 0.7135 to a high of 0.7223, before closing at 0.7205 in the New York session.
  
• Gold eased from 25- year highs by US$3.70 an ounce to US$590.60 an ounce.

TECHNICAL COMMENTARY

• Euro 1.2270

Initial support at 1.2119 (Apr 4 low) followed by 1.2031 (Apr 3 low). Initial resistance is now located at 1.2324 (Jan 25 high) followed by 1.2416 (Sept 12, 2005 high).

• Yen 116.90

Initial support is located at 116.25 (Mar 28 low) followed by 115.45 (Mar 1 reaction low). Initial resistance is now at 118.82 (Apr 3 high) followed by 119.41 (Feb 2 high).

• Pound – 1.7580

Initial support at 1.7369 (Apr 4 low) followed by 1.7229 (Mar 10 reaction low). Initial resistance is now at 1.7597 (Mar 16 reaction high) followed by 1.7626 (Mar 6 reaction high).

• Aussie – 0.7230

Initial support at 0.7114 (Apr 4 low) followed by 0.7058 (Mar 30 low). Initial resistance is now at 0.7303 (38.2% of 0.7590 – 0.7015 decline.) followed by 0.7370 (61.8% retracement of the 0.7590 to 0.7015 decline).