Australian FOREX Daily Outlook 25/04/2006

MARKET SUMMARY –25APRIL06 (05:00GMT)

• The Dollar continued to lose ground against the major currencies overnight. The Dollar lost more then 1% against the Japanese yen and slid to 7 month lows versus the Euro. Calls by the G7 ministers for Yuan reform by China continues to dominate trading as investors buy the Japanese yen as a substitute for future Yuan moves. In other markets US shares were slightly lower with the Dow Jones down 11pts and the NASDAQ down 10pts. Looking ahead and the Conference Board’s consumer confidence index for April is due out later today in the States. The market expects deterioration to 106.0 from 107.2 in March. Existing home sales is also due to be released.
  

• The Euro traded in a range of 1.2336 to 1.2408, before closing at 1.2390 in the New York session. On the data front, French business confidence came in firmer than consensus, jumping to 108 from 106, while German industrial for February was reported up 1% vs. an 0.6% consensus and the prior month’s weak -0.1% reading was revised into positive territory at +0.4%.
  

• The Japanese yen continued to gain against the dollar from JPY115.94 per US Dollar to JPY114.38, before closing at JPY114.65 in the New York session.
  
• The Sterling traded in a range of 1.7795 to 1.7929, before closing at 1.7865 in the New York session. UK retail sales came in stronger than expected but this data was largely ignored by the market.
  
• Gold traded in 20$ an ounce range, a weak dollar first pulled more money into gold before easing oil prices took some of the worry out of inflation concerns, promoting a wave of gold sales. Oil fell sharply after OPEC promised to keep pumping near maximum capacity. Analysts say that some investors booked profits from highs and price dips attracted new buyers, but overall sentiment remained upbeat.

TECHNICAL COMMENTARY

• Euro 1.2375

Initial support at 1.2265 (Apr 21 low) followed by 1.2223 (Apr 18 reaction low). Initial resistance is now located at 1.2412 (38.2% retracement of the 1.3668 to 1.1638) followed by 1.2541 (Sep 2, 2005 high).

• Yen 114.50

Initial support is located at 114.14 (Jan 21 reaction low) followed by 113.41 (Jan 12 reaction low). Initial resistance is now at 116.55 (Apr 21 gap low) followed by 117.79 (Apr 21 high).

• Pound – 1.7860

Initial support at 1.7749 (Apr 21 corrective low) followed by 1.7679 (Apr 18 low). Initial resistance is now at 1.7937 (Jan 25 high &amp Apr 19 high) followed by 1.7946 (61.8% retracement of the 1.8501 to 1.7048 decline).

• Aussie – 0.7450

Initial support at 0.7357 (Apr 20 reaction low) followed by 0.7270 (Apr 17 low). Initial resistance is now at 0.7485 (Apr 24 high) followed by 0.7500 (13 – month trendline resistance).