Australian FOREX Daily Outlook 26/04/2006

MARKET SUMMARY –26APRIL06 (05:00GMT)

• The Dollar was generally weaker versus the major currencies overnight with the exception of Japanese yen. The dollar fell to a seven-month low against the Euro after a European Central Bank board member indicated that the pace of monetary tightening could increase. The dollar strengthened dramatically when stronger than expected existing home sales and consumer confidence data was released. However, the move could not be sustained as the market continues to sell the dollar. US consumer confidence hit a four-year high in April, lifting from 107.5 to 109.6. Existing home sales edged up from 6.90m to 6.92m in March and well above market forecasts centered on a result near 6.70m. The Richmond Fed manufacturing composite index fell from +21 to +18 in April. In other markets, US shares traded down as the strong data implied that the Federal Reserve could keep lifting rates. The Dow Jones fell by 53pts and the NASDAQ was down by 3pts. US treasury yields soared to fresh four-year highs overnight in response to the solid economic data. Crude oil fell further overnight after President Bush suspended deliveries into the Strategic Petroleum Reserve. Crude oil fell by US45c to US$72.88 a barrel. Looking ahead and durable goods orders for March is due out later today in the States, with the market expecting a rise of 1.6% m/m, following the 2.6% rise in February.

• The Euro traded in a range of 1.2368 to 1.2437, before closing near its highs in the New York session. On the data front, the German IFO survey was firmer than expected, rising to 105.9 from 105.4, against consensus expectations for moderation back to 104.9. This is the 5^th consecutive monthly rise, coming despite rising oil prices, a firmer Euro, and expectations for more ECB tightening, and the index is now back at its highest levels since 1991. Looking ahead and German states CPI releases are pointing to an above consensus reading for German April national CPI due out later today.
  

• The Japanese yen traded in a range of 114.32 to 114.97, before closing at 114.80 in the New York session.
  
• The Sterling traded in a range of 1.7828 to 1.7940, before closing at 1.7880 in the New York session.

• The Aussie traded in a range of 0.7440 to 0.7480, before closing at 0.7460 in the New York session. Today in Australia, the Australian Bureau of Statistics said its consumer price index rose 0.9 percent in the first quarter, topping market forecasts of a 0.8 percent gain. The index was 3.0 percent up on a year earlier, compared to 2.8 percent the previous quarter.
  
• Gold lifted by US$ 10.30 an ounce to US$634.20.

TECHNICAL COMMENTARY

• Euro 1.2420

Initial support at 1.2265 (Apr 21 low) followed by 1.2223 (Apr 18 reaction low). Initial resistance is now located at 1.2541 (1.2541 Sep 5, 2005 high) followed by 1.2590 (Sep 2, 2005 high).

• Yen 115.00

Initial support is located at 114.24 (Apr 24 low) followed by 113.41 (Jan 12 reaction low). Initial resistance is now at 115.98 (Apr 24 reaction high) followed by 116.47 (Apr 21 low and top of gap).

• Pound – 1.7870

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 – 0.7470

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).