Australian FOREX Daily Outlook 28/04/2006

MARKET SUMMARY –28APRIL06 (05:00GMT)

• The Dollar was weaker versus the major currencies overnight following Fed Chairman Ben Bernanke’s testimony to Congress. Chairman Bernanke raised the likelihood of a pause in the tightening campaign after one more 25bp rate hike on May 10 is his testimony to the Joint Economic Committee. The dollar tumbled to fresh 7-month lows against the Euro after Bernanke’s comments. On the data front, US jobless claims rose by 11,000 in the latest week to 315,000, above analyst’s estimates of 305,000. The Chicago Midwest index rose from 114.2 to 114.90 in March. In other markets, US shares rose overnight as investors were heartened that the Fed is coming to the end of its rate hiking cycle. The Dow Jones index rose by 28pts while the NASDAQ was up 11pts. Looking ahead and US GDP is released later today in the States. The market expects it to print at 5% annualized, or 1.3% q/q.
  

• The Euro traded to a high of 1.2548 from 1.2406, before closing at 1.2530 in the New York session. On the data front, Germany’s unemployment rate came out as expected at 11.3%.
  

• The Japanese yen traded in a range of 113.84 to 115.12 versus the dollar, before closing at 114.10 in the New York session. Today in Japan, the BoJ policy meeting concluded with no change in rates as expected. Earlier today, CPI, unemployment, household spending and industrial production data were released with results generally inline with market expectations. Nationwide core CPI for March rose by 0.5% y/y, slightly below market consensus of 0.6% y/y, while the unemployment rate held steady at 4.1%.
  
• The Sterling rallied from 1.7820 to trade as high as 1.8045, before closing at 1.8010 in the New York session. On the data front, the UK showed that House Prices rose by 5.3% on annual base, higher than expectations of 4.8%.
  

• The Aussie traded up from 0.7492 to a high of 0.7578, before closing at 0.7565 in the New York session.
  
• Gold traded in a range of 627.20 to 643.00. Gold prices moved higher on Thursday over USD general weakness, trading close to last’s week 25-year peak at 645.75.

TECHNICAL COMMENTARY

• Euro 1.2530

Initial support at 1.2403 (Apr 27 low) followed by 1.2332 (Apr 24 low). Initial resistance is now located at 1.2590 (Sept 2, 2005 high) followed by 1.2651 (50% retracement of the 1.3663 to 1.1638).

• Yen 114.35

Initial support is located at 113.41 (Jan 12 reaction low) followed by 113.02 (Oct 6, 2005 low). Initial resistance is now at 115.38 (Apr 26 high) followed by 115.98 (Apr 24 reaction high).

• Pound – 1.8010

Initial support at 1.7945 (Apr 25 high) followed by 1.7800 (Apr 26 low). Initial resistance is now at 1.8149 (Sep 22, 2005 high) followed by 1.8300 (50.0% retracement of the 1.9551 to 1.7048 decline).

• Aussie – 0.7550

Initial support at 0.7492 (Apr 27 low) followed by 0.7419 (Apr 24 reaction low). Initial resistance is now at 0.7590 (Jan 31 reaction high) followed by 0.7617 (61.8% retracement of the 0.7989 to 0.7015 decline).