Australian FOREX Daily Outlook 02/05/2006

MARKET SUMMARY –02MAY06 (05:00GMT)

• The Dollar followed the usual trend and weakened against the major currencies in the early part of the overnight session. However, these losses were recovered and the dollar finished mildly stronger versus the majors, due to a CNBC report that implied Federal Reserve Chairman Ben Bernanke believes the market misinterpreted comments he made to Congress last week. A CNBC reporter said that in a conversation with Bernanke over the weekend, he felt that markets and the media had gotten it wrong, portraying him as dovish, rather than an aggressive inflation fighter, when recent comments have been designed to give the Fed more flexibility. On the data front, US construction spending jumped 0.9% to a record high in March, the market had expected a 0.3% rise. Consumer spending rose by 0.6% in March, the market expected a 0.4% rise. In other markets, US shares were slightly lower with the Dow Jones index down 24pts and the NASDAQ down 18pts. Crude oil rose overnight by US$1.82 to US$73.70 a barrel following more supply concerns.

• The Euro traded in a range of 1.2555 to 1.2690, before closing at 1.2590 in the New York session. There were no major economic releases in the Eurozone due to May Day Bank Holiday.

• The Japanese yen traded in a range of 112.34 to 113.69 versus the dollar, before closing at 113.35 in the New York session.
  
• The Sterling traded in a range of 1.8205 to 1.8416, before closing at 1.8240 in the New York session. There were no major economic releases in the UK due to May Day Bank Holiday.

• The Aussie traded in a range of 0.7583 to 0.7638, before closing at .7565 in the New York session. The Reserve Bank of Australia meets today and the market is divided on whether they will raise rates in their announcement due tomorrow.
  
• Gold rose again overnight following more tensions over Iran. Gold rose by US$6.30 an ounce to US$660.80.

TECHNICAL COMMENTARY

• Euro 1.2580

Initial support at 1.2520 (Apr 28 low) followed by 1.2403 (Apr 27 low). Initial resistance is now located at 1.2692 (May1 high) followed by 1.2731 (Former support from Feb 8, 2005).

• Yen 113.70

Initial support is located at 112.33 (May 1 low) followed by 111.54 (50% retracement of the 101.67 to 121.41 advance). Initial resistance is now at 113.86 (May 1 high) followed by 114.49 (Apr 28 corrective high).

• Pound – 1.8250

Initial support at 1.8229 (Apr 28 low) followed by 1.8000 (Apr 28 low). Initial resistance is now at 1.8416 (May 1 high) followed by 1.8501 (Sept 5, 2005 high).

• Aussie – 0.7560

Initial support at 0.7535 (Apr 28 low) followed by 0.7492 (Apr 27 low). Initial resistance is now at 0.7639 (May 1 reaction high) followed by 0.7647 (Oct 4, 2005 high).