Australian FOREX Daily Outlook 19/05/2006

MARKET SUMMARY –19MAY06 (05:00GMT)

• The Dollar weakened against major currencies yesterday after US Treasury Secretary John Snow urged China to increase flexibility in the Yuan, and the German Finance Minister stating that the pressures of a stronger Euro could be absorbed. On the data front, the US Philadelphia Fed index rose against expectations to 14.4 points in May from 13.2 in April with the market expecting a fall of 12.5. In other markets, US stocks finished lower yesterday with the sell off as a result of inflation fears in the US. The Dow Jones closed down 77 points with the NASDAQ closing down for the eighth consecutive day, falling by 15 points. Crude oil lifted on Thursday, rising by US76c to US$69.45 a barrel.
  

• The Euro traded in a range of 1.2746 to 1.2852 before closing at 1.2844 during the New York session.
  

• The Japanese yen traded in a range of 110.33 to 111.26 versus the dollar, before closing at 110.82 in the New York session. On the data front, the Q1 GDP figures showed a growth of 0.5% beating expectations. This results in an annualised growth thus far of 1.9%.
  
• The Sterling traded in a range of 1.8794 to 1.8955, before closing at 1.8955 in the New York session. On the data front, UK Retail sales numbers impressed with sales rising 0.6% over the month (versus consensus of +0.5%). Annual growth now stands at 3.0%.
  
• The Aussie traded in a range of 0.7588 to 0.7674, before closing at 0.7648 in the New York session.
  
• Gold fell moderately losing US$10.90 to US$680.9.

TECHNICAL COMMENTARY

• Euro 1.2850

Initial support at 1.2685 (May 11 low) followed by 1.266 (May 9 low). Initial resistance is now located at 1.2920 (May 17 high) followed by 1.2973 (May 15 high).

• Yen 110.60

Initial support is located at 108.98 (May 17 low) followed by 108.76 (Sep 5, 2005 reaction low). Initial resistance is now at 110.88 (May 16 high) followed by 111.54 (May 11 corrective high).

• Pound – 1.8940

Initial support at 1.8745 (May 16 low) followed by 1.853 (May 11 corrective low). Initial resistance is now at 1.8968 (76.4% retracement of the 1.9027 to 1.8775 decline) followed by 1.9027 (May 17 corrective high).

• Aussie – 0.7635

Initial support at 0.7573 (May 18 low) followed by 0.7551 (May 2 corrective low). Initial resistance is now at 0.7729 (May 17 high) followed by 0.7749 (May 15 high).