Australian FOREX Daily Outlook 31/05/2006

MARKET SUMMARY –31MAY06 (05:00GMT)

• The Dollar weakened against the major currencies in the overnight session as the US consumer confidence showed a fall to 103.3 from 109.8 for the month of May. This result however was better than the forecasted 100.0 level. President Bush named Goldman Sachs chief executive as Treasury Secretary to replace John Snow this year. In other markets, The Dow Jones index fell by 184pts and the NASDAQ fell by 45pts. Crude oil rose by US66c to US$72.03 a barrel. Looking ahead, the FOMC minutes are due out today.
  

• The Euro traded in a range of 1.2744 to 1.2909, before closing at 1.2865 in the New York session. On the data front, the M3 broad money supply exceeded expectations in April. It rose to 8.8% annually, while the market expected 8.5%. Looking ahead, the EC survey is out later today.
  

• The Japanese yen traded in a range of 1.1163 to 1.1279 versus the dollar, before closing at 112.15 in the New York session. On the data front, the PMI manufacturing number came in less then the previous month, falling to 55.3 from 55.5 in April.
  

• The Sterling traded in a range of 1.8582 to 1.8869, before closing at 1.8823 in the New York session. On the data front, Net mortgage lending/mortgage approvals and GfK consumer confidence numbers are out today.
  

• The Aussie traded in a range of 0.7609 to 0.7644, before closing at 0.7620 in the New York session. On the data front, trade balance data showed -1.093bn for the month of April with analysts forecasting a larger deficit of -1.4bn.

• Gold moved higher unlike other metals, rising US$3.10 to US$660.50 an ounce.

Initial support at 0.7557 (May 26 low) followed by 0.7491 (May 24 low). Initial resistance is now at 0.7669 (61.8% retracement of the 0.7795 to 0.7466 decline) followed by 0.7727 (May 17 high).