Australian FOREX Daily Outlook 07/06/2006

MARKET SUMMARY –7JUNE06 (05:00GMT)

• The Dollar strengthened against the major currencies in the overnight session after St. Louis Federal Reserve President William Poole noted his concern about inflation and that a slowing economy wasn’t enough to halt inflationary pressures. These comments together with comments from Eurozone finance ministers stating their concerns over a stronger Euro, was the impetus needed to move the dollar higher. In other markets, the Dow Jones index retreated by 46 pts whereas the NASDAQ moved lower by under 7pts. Crude oil fell by US10c a barrel to US$72.50 with comments from Iran stating there were some positives in the proposals from the West to halt its nuclear enrichment program.
  

• The Euro traded in a range of 1.2808 to 1.2934, before closing at 1.2830 in the New York session. Looking ahead, retail sales are due out today.
  

• The Japanese yen traded in a range of 112.06 to 113.57 versus the dollar, before closing at 113.32 in the New York session. Looking ahead, Money Supply M2 is due out tomorrow.
  

• The Sterling traded in a range of 1.8591 to 1.8773, before closing at 1.8604 in the New York session. Looking ahead, the BoE interest rate announcement is due out tomorrow.
  

• The Aussie traded in a range of 0.7395 to 0.7477, before closing at 0.7409 in the New York session. On the data front, the current account deficit came in at -14bn which was a little better than expected, bettering the -14.8bn general estimate. Also, GDP for the first quarter came in as estimated, that is, 0.9%.

• Gold fell by US$14 to $634.70 an ounce on the back of the stronger dollar. Base metal prices fell in general with the correction across equity markets.