Australian FOREX Daily Outlook 06/07/2006

CURRENCY TRADING SUMMARY –6JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) experienced resurgence in the overnight session as forex buyers back from their Independence Day holiday bought the USD after strong ADP payroll survey and factory orders data were released. The ADP US National Employment Report showed a rise of 368k jobs in June after a May result of 122k. US factory orders rose 0.7% in May compared to an expectation of only a 0.1% rise. Together with the regional instability in the Korean Peninsula after North Korea test fired 7 missiles the Japanese Yen weakened, providing more strength to the USD. In other markets, the Dow Jones finished 76pts down while the NASDAQ gave up 37pts as the situation in North Korea worried the forex markets. Crude oil finished at a record US$75.19 a barrel, up US$1.26 amid a surge in US demand and concerns about political tensions in Asia. Looking ahead, ISM Non-manufacturing Index/Price is due out today as well as initial jobless claims.
  

• The Euro (EUR) traded in a range of 1.2710 to 1.2837, before closing at 1.2724 in the New York session. On the data front, Eurozone PMI rose in June to 60.7 from 58.7 versus market expectation of 59.0. Looking ahead, ECB interest rate announcement is due out today.
  

• The Japanese Yen (JPY) traded in a range of 114.61 to 115.75 versus the dollar, before closing at 115.73 in the New York session. Looking ahead, leading indicators are due out today.
  

• The Sterling (GBP) traded in a range of 1.8329 to 1.8485, before closing at 1.8347 in the New York session. Looking ahead, the Bank of England announces their decision on interest rates today.
  

• The Australian Dollar (AUD) traded in a range of 0.7420 to 0.7465, before closing at 0.7417 in the New York session.

• Gold (XAU) rose by US$13.70 to US$629.70 an ounce after safe haven buying on the back of missile tests out of North Korea unsettling regional stability. Base metals with the exception of Nickel were lower in the overnight session.

TECHNICAL COMMENTARY

Euro 1.2735

Initial support at 1.2702 (38.2% retracement) followed by 1.2655 (June 30 low). Initial resistance is now located at 1.2841 (Jul 5 corrective high) followed by 1.2862 (76.4% retracement of the 1.2980 to 1.2478 decline).

• Yen 115.60

Initial support is located at 114.57 (July 5 low) followed by 114.09 (Jul 3 reaction low). Initial resistance is now at 115.72 (61.8% retracement of the 116.72 to 114.09 decline) followed by 116.72 (June 26 reaction high).

• Pound – 1.8360

Initial support at 1.8295 (50% retracement of the 1.8090 to 1.8500 advance) followed by 1.8262 (Jun 30 low). Initial resistance is now at 1.8500 (Jun 30 high) followed by 1.8561 (Jun 16 reaction high).

• Australian Dollar – 0.7415

Initial support at 0.7378 (June 30 low) followed by 0.7269 (June 28 low). Initial resistance is now at 0.7477 (July 5 high) followed by 0.7505 (Jun 9 corrective high).