Australian FOREX Daily Outlook 13/07/2006

CURRENCY TRADING SUMMARY –13JULY06 (05:00GMT)

• U.S. Dollar Trading (USD) strengthened against the majors in the overnight forex trading session after the news release that the US trade balance widened less than expected. US trade widened from -$63.3bln in April to -$63.8bln in May. The market had forecasted a widening of the deficit to –US$65bln. This was due to a record exports number which was the key behind the less narrow than expected trade gap. In other markets, the Dow Jones index finished 122pts and the NASDAQ ended down 39pts. Crude oil lifted again overnight as a much larger than expected fall in crude inventories gave the necessary push for oil to edge higher. Crude oil rose by US79c a barrel to US$74.95. Looking ahead, US retail sales is due out tomorrow together with the University of Michigan consumer confidence.
  

• The Euro (EUR) traded in a range of 1.2677 to 1.2777, before closing at 1.2705 in the New York session.
  

• The Japanese Yen (JPY) traded in a range of 114.18 to 115.70 versus the dollar, before closing at 115.52 in the New York session. Looking ahead, Current account, trade balance, and industrial production are due out today.
  

• The Sterling (GBP) traded in a range of 1.8310 to 1.8478, before closing at 1.8342 in the New York session. On the data front, UK unemployment edged up higher to 5.4% compared to an estimate of 5.3%.
  

• The Australian Dollar (AUD) traded in a range of 0.7515 to 0.7530, before closing at 0.7523 in the New York session. Looking ahead, the unemployment rate is due out today.
  
• Gold (XAU) strengthened by US$8.10 to US$651.20 an ounce with the market seeking the relative safety of the precious metal in light of the bombings in India.

TECHNICAL COMMENTARY

• Euro 1.2710

Initial support at 1.2674 (Jul 12 low) followed by 1.2655 (Jun 30 low). Initial resistance is now located at 1.2865 (July 7 high and 76.4% of the 1.2980 to 1.2478 decline) followed by 1.2935 (Jun 6 high).

• Yen 115.35

Initial support is located at 114.7 (July 11 high) followed by 113.91 (Jul 10 reaction low). Initial resistance is now at 115.8 (Jul 5 high) followed by 116.72 (Jun 26 reaction high).

• Pound – 1.8345

Initial support at 1.8309 (Jul 12 low) followed by 1.8295 (50% retracement of the 1.8090 to 1.8500 advance). Initial resistance is now at 1.8541 (July 7 high) followed by 1.8559 (50% retracement of the 1.9027 to 1.8090 decline).

• Australian Dollar – 0.7520

Initial support at 0.746 (Jul 11 low) followed by 0.7399 (Jul 5 low). Initial resistance is now at 0.7557 (July 12 high) followed by 0.7594 (61.8% retracement of the 0.7795-0.7269 decline).

• Gold – 651

Initial support at 620.7 (Jul 10 low) followed by 610.5 (short-term trendline support). Initial resistance is now at 655.5 (July 12 high) followed by 658.91 (61.8% retracement of the 730.25 to 543.50 decline).