Australian FOREX Daily Outlook 01/08/2006

CURRENCY TRADING SUMMARY –1 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) remained steady against the majors in the overnight foreign exchange trading session, as the greenback traded in tight ranges after a mixed release of data from the US. The Chicago PMI rose to 57.9 from 56.5 in June, compared to an expectation of a fall to 56.0. San Francisco Fed president Janet Yellen noted that the current federal funds rate of 5.25% was in the vicinity of the right level as seen by the Federal Reserve. In other markets, the Dow Jones index fell by 34pts and the NASDAQ retreated 2pts. Crude oil rose by US$1.61 to US$74.40 a barrel, buoyed by the fighting in the Middle East after a ceasefire deal was rejected by Israel. Looking ahead, the Core PCE deflator is due for release as well as personal income, spending and the ISM manufacturing index.
  

• The Euro (EUR) traded within a low of 1.2743 and a high of 1.2781, before closing at 1.2765 in the New York session. On the data front, Eurozone CPI remained steady at 2.5% which was in line with expectations. Looking ahead, the unemployment rate is due out today.
  

• The Japanese Yen (JPY) traded within a low of 114.21 and a high of 114.83 versus the dollar, before closing at 114.66 in the New York session.
  

• The Sterling (GBP) traded within a low of 1.8621 and a high of 1.8687, before closing at 1.8677 in the New York session. Looking ahead, the Bank of England meet to discuss interest rates in the first day of a 2-day meeting.
  

• The Australian Dollar (AUD) traded within a low of 0.7648 and a high of 0.7668, before closing at 0.7656 in the New York session. Looking ahead, the Reserve Bank of Australia meets today and tomorrow to discuss possible changes to interest rates.
  

• Gold (XAU) fell by US$1.00 to US$636.80 an ounce as traders squared up positions before end of month.

TECHNICAL COMMENTARY

• Euro 1.2770

Initial support at 1.2651 (38.2% of the 1.2456-1.2772 advance) followed by 1.2577 (61.8% retracement of the 1.2456 to 1.2772 advance). Initial resistance is now located at 1.2784 (Jul 31 high) followed by 1.2865 (Jul 7 reaction high).

• Yen 114.55

Initial support is located at 113.45 (Jul 10 low and 50% ret 108.98 to 117.89) followed by 112.38 (61.8% retracement of the 108.98 to 117.89 advance). Initial resistance is now at 114.86 (Jul 31 high) followed by 116.04 (Jul 28 high).

• Pound – 1.8675

Initial support at 1.8527 (Jul 27 low) followed by 1.8385 (Jul 25 corrective low). Initial resistance is now at 1.8774 (Jun 6 high) followed by 1.8806 (76.4% retracement of the 1.9027 to 1.8090 decline).

• Australian Dollar – 0.7655

Initial support at 0.7593 (Jul 28 low) followed by 0.7518 (Jul 25 corrective low). Initial resistance is now at 0.7677 (July 28 high) followed by 0.7727 (May 17 corrective high).

• Gold – 636

Initial support at 623.75 (Jul 27 low) followed by 602.66 (Jul 24 reaction low). Initial resistance is now at 641.0 (Jul 27 high) followed by 648.2 (76.4% retracement of the 676.35 to 602.66 decline).