Australian FOREX Daily Outlook 08/08/2006

CURRENCY TRADING SUMMARY –8 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) was firmer against the majors in the overnight foreign exchange trading session as traders sought to take profit ahead of the FOMC meeting. The forex market is pricing in a 15% chance that the US Federal Reserve will hike rates. In other markets, the Dow Jones index fell by 20pts while the NASDAQ fell by 12pts as the sharp rise in oil prices caused investors to be wary of slowing economic growth. Crude oil rose sharply overnight as an important US oilfield in Alaska was shut down to due a damaged pipeline and Iran has threatened to use its oil exports as a weapon against the West if they continue to impede their nuclear program. Oil shot up USD$2.22 to USD$76.98 a barrel. Looking ahead, the announcement by the FOMC on interest rates is due out tonight.
  

• The Euro (EUR) traded within a low of 1.2834 and a high of 1.2886, before closing at 1.2842 in the New York session.
  

• The Japanese Yen (JPY) traded within a low of 114.27 and a high of 115.14 versus the dollar, before closing at 115.14 in the New York session. Looking ahead, machinery orders are due out tomorrow.
  

• The Sterling (GBP) traded within a low of 1.9047 and a high of 1.9113, before closing at 1.9043 in the New York session. On the data front, industrial production came in at -0.1% for June compared to an estimate of 0.3%. Manufacturing production came in at 0.1% compared to a 0.2% estimate for the month of June. Looking ahead, UK trade balance is due out tomorrow.
  

• The Australian Dollar (AUD) traded within a low of 0.7626 and a high of 0.7647, before closing at 0.7635 in the New York session.
  

• Gold (XAU) rose by US$2.80 to US$649.50 an ounce as high oil prices and Middle East instability help to buoy the gold price.