Australian FOREX Daily Outlook 11/08/2006

CURRENCY TRADING SUMMARY –11 AUGUST06 (05:00GMT)

• U.S. Dollar Trading (USD) gained against the majors in the overnight forex session as the US trade gap narrowed slightly and news of a foiled terrorist plot in the UK emerged. US trade balance came in at -64.8bln for the month of June compared to an estimate of -64.4bln which was less than the previous result of -64.97bln. Initial jobless claims however were weaker than expected coming in at 319k from a 315k estimate. News released from the UK alerted the markets that a terrorist plot to blow airliners mid-flight was thwarted by British authorities. In other markets, the Dow Jones index rose by 48pts while the NASDAQ climbed 11pts as oil prices dropped as a result of the foiled terrorist plot. Crude oil fell by US$2.35 to US$74.00 a barrel as the market interpreted events in the UK as a precursor for a lowering in demand for jet fuel by airliners. Looking ahead, US retail sales are due out today.
  

• The Euro (EUR) traded within a low of 1.2748 and a high of 1.2912, before closing at 1.2794 in the New York session. On the data front, industrial production for France came in unchanged compared to an estimate of a slight fall of -0.1%.
  

• The Japanese Yen (JPY) traded within a low of 114.68 and a high of 115.61 versus the dollar, before closing at 115.26 in the New York session. On the data front, GDP came in at 0.2% for the second quarter compared to an estimate of 0.4%. Looking ahead, the 2-day BoJ meeting finishes today with their decision on interest rates to be delivered afterwards.
  

• The Sterling (GBP) traded within a low of 1.8868 and a high of 1.9089, before closing at 1.8940 in the New York session. The UK was rocked by revelations that authorities have foiled a terrorist plot to blow up airliners traveling from the UK to the USA mid-flight.
  

• The Australian Dollar (AUD) traded within a low of 0.7658 and a high of 0.7710, before closing at 0.7665 in the New York session. On the data front, trade balance came in at -0.722Bln for June from a previous -2.3Bln. Exports increased to 8% and Imports decreased to -1%, from a result last month of -3% and 3% respectively.
  

• Gold (XAU) fell by US$16.00 to US$636.00 an ounce after USD strength seen in the overnight session.