Australian FOREX Daily Outlook 08/09/2006

CURRENCY TRADING SUMMARY –8 SEPTEMBER06 (05:00GMT)

• U.S. Dollar Trading (USD) was generally stronger against the majors in the overnight forex session as initial jobless claims came in better than expected and comments from San Francisco Fed President Janet Yellen highlighted the high level of inflation. Initial jobless claims posted a result of 310k compared to a 315k estimate. FOMC voting member Yellen stated that “It could take several years for a key measure of inflation to ease from current levels, and in the meantime the Federal Reserve must be biased toward additional interest rate increases.” In other markets, the Dow Jones index retreated 74pts while the NASDAQ gave up 12pts. Crude oil dipped US18c to US67.32 a barrel as the market looked on with worry at the possibility of a rapidly softening US economy.
  

• The Euro (EUR) traded within a low of 1.2708 and a high of 1.2831, before closing at 1.2729 in the New York session. On the data front, the Euro suffered from the strength initially in the Yen after heavy EUR/JPY selling following rumours of Yen focus at the future G7 meeting, followed by comments from Fed. Reserve Janet Yellen.
  

• The Japanese Yen (JPY) traded within a low of 116.00 and a high of 117.04 versus the dollar, before closing at 116.43 in the New York session. On the data front, comments from German Deputy Finance Minister Thomas Mirrow hinted that the focus of the G7 meeting later in September will be on Yen weakness. However, the Japanese Deputy Finance Minister Hiroshi Watanabe downplayed the comments stating that the focus will be on global imbalances.
  

• The Sterling (GBP) traded within a low of 1.8709 and a high of 1.8868, before closing at 1.8762 in the New York session. On the data front, the Bank of England kept interest rates steady at 4.75%.
  

• The Australian Dollar (AUD) traded within a low of 0.7580 and a high of 0.7603, before closing at 0.7583 in the New York session. On the data front, Australian trade balance impressed coming in at -588million compared to a -680million estimate.
  

• Gold (XAU) fell by US$16.90 to US$621.80 an ounce as the greenback strengthened and oil weakened.

TECHNICAL COMMENTARY

• Euro 1.2735

Initial support at 1.2706 (Sep 7 low) followed by 1.2696 (Aug 15 reaction low). Initial resistance is now located at 1.2836 (Sep 6 high) followed by 1.288 (Aug 31 high).

• Yen 116.40

Initial support is located at 115.56 (Sep 5 low) followed by 115.32 (61.8% retracement of the 113.97 to 117.51 advance). Initial resistance is now at 117.07 (Sep 7 high) followed by 117.51 (Aug 31 reaction high).

• Pound – 1.8760

Initial support at 1.8707 (Sep 7 low) followed by 1.8618 (50% retracement of the 1.8090 to 1.9146 advance). Initial resistance is now at 1.8872 (Sep 7 high) followed by 1.8957 (Sep 6 high).

• Australian Dollar – 0.7585

Initial support at 0.7551 (Aug 25 low and 38.2% ret 0.7269 to 0.7722) followed by 0.7495 (50% retracement of the 0.7269 to 0.7722 rally). Initial resistance is now at 0.7683 (Sep 7 high) followed by 0.7722 (Sep 4 reaction high).

• Gold – 618

Initial support at 614.56 (Sep 7 low) followed by 607.5 (Aug 30 low). Initial resistance is now at 640.6 (Sep 5 high) followed by 645 (Aug 11 high).